"The earliest attribution to Napoleon known ... appeared in 1998. Yet, the Emperor died in 1821. The long delay means that the linkage to Napoleon currently has no substantive support."
I imagine Vollrath mentions this (because he works with Charles Jones) but when it comes to services as we get richer we spend more on longevity (geriatric healthcare) which is not a source of growth.
I thought this might interest you - an argument that AI is currently causing what looks like productivity growth because it has created demand and that has increased capital and labour utilisation rates:
Piketty provides a compelling analysis of the factors driving growth and capital accumulation, and active population is the exponential component. If working population declines we lose the economic relations between the economic actors even faster. We need workers and consumers who value products and services that don't burn the earth's resources.
Really good piece as always. The politics are crucial because we didn’t have universal suffrage in the Victorian era (one of several reasons why they built so much, including not being overly concerned with safe working environments ) and the attempt to combine small government with universal suffrage in the inter war period went so well that Attlee won in 1945. The state has to be better at helping people to adapt if we are going to engage in radical change unless we want to go down the authoritarian route .
I agree with the proposition that economic growth or productivity growth requires more than tinkering. However the fundamental question is growth to what end and for whose benefit? . We know or should know by now that the prevailing “market” prescription to slash welfare and cut taxes is just nonsense. Society , yes I think it exists, is more than a market. We are not all consumers despite the dizzying commodification of everything. What is an economy for, the needs of a human and decent existence or the optimisation of capital? More of the same and tinkering is in my view for the benefit of the owners of capital, and from an income inequality perspective , for a large section of the UK population it has never been so good. Hence the desire to keep the whole shitshow on the road for as long as possible , even by those stupid enough to think bringing down the shitshow will change anything for them.
Now there are are plenty of examples to show how gdp growth has transformed the lives of people from Asia to Europe to parts of Africa. But but but for our wonderful developed economies it has been growth that was underpinned by a totally unsustainable energy system that we now know is the greatest risk and real threat facing all our futures and for those yet unborn. If there are lessons to be learned from the so called stagnation nation Japan , it is that a society does not collapse because of low growth rates, it collapses because of self limiting beliefs and an inability to accept new realities. A case in point? The USA. The UK can be a thriving, dynamic, decent and sustainable society one but only if enough people wise up to the GDP growth con story. Transforming income and wealth inequality in all its manifestations is the only way forward. Growing the economy is I suggest second place to a sharing and dare I say caring economy. They are not mutually exclusive.
«After WWII there was a concatenation of circumstances uniquely favourable to fast growth: a backlog of civilian innovations; a need to rebuild housing and physical capital; declining trade barriers; an absence of major financial crises until 1973; strong wage growth encouraging capital-labour substitution and (perhaps) a confidence that aggregate demand would remain high thereby justifying big capital spending.»
For some reason thatcherite "abundancers" rarely mention the overwhelming role in increasing productivity first of coal and after WW2 of oil. It is always a moral "just-so" story of the wonders of "whig" technocratic thatcherism:
«backlash against liberal migration, funding of universities and membership of the single market [...] create the conditions in which sensible technocratic policy-making is even possible.»
Regardless of whether technocratic "whig" thatcherism is the best recipe to let "wealth creators" create more abundance for themselves there is a serious anti-growth issue that (as our blogger mentioned previously) Kalecki wrote about in 1943: growth results in full employment and thus too much leverage for workers in wage negotiations.
I guess that "abundancers" know that well and that is why they recommend to "moderate" wage inflation with mass immigration and mass offshoring.
As externalities build up in the Earth's closed system (CO2, N, P, plastic, etc.) growth inevitably must grind to a halt and go negative. Either taxes will rise sharply to adapt and recoup losses. Or economies will decline as fewer have jobs and can afford the riches of a developed economy.
Either way, growth for the masses is now over - for good.
“Economic growth” isn't the same thing as human prosperity. GDP measures the market value of final goods and services produced, not individual well-being. A rising GDP can coexist with monetary inflation, debt expansion, government spending, and increasing government control.
Prosperity is not produced by a rising statistic; it rests upon saving, sound money, investment, entrepreneurship, private property, and voluntary exchange. It requires removing the obstacles government imposes.
Taxation, regulation, monetary manipulation, deficit spending, and political privilege distort the market and undermine saving, investment, and entrepreneurship.
The answer to stagnation is therefore not more sophisticated economic management, but less political interference and more economic freedom. Centrist tinkering isn't enough—but neither is technocratic radicalism.
"The earliest attribution to Napoleon known ... appeared in 1998. Yet, the Emperor died in 1821. The long delay means that the linkage to Napoleon currently has no substantive support."
https://quoteinvestigator.com/2022/11/07/age-twenty/
I imagine Vollrath mentions this (because he works with Charles Jones) but when it comes to services as we get richer we spend more on longevity (geriatric healthcare) which is not a source of growth.
I thought this might interest you - an argument that AI is currently causing what looks like productivity growth because it has created demand and that has increased capital and labour utilisation rates:
https://cepr.org/voxeu/columns/higher-utilisation-explains-recent-surge-productivity-growth
Maybe what the UK needs is a kick up the demand ass
I'm becoming a big fan, Chris. Your essays on economics cover topics and analyses I simply don't find elsewhere. Keep it up!
Piketty provides a compelling analysis of the factors driving growth and capital accumulation, and active population is the exponential component. If working population declines we lose the economic relations between the economic actors even faster. We need workers and consumers who value products and services that don't burn the earth's resources.
I am unpersuaded by casual dismissal of the impact of massive, and still growing, inequality.
Distribution. Matters.
Really good piece as always. The politics are crucial because we didn’t have universal suffrage in the Victorian era (one of several reasons why they built so much, including not being overly concerned with safe working environments ) and the attempt to combine small government with universal suffrage in the inter war period went so well that Attlee won in 1945. The state has to be better at helping people to adapt if we are going to engage in radical change unless we want to go down the authoritarian route .
I agree with the proposition that economic growth or productivity growth requires more than tinkering. However the fundamental question is growth to what end and for whose benefit? . We know or should know by now that the prevailing “market” prescription to slash welfare and cut taxes is just nonsense. Society , yes I think it exists, is more than a market. We are not all consumers despite the dizzying commodification of everything. What is an economy for, the needs of a human and decent existence or the optimisation of capital? More of the same and tinkering is in my view for the benefit of the owners of capital, and from an income inequality perspective , for a large section of the UK population it has never been so good. Hence the desire to keep the whole shitshow on the road for as long as possible , even by those stupid enough to think bringing down the shitshow will change anything for them.
Now there are are plenty of examples to show how gdp growth has transformed the lives of people from Asia to Europe to parts of Africa. But but but for our wonderful developed economies it has been growth that was underpinned by a totally unsustainable energy system that we now know is the greatest risk and real threat facing all our futures and for those yet unborn. If there are lessons to be learned from the so called stagnation nation Japan , it is that a society does not collapse because of low growth rates, it collapses because of self limiting beliefs and an inability to accept new realities. A case in point? The USA. The UK can be a thriving, dynamic, decent and sustainable society one but only if enough people wise up to the GDP growth con story. Transforming income and wealth inequality in all its manifestations is the only way forward. Growing the economy is I suggest second place to a sharing and dare I say caring economy. They are not mutually exclusive.
«After WWII there was a concatenation of circumstances uniquely favourable to fast growth: a backlog of civilian innovations; a need to rebuild housing and physical capital; declining trade barriers; an absence of major financial crises until 1973; strong wage growth encouraging capital-labour substitution and (perhaps) a confidence that aggregate demand would remain high thereby justifying big capital spending.»
For some reason thatcherite "abundancers" rarely mention the overwhelming role in increasing productivity first of coal and after WW2 of oil. It is always a moral "just-so" story of the wonders of "whig" technocratic thatcherism:
«backlash against liberal migration, funding of universities and membership of the single market [...] create the conditions in which sensible technocratic policy-making is even possible.»
Regardless of whether technocratic "whig" thatcherism is the best recipe to let "wealth creators" create more abundance for themselves there is a serious anti-growth issue that (as our blogger mentioned previously) Kalecki wrote about in 1943: growth results in full employment and thus too much leverage for workers in wage negotiations.
I guess that "abundancers" know that well and that is why they recommend to "moderate" wage inflation with mass immigration and mass offshoring.
As externalities build up in the Earth's closed system (CO2, N, P, plastic, etc.) growth inevitably must grind to a halt and go negative. Either taxes will rise sharply to adapt and recoup losses. Or economies will decline as fewer have jobs and can afford the riches of a developed economy.
Either way, growth for the masses is now over - for good.
An extraordinary interesting post, thank you.
(What a prescient comment by Mill!)
Good thought-provoking post. Thank you.
“Economic growth” isn't the same thing as human prosperity. GDP measures the market value of final goods and services produced, not individual well-being. A rising GDP can coexist with monetary inflation, debt expansion, government spending, and increasing government control.
Prosperity is not produced by a rising statistic; it rests upon saving, sound money, investment, entrepreneurship, private property, and voluntary exchange. It requires removing the obstacles government imposes.
Taxation, regulation, monetary manipulation, deficit spending, and political privilege distort the market and undermine saving, investment, and entrepreneurship.
The answer to stagnation is therefore not more sophisticated economic management, but less political interference and more economic freedom. Centrist tinkering isn't enough—but neither is technocratic radicalism.