Wednesday, July 21, 2010

A question about growth

Perhaps you can help me make constructive sense of several relatively recent threads:

When you look at all of these messages together, what thoughts do you have?

For those of you without current employment, I'm seriously not trying to prolong your agony. I wonder, though, if growth and jobs have to be linked the way we sometimes think they are.  Can we figure out a way to get jobs for people that also reduces the potential for future unemployment?

What do you think?

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Blogger Dave said...

The sticky point for all of these discussions is what economies do versus what nations do. Whoever said that economies limit themselves along political lines? Why is it assumed that the national level is the appropriate level to analyze economic activity? Take away the idea of nation-states, and just look at economics from the perspective of city-regions and globalization.

On the Oil Drum blog, Daly says that GDP should be rethought. What about the political unit that it is examined at? Are you really telling me that economic activity in Dubuke has more of an influence on the economy of Manhattan than does Toronto or London? Really?

22 July, 2010 08:14  
Blogger Bill Harris said...

Thanks for the comments, Dave. How do you imagine looking at economics from the perspective of city-regions and globalization? What does that look like?

And what thoughts do the rest of you have about these five articles?

22 July, 2010 19:36  
Blogger Tom Fiddaman said...

I haven't read all the articles yet, but have a few thoughts anyway.

First, when people talk about GDP recovery, they usually seem to mean consumption recovery. Consumption recovery can't really happen, because the level of consumption in the 2000s was funded by deficits. (Well, it could happen, with even more drawdown of assets or accumulation of debt, but that would be worse in the long run.

Second, and relevant to Dave's comment, a lot of what passed for GDP or value added in the last decade or two could be transient effects of opening markets. Capital is mobile and labor isn't. The influx of cheap goods inflates profits (until prices equilibrate) but deflates wages. The result is perhaps somewhat GDP-neutral, but has a harmful effect on income distribution, making the downturn more painful for the median than the mean earner. That may not be a reversible situation either.

A decent solution to both problems might be to just print a boatload of money. That rewards debt holders over the prudent, which is a bummer. But the imprudent are dragging all of us down, so it's perhaps not a bad trade. Also, the resulting inflation and dollar depreciation allows those countries running industrial and trade policies that lead to big dollar surpluses to finance some of the recovery.

23 July, 2010 18:59  
Blogger Brian C. Setzler said...

We are all stuck inside a system that propels everything forward. Even those of us who wish to save the world work harder causing yet more destruction.

What causes or entire culture to be on this insane and ultimately destructive treadmill?

I think the answer is that we've devised a system where all the food is essentially under lock and key and there is no way out if you want to eat. Accordingly, all of us chase the proverbial carrot.

Unlock the food supply, and see what happens.

24 July, 2010 20:13  
Blogger Bill Harris said...

Thanks, Brian and Tom. I am curious that there seems to be little mainstream dialog about these two seemingly different philosophies about economic sustainability since perhaps the 1970s.

31 July, 2010 10:21  

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