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On December 30 2011 22:22 mememolly wrote:Show nested quote +On December 30 2011 22:15 EdSlyB wrote:On December 30 2011 21:15 mememolly wrote:On December 30 2011 20:49 mdb wrote:
I`m total economics newb and as far as I understand if we put it in simple words
- people get loans from banks
- they dont invest the money in smth that will return profit, but instead buy iphones and such stuff
- people cant return the money to the banks
- banks bankrupt
is this correct? No, you're wrong. Greece lied about their deficit when they joined the Euro, if they had told the truth they wouldn't have been allowed into the Euro. 40% of taxable income in Greece goes unpaid, no one pays their taxes in Greece the entire country is corrupt and just fucks each other over, add in the fact that during the housing bubble they invested money widely and you have a recipe for disaster. I'd be pissed if I was German and had to help those douches (the Greeks) out. Although, Germany and Iceland both entered the housing bubble with their pockets open and didn't know what the fuck they were doing as they have no experience in the financial markets (at least not at the level they were playing), Germany and Iceland bought a shit ton of toxic debts and basically got fucked over by Americans who knew a mug when they saw one coming. Don't blame the Greeks in general. The Greek polititions are the ones to blame. Like the polititions in my own country. But in the end the ones making the sacrifices and paying up their screw ups are the hard working people. I'm not just blaming the Greek "hard working" people, but the "hard working" people of Greece don't pay their taxes, sure some do but the vast majority don't, everyone is looking to get one over on one another and no one wants to take responsibility, tbh Greece should never of been allowed to join the Euro but who knew they were lying about their deficit? Putting a country like Germany in financial bed with a country as corrupt as Greece was never going to turn out well
You realize the reason the eu's rules became a joke is because of germany? They broke the deficit rules way back in the early 90's and a pot can't exactly call a kettle black, hence why they allowed the PIIGS to break EU laws for so long.
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I dunno shit about economics but so far since the GFC, nothing has changed for me :/
same shitty pay, same housing prices, same job market.
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On December 30 2011 22:22 mememolly wrote:Show nested quote +On December 30 2011 22:15 EdSlyB wrote:On December 30 2011 21:15 mememolly wrote:On December 30 2011 20:49 mdb wrote:
I`m total economics newb and as far as I understand if we put it in simple words
- people get loans from banks
- they dont invest the money in smth that will return profit, but instead buy iphones and such stuff
- people cant return the money to the banks
- banks bankrupt
is this correct? No, you're wrong. Greece lied about their deficit when they joined the Euro, if they had told the truth they wouldn't have been allowed into the Euro. 40% of taxable income in Greece goes unpaid, no one pays their taxes in Greece the entire country is corrupt and just fucks each other over, add in the fact that during the housing bubble they invested money widely and you have a recipe for disaster. I'd be pissed if I was German and had to help those douches (the Greeks) out. Although, Germany and Iceland both entered the housing bubble with their pockets open and didn't know what the fuck they were doing as they have no experience in the financial markets (at least not at the level they were playing), Germany and Iceland bought a shit ton of toxic debts and basically got fucked over by Americans who knew a mug when they saw one coming. Don't blame the Greeks in general. The Greek polititions are the ones to blame. Like the polititions in my own country. But in the end the ones making the sacrifices and paying up their screw ups are the hard working people. I'm not just blaming the Greek "hard working" people, but the "hard working" people of Greece don't pay their taxes, sure some do but the vast majority don't, everyone is looking to get one over on one another and no one wants to take responsibility, tbh Greece should never of been allowed to join the Euro but who knew they were lying about their deficit? Putting a country like Germany in financial bed with a country as corrupt as Greece was never going to turn out well
Ironically the people who tend to evade more taxes, here in Portugal, are those with the highest incomes... And now I have to pay even more taxes...lol T.T
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On December 30 2011 21:28 Lebesgue wrote:
The crisis in Europe is a complex event and it will be studied for years before people converge causes. But so far it looked that it was caused:
- Greece: by huge budget deficit it was running for years
- Italy - uncompetitive economy - basically Italy has been not growing for years thanks to Berlusconi.
- Spain - burst of the housing bubble + other economic problems
- Ireland - subprime crisis in US
- Iceland - same as Ireland
I agree.
Still, the underlying problem was the market losing faith in the governments of Europe.
Example Italy: The economic indicators did hardly change throughout the last 10 years, but the market's opinion did, and that is why the interest rates sky rocketed. Almost no country could pay interest rates of more than 7%.
Of course the Greek budget deficit getting out of control and the apparent inability of the European Union to act decisively triggered the loss of faith.
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On December 30 2011 22:34 sekritzzz wrote:Show nested quote +On December 30 2011 22:22 mememolly wrote:On December 30 2011 22:15 EdSlyB wrote:On December 30 2011 21:15 mememolly wrote:On December 30 2011 20:49 mdb wrote:
I`m total economics newb and as far as I understand if we put it in simple words
- people get loans from banks
- they dont invest the money in smth that will return profit, but instead buy iphones and such stuff
- people cant return the money to the banks
- banks bankrupt
is this correct? No, you're wrong. Greece lied about their deficit when they joined the Euro, if they had told the truth they wouldn't have been allowed into the Euro. 40% of taxable income in Greece goes unpaid, no one pays their taxes in Greece the entire country is corrupt and just fucks each other over, add in the fact that during the housing bubble they invested money widely and you have a recipe for disaster. I'd be pissed if I was German and had to help those douches (the Greeks) out. Although, Germany and Iceland both entered the housing bubble with their pockets open and didn't know what the fuck they were doing as they have no experience in the financial markets (at least not at the level they were playing), Germany and Iceland bought a shit ton of toxic debts and basically got fucked over by Americans who knew a mug when they saw one coming. Don't blame the Greeks in general. The Greek polititions are the ones to blame. Like the polititions in my own country. But in the end the ones making the sacrifices and paying up their screw ups are the hard working people. I'm not just blaming the Greek "hard working" people, but the "hard working" people of Greece don't pay their taxes, sure some do but the vast majority don't, everyone is looking to get one over on one another and no one wants to take responsibility, tbh Greece should never of been allowed to join the Euro but who knew they were lying about their deficit? Putting a country like Germany in financial bed with a country as corrupt as Greece was never going to turn out well You realize the reason the eu's rules became a joke is because of germany? They broke the deficit rules way back in the early 90's and a pot can't exactly call a kettle black, hence why they allowed the PIIGS to break EU laws for so long.
The Greek government lied about their deficit when joining the euro, you can't blame Germany for another countries lies
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We had a huge boom. Now we're having a huge bust.
The developed world is still far better off (on average) than it was a couple decades ago. People who thinks this is some unbelievable phenomenon that has ruined everything are wrong. In most of the developed world, people will live a somewhat less luxurious life for a decade or two and that's all there is to it.
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On December 30 2011 22:34 sekritzzz wrote:Show nested quote +On December 30 2011 22:22 mememolly wrote:On December 30 2011 22:15 EdSlyB wrote:On December 30 2011 21:15 mememolly wrote:On December 30 2011 20:49 mdb wrote:
I`m total economics newb and as far as I understand if we put it in simple words
- people get loans from banks
- they dont invest the money in smth that will return profit, but instead buy iphones and such stuff
- people cant return the money to the banks
- banks bankrupt
is this correct? No, you're wrong. Greece lied about their deficit when they joined the Euro, if they had told the truth they wouldn't have been allowed into the Euro. 40% of taxable income in Greece goes unpaid, no one pays their taxes in Greece the entire country is corrupt and just fucks each other over, add in the fact that during the housing bubble they invested money widely and you have a recipe for disaster. I'd be pissed if I was German and had to help those douches (the Greeks) out. Although, Germany and Iceland both entered the housing bubble with their pockets open and didn't know what the fuck they were doing as they have no experience in the financial markets (at least not at the level they were playing), Germany and Iceland bought a shit ton of toxic debts and basically got fucked over by Americans who knew a mug when they saw one coming. Don't blame the Greeks in general. The Greek polititions are the ones to blame. Like the polititions in my own country. But in the end the ones making the sacrifices and paying up their screw ups are the hard working people. I'm not just blaming the Greek "hard working" people, but the "hard working" people of Greece don't pay their taxes, sure some do but the vast majority don't, everyone is looking to get one over on one another and no one wants to take responsibility, tbh Greece should never of been allowed to join the Euro but who knew they were lying about their deficit? Putting a country like Germany in financial bed with a country as corrupt as Greece was never going to turn out well You realize the reason the eu's rules became a joke is because of germany? They broke the deficit rules way back in the early 90's and a pot can't exactly call a kettle black, hence why they allowed the PIIGS to break EU laws for so long.
There was no EU in the early 90s, what rules are you talking about?
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The problem is that the existence of interest is a ponzi scheme.
Well, that is only a part of the problem but it is a huge part.
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Aah, nice. this is a good perspective, and I was curious whether a thread like this would pop up eventually.
Also should be noted that the ability for governments to deal with the weak economy is hamstrung by the myth of excessive government spending, and the accompanying myth of austerity measures being necessary to deal with it. Austerity only increases wealth disparity which further exacerbates weak economies.
Fun not-so-tangentally related fact, of all 37 or so times that the US has raised the minimum wage, a net employment gain was realized shortly after.
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On December 31 2011 00:10 FuzzyJAM wrote:
We had a huge boom. Now we're having a huge bust.
The developed world is still far better off (on average) than it was a couple decades ago. People who thinks this is some unbelievable phenomenon that has ruined everything are wrong. In most of the developed world, people will live a somewhat less luxurious life for a decade or two and that's all there is to it.
This depends completely on what you mean by 'better'-- yes, our GDP is higher, stock indices are higher, but real wages, standard of living/quality of life indices, are down for the vast majority of the population for nearly all of the 'developed world'. People seem to buy into the myth that economic growth is good for everyone-- this hasn't been true historically, at least in the 20th century in any obvious way except for a brief period from the mid 50s till the late 60s, at least in North America, coinciding with labour victories.
The trend of GDP growth moving completely out of step with most quality of life indicators is strongest since the late 70s, and has been most pronounced in the past decade.
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On December 31 2011 02:11 caradoc wrote:Show nested quote +On December 31 2011 00:10 FuzzyJAM wrote:
We had a huge boom. Now we're having a huge bust.
The developed world is still far better off (on average) than it was a couple decades ago. People who thinks this is some unbelievable phenomenon that has ruined everything are wrong. In most of the developed world, people will live a somewhat less luxurious life for a decade or two and that's all there is to it. This depends completely on what you mean by 'better'-- yes, our GDP is higher, stock indices are higher, but real wages, standard of living/quality of life indices, are down for the vast majority of the population for nearly all of the 'developed world'. People seem to buy into the myth that economic growth is good for everyone-- this hasn't been true historically, at least in the 20th century in any obvious way except for a brief period from the mid 50s till the late 60s, at least in North America, coinciding with labour victories. The trend of GDP growth moving completely out of step with most quality of life indicators is strongest since the late 70s, and has been most pronounced in the past decade.
Economic growth is absolutely good for everyone. Distribution (which can be caused by any number of things) is what effs people over.
But by and large you're correct. In 1973 American standards of living started going down actually. A ton of stuff happened around that time so there's not a definitive cause but that's the year it all started.
Also, thanks to Ricardian Equivalence, public and private debt aren't all that different.
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On December 31 2011 02:18 Klondikebar wrote:Show nested quote +On December 31 2011 02:11 caradoc wrote:On December 31 2011 00:10 FuzzyJAM wrote:
We had a huge boom. Now we're having a huge bust.
The developed world is still far better off (on average) than it was a couple decades ago. People who thinks this is some unbelievable phenomenon that has ruined everything are wrong. In most of the developed world, people will live a somewhat less luxurious life for a decade or two and that's all there is to it. This depends completely on what you mean by 'better'-- yes, our GDP is higher, stock indices are higher, but real wages, standard of living/quality of life indices, are down for the vast majority of the population for nearly all of the 'developed world'. People seem to buy into the myth that economic growth is good for everyone-- this hasn't been true historically, at least in the 20th century in any obvious way except for a brief period from the mid 50s till the late 60s, at least in North America, coinciding with labour victories. The trend of GDP growth moving completely out of step with most quality of life indicators is strongest since the late 70s, and has been most pronounced in the past decade. Economic growth is absolutely good for everyone. Distribution (which can be caused by any number of things) is what effs people over. But by and large you're correct. In 1973 American standards of living started going down actually. A ton of stuff happened around that time so there's not a definitive cause but that's the year it all started. Also, thanks to Ricardian Equivalence, public and private debt aren't all that different.
Why is economic growth good for everyone? Is it simply the assumption that more stuff for everyone is better?
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On December 31 2011 02:23 NtroP wrote:Show nested quote +On December 31 2011 02:18 Klondikebar wrote:On December 31 2011 02:11 caradoc wrote:On December 31 2011 00:10 FuzzyJAM wrote:
We had a huge boom. Now we're having a huge bust.
The developed world is still far better off (on average) than it was a couple decades ago. People who thinks this is some unbelievable phenomenon that has ruined everything are wrong. In most of the developed world, people will live a somewhat less luxurious life for a decade or two and that's all there is to it. This depends completely on what you mean by 'better'-- yes, our GDP is higher, stock indices are higher, but real wages, standard of living/quality of life indices, are down for the vast majority of the population for nearly all of the 'developed world'. People seem to buy into the myth that economic growth is good for everyone-- this hasn't been true historically, at least in the 20th century in any obvious way except for a brief period from the mid 50s till the late 60s, at least in North America, coinciding with labour victories. The trend of GDP growth moving completely out of step with most quality of life indicators is strongest since the late 70s, and has been most pronounced in the past decade. Economic growth is absolutely good for everyone. Distribution (which can be caused by any number of things) is what effs people over. But by and large you're correct. In 1973 American standards of living started going down actually. A ton of stuff happened around that time so there's not a definitive cause but that's the year it all started. Also, thanks to Ricardian Equivalence, public and private debt aren't all that different. Why is economic growth good for everyone? Is it simply the assumption that more stuff for everyone is better?
Well yeah, true economic growth is by definition an increase in the standard of living. That's good for everyone. What messes it up is, for example, when the government takes all of person A's money and gives it to person B. But we wouldn't say economic growth was bad for person A, we would say redistribution was bad for person A.
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Massive private (not government) debt.
Lol, please.
Government spending is retarded on most European countries.
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1. and 3. seem to be contradictory because massive government debt lead to high interest rates that Greece, Italy and Spain cannot afford. I mean high debt in terms of GDP. Since these contries cannot print their own money, they do not have an easy solution to how to pay these interest rates.
Cutting spending is not the best solution and will deepen the recession. But, some countries need to cut spending. The best solution is to print a lot of money to pay back the debt and will lower the cost of the goods you produce, so your exports should increase. Unfortunately, Greece can not do this as long as it is part of the Eurozone and Germany and France will not allow a lot of money to be printed.
This means that the ECB won't act as the lender of last resort and inflation won't occur because money won't be allowed to be printed.
Possible Solution:
The reason that the interest rates are so high for many of the Eurozone countries is because of the potential for a Greece default. So, what if Greece was removed from the Eurozone, but not the European Union. This would allow Greece to have its own currency and do the inflation/ currency devaluation that needs to be done. This should lower the interest rates for the rest of the Eurozone since the chance of a Greece default will be removed. By remaining part of the EU, Greece will not be able to add taxes on imports from other EU countries.
Greece public debt in 2010 was around $460 B. If the Eurozone agreed to take on 50% of Greeces debt, in exchange for Greeece leaving the Eurozone, Greece would have a debt level that it can manage and with its own currency, hopefully be able to turn its economy around. The Eurozone devt would be held at the ECB and each countriy would pay a % based on its GDP as a % of the Eurozone.
Why would the Eurozone take on Greece debt?
They allowed Greece to enter when Greece did not meet the requirements. Greece cooked its books for 1 year to show its defecit was in line with Eurozone requirements and was admitted. This should have been very suspicious given Greece historical defecit levels. It was also allow countries to borrow at lower rates because of the lowered possibility of default. Finally, it will allow Germany and France to save their banks from huge write downs on Greece debt, which would cause them to have to recapitalize.
http://www.indexmundi.com/g/g.aspx?v=65&c=gr&l=en
http://www.indexmundi.com/g/g.aspx?v=143&c=gr&l=en
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On December 31 2011 02:18 Klondikebar wrote:Show nested quote +On December 31 2011 02:11 caradoc wrote:On December 31 2011 00:10 FuzzyJAM wrote:
We had a huge boom. Now we're having a huge bust.
The developed world is still far better off (on average) than it was a couple decades ago. People who thinks this is some unbelievable phenomenon that has ruined everything are wrong. In most of the developed world, people will live a somewhat less luxurious life for a decade or two and that's all there is to it. This depends completely on what you mean by 'better'-- yes, our GDP is higher, stock indices are higher, but real wages, standard of living/quality of life indices, are down for the vast majority of the population for nearly all of the 'developed world'. People seem to buy into the myth that economic growth is good for everyone-- this hasn't been true historically, at least in the 20th century in any obvious way except for a brief period from the mid 50s till the late 60s, at least in North America, coinciding with labour victories. The trend of GDP growth moving completely out of step with most quality of life indicators is strongest since the late 70s, and has been most pronounced in the past decade. Economic growth is absolutely good for everyone. Distribution (which can be caused by any number of things) is what effs people over. But by and large you're correct. In 1973 American standards of living started going down actually. A ton of stuff happened around that time so there's not a definitive cause but that's the year it all started. Also, thanks to Ricardian Equivalence, public and private debt aren't all that different.
How is economic growth absolutely good for everyone? This doesn't make any sense to me. GDP is a measure of growth within the borders of a country. If you have a billionaire move into the country and open up a club which only allows millionaires in, and pays minimum wage to the peasantry that works there, and the millionaires that frequent this club decide to no longer frequent equivalent clubs who happen to cater to a wider clientelle and pay better than minimum wage, how does this equate to being better for anyone but the billionaire, and the billionaires who own the factories that he sources materials for his club from assuming they run equivalent business models? GDP will increase for the country, sure, that's economic growth, but for who? Especially when austerity measures are being rammed down everyone's throats and corporate taxes are at a level unseen since 1929
This is a very contrived example, but an apt description of our economy in simplistic terms.
I basically agree with what you're saying about distribution, but saying that economic growth is good for everyone kind of glosses over the fact that the way we delineate 'economies' is more or less arbitrary (i.e. countries), when flows of capital do not confine themselves to the same lines, nor flow equally to all areas within these delineations.
Talking about 'economic growth' is more or less used in public discourse as a proxy for talking about quality of life, the two are not the same.
Of course we could talk about economies of individuals or whatever, and say that economic growth within that domain is good for the individual, and that would probably be true, but that's such a skewed way of interpreting the term that its nearly useless.
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Its very annoying if you actually study economics to read these threads and see how everyone talks about random solutions/problems without understanding the basic principles that lie underneath.
The main problem as has been said by multiple politicians is that the southern countries of europe aren't competitive anymore. They have to rework there economies to become competitive again and then there is no longer a problem. This means shortterm aid is necessary to help them bridge untill they can rework there economies. Also from a Dutch perspective, a big % of our export goes to southern Europe. So I always find it funny when people say 'they spend to much' while really we SOLD stuff to them.
Looking from a broader perspective, I think that Greece no longer belongs in the Euro. Its actually better for them to devaluate the currency at this point to invite tourists. Its still a beautiful country and this will help them to become solvant again in 8-10 years. Every country has different problems, Spain its mostly unemployment not debt, Italy has a huge debt but there yearly budget deficit was actually positive last 2-3 years. So they are already on the way out.
The way forward is to have people that actually know what has to be done, which is mainly the current top of the ECB and the politicians, have a bigger voice. So that populists who yell for ECB intervention won't become a majority. Because ECB stepping in will only hurt us more in the long run, its better to bleed now then to bleed in 10 years. This has always been Northern Europe's point of view, in contradiction to American/GB who just print moneys and try to keep the economy pumping that way.
And its a very complex problem, dont even get me started on why its bad that the banks are forced to take a loss on the government debt.
Also, I dont think there is a right or wrong in this discussion, Monetary economics is traditionally a debate between inflation and rent%. (hard-nosed vs wet-nosed). America has always been less caring about inflation and europe has always been more focused on keeping inflation down. Its a debate thats been going on for centuries and now both sides have different solutions again.
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On December 31 2011 02:30 caradoc wrote:Show nested quote +On December 31 2011 02:18 Klondikebar wrote:On December 31 2011 02:11 caradoc wrote:On December 31 2011 00:10 FuzzyJAM wrote:
We had a huge boom. Now we're having a huge bust.
The developed world is still far better off (on average) than it was a couple decades ago. People who thinks this is some unbelievable phenomenon that has ruined everything are wrong. In most of the developed world, people will live a somewhat less luxurious life for a decade or two and that's all there is to it. This depends completely on what you mean by 'better'-- yes, our GDP is higher, stock indices are higher, but real wages, standard of living/quality of life indices, are down for the vast majority of the population for nearly all of the 'developed world'. People seem to buy into the myth that economic growth is good for everyone-- this hasn't been true historically, at least in the 20th century in any obvious way except for a brief period from the mid 50s till the late 60s, at least in North America, coinciding with labour victories. The trend of GDP growth moving completely out of step with most quality of life indicators is strongest since the late 70s, and has been most pronounced in the past decade. Economic growth is absolutely good for everyone. Distribution (which can be caused by any number of things) is what effs people over. But by and large you're correct. In 1973 American standards of living started going down actually. A ton of stuff happened around that time so there's not a definitive cause but that's the year it all started. Also, thanks to Ricardian Equivalence, public and private debt aren't all that different. How is economic growth absolutely good for everyone? This doesn't make any sense to me. GDP is a measure of growth within the borders of a country. If you have a billionaire move into the country and open up a club which only allows millionaires in, and pays minimum wage to the peasantry that works there, and the millionaires that frequent this club decide to no longer frequent equivalent clubs who happen to cater to a wider clientelle and pay better than minimum wage, how does this equate to being better for anyone but the billionaire, and the billionaires who own the factories that he sources materials for his club from assuming they run equivalent business models? GDP will increase for the country, sure, that's economic growth, but for who? Especially when austerity measures are being rammed down everyone's throats and corporate taxes are at a level unseen since 1929 This is a very contrived example, but an apt description of our economy in simplistic terms.
Well I answered this above but GDP growth isn't REALLY a signal of economic growth. There's usually some correlation between the two so we're OK using it as a measure, but in reality you can't say "oh GDP went up, that's growth."
Real growth means an increase in the standard of living.
Also, the problem in your example (and quite arguably in the real world right now) is distribution, not growth. We wouldn't say that growth is bad, we would say that distribution is bad. Growth gives us more stuff, that's undeniably good. Distribution takes that new stuff away from some people and gives it to others, that's bad.
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On December 31 2011 02:38 Klondikebar wrote:Show nested quote +On December 31 2011 02:30 caradoc wrote:On December 31 2011 02:18 Klondikebar wrote:On December 31 2011 02:11 caradoc wrote:On December 31 2011 00:10 FuzzyJAM wrote:
We had a huge boom. Now we're having a huge bust.
The developed world is still far better off (on average) than it was a couple decades ago. People who thinks this is some unbelievable phenomenon that has ruined everything are wrong. In most of the developed world, people will live a somewhat less luxurious life for a decade or two and that's all there is to it. This depends completely on what you mean by 'better'-- yes, our GDP is higher, stock indices are higher, but real wages, standard of living/quality of life indices, are down for the vast majority of the population for nearly all of the 'developed world'. People seem to buy into the myth that economic growth is good for everyone-- this hasn't been true historically, at least in the 20th century in any obvious way except for a brief period from the mid 50s till the late 60s, at least in North America, coinciding with labour victories. The trend of GDP growth moving completely out of step with most quality of life indicators is strongest since the late 70s, and has been most pronounced in the past decade. Economic growth is absolutely good for everyone. Distribution (which can be caused by any number of things) is what effs people over. But by and large you're correct. In 1973 American standards of living started going down actually. A ton of stuff happened around that time so there's not a definitive cause but that's the year it all started. Also, thanks to Ricardian Equivalence, public and private debt aren't all that different. How is economic growth absolutely good for everyone? This doesn't make any sense to me. GDP is a measure of growth within the borders of a country. If you have a billionaire move into the country and open up a club which only allows millionaires in, and pays minimum wage to the peasantry that works there, and the millionaires that frequent this club decide to no longer frequent equivalent clubs who happen to cater to a wider clientelle and pay better than minimum wage, how does this equate to being better for anyone but the billionaire, and the billionaires who own the factories that he sources materials for his club from assuming they run equivalent business models? GDP will increase for the country, sure, that's economic growth, but for who? Especially when austerity measures are being rammed down everyone's throats and corporate taxes are at a level unseen since 1929 This is a very contrived example, but an apt description of our economy in simplistic terms. Well I answered this above but GDP growth isn't REALLY a signal of economic growth. There's usually some correlation between the two so we're OK using it as a measure, but in reality you can't say "oh GDP went up, that's growth." Real growth means an increase in the standard of living. Also, the problem in your example (and quite arguably in the real world right now) is distribution, not growth. We wouldn't say that growth is bad, we would say that distribution is bad. Growth gives us more stuff, that's undeniably good. Distribution takes that new stuff away from some people and gives it to others, that's bad.
yes, true. I edited my post above just now.
My contention I suppose is the usage of the term 'economic growth' as a proxy for standard of living. We can define growth as standard of living, and I think it would be a justified writing back of the term, but the vast majority of its use in popular discourse is as a feel-good analogue to GDP which results in people supporting policies which neglect quality of life but increase GDP with the tacit and misguided belief that quality of life increases will result.
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On December 31 2011 02:43 caradoc wrote:Show nested quote +On December 31 2011 02:38 Klondikebar wrote:On December 31 2011 02:30 caradoc wrote:On December 31 2011 02:18 Klondikebar wrote:On December 31 2011 02:11 caradoc wrote:On December 31 2011 00:10 FuzzyJAM wrote:
We had a huge boom. Now we're having a huge bust.
The developed world is still far better off (on average) than it was a couple decades ago. People who thinks this is some unbelievable phenomenon that has ruined everything are wrong. In most of the developed world, people will live a somewhat less luxurious life for a decade or two and that's all there is to it. This depends completely on what you mean by 'better'-- yes, our GDP is higher, stock indices are higher, but real wages, standard of living/quality of life indices, are down for the vast majority of the population for nearly all of the 'developed world'. People seem to buy into the myth that economic growth is good for everyone-- this hasn't been true historically, at least in the 20th century in any obvious way except for a brief period from the mid 50s till the late 60s, at least in North America, coinciding with labour victories. The trend of GDP growth moving completely out of step with most quality of life indicators is strongest since the late 70s, and has been most pronounced in the past decade. Economic growth is absolutely good for everyone. Distribution (which can be caused by any number of things) is what effs people over. But by and large you're correct. In 1973 American standards of living started going down actually. A ton of stuff happened around that time so there's not a definitive cause but that's the year it all started. Also, thanks to Ricardian Equivalence, public and private debt aren't all that different. How is economic growth absolutely good for everyone? This doesn't make any sense to me. GDP is a measure of growth within the borders of a country. If you have a billionaire move into the country and open up a club which only allows millionaires in, and pays minimum wage to the peasantry that works there, and the millionaires that frequent this club decide to no longer frequent equivalent clubs who happen to cater to a wider clientelle and pay better than minimum wage, how does this equate to being better for anyone but the billionaire, and the billionaires who own the factories that he sources materials for his club from assuming they run equivalent business models? GDP will increase for the country, sure, that's economic growth, but for who? Especially when austerity measures are being rammed down everyone's throats and corporate taxes are at a level unseen since 1929 This is a very contrived example, but an apt description of our economy in simplistic terms. Well I answered this above but GDP growth isn't REALLY a signal of economic growth. There's usually some correlation between the two so we're OK using it as a measure, but in reality you can't say "oh GDP went up, that's growth." Real growth means an increase in the standard of living. Also, the problem in your example (and quite arguably in the real world right now) is distribution, not growth. We wouldn't say that growth is bad, we would say that distribution is bad. Growth gives us more stuff, that's undeniably good. Distribution takes that new stuff away from some people and gives it to others, that's bad. yes, true. I edited my post above just now. My contention I suppose is the usage of the term 'economic growth' as a proxy for standard of living. We can define growth as standard of living, and I think it would be a justified writing back of the term, but the vast majority of its use in popular discourse is as a feel-good analogue to GDP which results in people supporting policies which neglect quality of life but increase GDP with the tacit and misguided belief that quality of life increases will result.
Well politicians have never understood economics so it's no surprise that they confuse GDP with true growth. And most classical economists do define growth as a measured increase in the standard of living...it's not a new or even obsolete definition. If you use an increase in GDP to mean growth in any discourse, you're just wrong. You're just using the wrong words. A lot of people do it but they aren't correct.
I guess maybe in the finance world they might use the two as the same thing...I'm not sure. I sit in the economics camp.
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