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and, of course, most are familiar with the famous speech given by IKE detailing what the Military Industrial Complex money SHOULD BE BUYING (schools, hospitals, etc.).
I'm fairly good at understanding economics - owned and ran businesses for 40 years. In addition, I am well versed in history and current events...and yet I cannot understand the USA's current focus on increasing GDP. I can see why it might be important for a developing country as a way to measure growth. But in a country as developed as ours, it's really hard for me to see increased GDP as a good thing.
I'm sure someone with more smarts can talk me down from this, but here are a number of examples of why. Note that these examples cover TRILLIONS of dollars of expenditures, so they are not some sideline of the economics involved. My "alternative answer" is that efficiency is the name of the game of the present and future and that means more for less. If we spend less, then GDP is less, right? Examples:
1. We are paying the highest rates in the world for health care - reaching almost 11K per person per year. That money being spent is all GDP, right? So if we had a system that was closer in cost to some country (which get better results, live longer), our GDP would be lower.
2. If I trade in my Subaru for a Prius (even trade) and get 2X the MPG, I will buy 1/2 as much gasoline this year. That will lower GDP (when taken times tens of millions of vehicles).
3. If our "Security State" which has grown massively in the last 15 years...was cut down to the true size needed without watching every word and action of every square miles in the entire world (and every sq ft in this country) - this would also lower GDP.
4. If, instead of owning a tablet, computer and smart phone ($4K not so long ago) I own just a large Phablet, GDP is cut down as well as electric use (GDP also). In fact, every efficient device we all own cuts down the amount we pay for the fuel(s), and therefore lowers GDP.
5. If Trump gives away 1.5 Trillion dollars out of debt and deficit, some of that money will be spent on things which increase GDP. But there is no "other" side of the equation for the debt, deficit and interest on all of it.
Again, my takes is that the future (in the entire world, let alone the US) belongs to the efficient...and, almost by nature, efficiency means more for less. There are many other similar situations in our everyday lives - cooking at home and watching Netflix lowers GDP vastly over eating and drinking at a local establishment and then catching a movie. IMHO, not only does efficiency save money and resources, but it creates a better society overall (less traffic, pollution, waste, etc.).
If the economy grows, everyone wins... (that's the Econ 101 mantra)
...until we don't, since growth does not come from thin air or without costs or consequences. We are already paying a steep global cost for unrestrained economic growth. Other costs, with even steeper human cost, are about to come due.
Corporate revenue (and profits), one supposes, bear some proportionality to GDP. We can argue as to what portion of GDP should go to corporations, what portion goes to workers, what portion goes wherever else... but regardless, the supposition is that more GDP means to some degree more for all of those portions. And more corporate profit means higher stock prices... which means, among other things, healthier pension-schemes (defining contribution AND defined benefit), university endowments, and yes, individual net-worth.
Wasteful and even harmful spending may be inimical to clean environment, healthy kids and so forth, and thus do nothing (or negative) for "happiness" or overall quality of life. But even such "bad" spending is presumably helpful for generating economic activity, and with it, the growth that makes us materially richer. Are material riches the same as overall greater life-satisfaction? Probably not. But that's its own debate.
Then there's the broken-windows hypothesis, and its various refutations. Clearly, efficient spending is better than inefficient spending. Breaking something, only to generate economic activity to repair it, is a dumb way to run an economy. But arguably it is still better than sitting on our hands, watching the sunset.
and, of course, most are familiar with the famous speech given by IKE detailing what the Military Industrial Complex money SHOULD BE BUYING (schools, hospitals, etc.).
I'm fairly good at understanding economics - owned and ran businesses for 40 years. In addition, I am well versed in history and current events...and yet I cannot understand the USA's current focus on increasing GDP. I can see why it might be important for a developing country as a way to measure growth. But in a country as developed as ours, it's really hard for me to see increased GDP as a good thing.
I'm sure someone with more smarts can talk me down from this, but here are a number of examples of why. Note that these examples cover TRILLIONS of dollars of expenditures, so they are not some sideline of the economics involved. My "alternative answer" is that efficiency is the name of the game of the present and future and that means more for less. If we spend less, then GDP is less, right? Examples:
1. We are paying the highest rates in the world for health care - reaching almost 11K per person per year. That money being spent is all GDP, right? So if we had a system that was closer in cost to some country (which get better results, live longer), our GDP would be lower.
2. If I trade in my Subaru for a Prius (even trade) and get 2X the MPG, I will buy 1/2 as much gasoline this year. That will lower GDP (when taken times tens of millions of vehicles).
3. If our "Security State" which has grown massively in the last 15 years...was cut down to the true size needed without watching every word and action of every square miles in the entire world (and every sq ft in this country) - this would also lower GDP.
4. If, instead of owning a tablet, computer and smart phone ($4K not so long ago) I own just a large Phablet, GDP is cut down as well as electric use (GDP also). In fact, every efficient device we all own cuts down the amount we pay for the fuel(s), and therefore lowers GDP.
5. If Trump gives away 1.5 Trillion dollars out of debt and deficit, some of that money will be spent on things which increase GDP. But there is no "other" side of the equation for the debt, deficit and interest on all of it.
Again, my takes is that the future (in the entire world, let alone the US) belongs to the efficient...and, almost by nature, efficiency means more for less. There are many other similar situations in our everyday lives - cooking at home and watching Netflix lowers GDP vastly over eating and drinking at a local establishment and then catching a movie. IMHO, not only does efficiency save money and resources, but it creates a better society overall (less traffic, pollution, waste, etc.).
Sure, you can point to cases where it's not always better to have a higher GDP but in general, the higher the GDP per capita the better. The country with the lowest GDP per capita I've worked in is Afghanistan and it sucked. The highest GDP country I've been in is Qatar and things are pretty good there. So I would say thinking people should be going for the best lifestyle which to some degree is affected by GDP per capita.
Breaking something, only to generate economic activity to repair it, is a dumb way to run an economy. But arguably it is still better than sitting on our hands, watching the sunset.
So any economic activity, even counter-productive, useless or damaging activity, is better than no activity?
That's a bit like saying, "It's better to be warm!" - which may be true, in some vague sense, but is a fairly bad thing off the northern Canadian coastline.
and, of course, most are familiar with the famous speech given by IKE detailing what the Military Industrial Complex money SHOULD BE BUYING (schools, hospitals, etc.).
I'm fairly good at understanding economics - owned and ran businesses for 40 years. In addition, I am well versed in history and current events...and yet I cannot understand the USA's current focus on increasing GDP. I can see why it might be important for a developing country as a way to measure growth. But in a country as developed as ours, it's really hard for me to see increased GDP as a good thing.
I'm sure someone with more smarts can talk me down from this, but here are a number of examples of why. Note that these examples cover TRILLIONS of dollars of expenditures, so they are not some sideline of the economics involved. My "alternative answer" is that efficiency is the name of the game of the present and future and that means more for less. If we spend less, then GDP is less, right? Examples:
1. We are paying the highest rates in the world for health care - reaching almost 11K per person per year. That money being spent is all GDP, right? So if we had a system that was closer in cost to some country (which get better results, live longer), our GDP would be lower.
2. If I trade in my Subaru for a Prius (even trade) and get 2X the MPG, I will buy 1/2 as much gasoline this year. That will lower GDP (when taken times tens of millions of vehicles).
3. If our "Security State" which has grown massively in the last 15 years...was cut down to the true size needed without watching every word and action of every square miles in the entire world (and every sq ft in this country) - this would also lower GDP.
4. If, instead of owning a tablet, computer and smart phone ($4K not so long ago) I own just a large Phablet, GDP is cut down as well as electric use (GDP also). In fact, every efficient device we all own cuts down the amount we pay for the fuel(s), and therefore lowers GDP.
5. If Trump gives away 1.5 Trillion dollars out of debt and deficit, some of that money will be spent on things which increase GDP. But there is no "other" side of the equation for the debt, deficit and interest on all of it.
Again, my takes is that the future (in the entire world, let alone the US) belongs to the efficient...and, almost by nature, efficiency means more for less. There are many other similar situations in our everyday lives - cooking at home and watching Netflix lowers GDP vastly over eating and drinking at a local establishment and then catching a movie. IMHO, not only does efficiency save money and resources, but it creates a better society overall (less traffic, pollution, waste, etc.).
Oh, come now. You're pretending. You know perfectly well that increasing GDP is one very good way to essentially shrink the national debt.
You have to know that.
So any economic activity, even counter-productive, useless or damaging activity, is better than no activity?
That's a bit like saying, "It's better to be warm!" - which may be true, in some vague sense, but is a fairly bad thing off the northern Canadian coastline.
There's no need for unbridled pedantry; I did say, "arguably". And yes, one could think of stupid and even self-destructive things, that at least keep people employed, skills sharp and plants humming. An example might be the employment of chemists, to make chemical weapons, which are contrary to the rules of war, embarrassing if discovered, difficult to store, carcinogenic to those who produce them, and useless for any civilian purposes. So why do it? Perhaps, because it keeps said chemists' skills sharp, for some potentially better future use. Or, it gives them employment, so that they don't sell their skills to some really nasty dictatorship. Or, it produces spinoff benefits, say in new materials for hazmat storage. And so forth.
The absolute worst thing, from a material-prosperity point of view, is an idyllic hunter-gatherer society, that peacefully gathers fruits from vines, builds nothing, fights nobody, uses only natural materials, and keeps its population sustainably low.
There's no need for unbridled pedantry; I did say, "arguably".
Which means you are arguing that you believe it to be true. Nothing pedantic about my answer; I think the notion of an economy built on endless growth (which is in turn based on ever-increasing consumption) is complete nonsense. And we're about to be considering how nonsensical from our vacations on Northern Canadian beaches.
Quote:
And yes, one could think of stupid and even self-destructive things, that at least keep people employed, skills sharp and plants humming.
And there you have it: keeping people employed and the economy spinning is worth even stupid and self-destructive acts. I (pedantically) disagree.
Quote:
The absolute worst thing, from a material-prosperity point of view, is an idyllic hunter-gatherer society, that peacefully gathers fruits from vines, builds nothing, fights nobody, uses only natural materials, and keeps its population sustainably low.
Just as the absolute worst thing for the arms industry would be the end of war. It's all a matter of perspective. My perspective is that an continually increasing economy is stupid and self-destructive, and that we are about to irretrievably run out of even makework jobs for most people.
Funny, I've always looked at modern war as taking your best fruits, your best resources, large amounts of your capital, a bunch of borrowed money - and throwing it all off a cliff so you can start again.
I guess it depends on whether resources are unlimited or not. Some seem to believe they are unlimited - but still the processing of them causes some problems.
I used to think that "going back to the land" and living simpler lives was the solution. I'm still good with the "simpler lives" part which I think is coming true (to some degree). But the only thing that can save us now is technology. That is, we will choke on our own smoke without it.
Back to the GDP, I understand the concept of looking at places like Afghanistan and even China - economies which are either very poor or very dynamic (moving up quickly). But with 36% of Americans being obese (and with our system having a LOT of other "obese" type of overkill consumerism)...it would seem that measurements of:
Efficiency
Happiness and Health and General Welfare of the entire population
Stewardship of existing land and resources
Mortality - Life expectancy (headed down or stable)
and such would be the more important measurements.
It seems simple to me. Cars used to last 2-8 years. Now they last as long as 15+. Using the GDP standard, this is bad thing. If I have no health care and therefore avoid preventative care - and then need 1/2 million in care after I end in the ER with Cancer tumors....that makes for a bigger and better GDP.
It would be one thing if I cherry picked just a few small segments to illustrate this. But these things represent a large portion of what the average citizen spends their money on.
Since no society in the history of the world has been this rich, we are in uncharted territory. If I were King I'd study the subjects closely and determine if it was time to "think and plan different". My heart tells me that it is...
Just a few years back my home landline phone bill (2 lines) was about $150-$170 per month. We're talking about 2005 or so. Now I spend $210 a month for 6 smartphones (kids, etc.) and one mobile ipad. That's a little over $30 per line...and I get access to all the information in the world thrown in.
As far as "working instead of watching the sunset", this depends on the person and the phase of life they are going through. All of history shows us that great accomplishments are largely made by those from 19-30 years old. Even Einstein didn't come up with much after he was 30. There are exceptions, but if you really study most fields that seems to be the case.
There is lots to do besides sitting and watching the sunset. You can teach, sew, play guitar, create art, help others in a multitude of ways, etc.
When everyone in this country is taken care of in the right way (based on our GDP), then I'd be a bit more apt to say "busy work is better than no work". But for now there is plenty of REAL work to do.
BTW, Americans work more hours (by a good margin) than other civilized and industrialized countries. As a result, family and recreational and other time is sacrifices on the same altar - that of GDP.
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You know perfectly well that increasing GDP is one very good way to essentially shrink the national debt.
