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Why Economic Growth Will Fall

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Re: Why Economic Growth Will Fall

#111

Post by tome »

allendoerfer wrote: post #108
tome wrote: post #105

Earlier quoted context omitted.

Why and how does our economy depend on growth? I've head this claimed a lot but never understood it.

You buy a stock, create a company, build a house, because you expect it to increase in value and be a worthwhile investment. If growth stops it will be increasingly hard to do this, because all stocks that are still increasing in value will be bought up, until they cannot anymore. So you keep your money. Deflation. System collapse.

OK, that's a rough argument that needs fleshing out. Has the rigorous argument actually been made and is widely accepted by economists or is this just a meme that's accepted and repeated without much basis?

Re: Why Economic Growth Will Fall

#112

Post by swiftisthebest »

tome wrote: post #105
mark_l_watson wrote: post #68

Our economy depends on growth, and I think this will cause lots of problems. I saw a quote by a US congressman blaming young people today for our financial problems because many of them are unwilling to put themselves into debt for homes, cars, etc. An outrageous statement, blaming people for doing what they believe to be in their own self interest. If the value of production mostly stayed with the people and local b…

Why and how does our economy depend on growth? I've head this claimed a lot but never understood it.

What living being can survive without growth?

Re: Why Economic Growth Will Fall

#113

Post by yummyfajitas »

hx87 wrote: post #100
bluetomcat wrote: post #55

Earlier quoted context omitted.

Getting educated in what? Corporate law, advertising and marketing, journalism, HR, French literature... If most of these jobs are replaced by proper blue-collar occupations, we would see far more tangible results – most importantly, cheaper construction and housing.

It's difficult to make construction in the USA cheaper without greater acceptance of prefabrication and panelization in the residential sector and lowering of permitting costs.

Not to mention breaking public sector unions, eliminating "Buy American" provisions, and just generally removing all the unique things that no one else in the world does.

Delhi built phase 2 of her metro for $2.9B in 3 years (85 stations, 77 miles of track). NYC build Hudson Yards in 9 years for $2.5B (1 station, 1 mile of track).

Various tricks: Delhi didn't wildly overhire and overpay workers, they bought standard train cars/other equipment from Japanese and German corporations that have a proven record in supplying such things, and eliminated a bunch of red tape. It's almost as if Delhi built a metro with the goal of having a metro rather than with the goal of funneling money to MTA workers.

Re: Why Economic Growth Will Fall

#114

Post by dv_dt »

objectivistbrit wrote: post #40
skywhopper wrote: post #24

I agree that it's impossible for the rates of economic growth and lifestyle improvements we saw since the late 1800s to continue indefinitely, but the key to growth is investment. And from the late-1800s till the mid-1900s, there were huge government investments made in building new and innovative infrastructure in the US--railroads, the phone network, state universities and K-12 public education, electricity generat…

> And from the late-1800s till the mid-1900s, there were huge government investments made in building new and innovative infrastructure in the US--railroads, the phone network, state universities and K-12 public education, electricity generation and distribution, highways, airports. Excluding the world wars, US government spending was much lower during that period than it is today. It increased greatly with the New D…

Can you really exclude the wars? Wasn't a huge amount industrial infrastructure built up during WWII, and then re-used at a lower capital cost basis by industry for future production?

Re: Why Economic Growth Will Fall

#115

Post by paganel »

hx87 wrote: post #98
paganel wrote: post #91

Earlier quoted context omitted.

> You do realize that crop yields have grown exponentially as well? I do realize that, yes, only that nowadays people are not content with only eating bread and making it to the next day (which, I agree, we have enough resources for) but they instead want to have a "Western"-style of life, meaning middle or higher education, a car, some electronics (phones, TVs), air-conditioning etc. I'd say our planet doesn't have…

> air conditioning It's just a pet peeve of mine, but why is so much blame placed on air conditioning, when heating uses an order of magnitude more energy?

I don't necessarily "blame" air-conditioning, it's just that in order to have AC you need to have a functional power distribution network that works at country level, which in turn requires having the initial capital for building it and then (I say most importantly) the necessary political and economical stability in place in order to raise the power distribution poles and, generally speaking, keeping the power distribution network up and running.

I know that us people in the "West" now take this for granted, but I'd say that in a great part of the world the conditions for putting that in place will not be met in the next 30-50 years.

I speak from first-hand experience (I spent my childhood in communist Eastern Europe in the '80s, when the going got tough) but one of the first things to go when a regime/society is economically and politically crumbling is the power distribution, meaning country-level power black-outs.

Re: Why Economic Growth Will Fall

#116

Post by crimsonalucard »

evgen wrote: post #9
crimsonalucard wrote: post #2

This. Finally. People on HN think that startups, technology and economic growth have unlimited potential. This is pure stupidity at its finest. Observations of the natural world show a general trend: that everything, from physical resources to energy has limits. It is a mistake to believe that this general observation does not apply to technology and the human imagination. While we can comprehend what a limit in oil…

This sort of dystopian hand-wringing seems to have a certain cachet aomong some crowds, but seems to mostly stem from profound ignorance and a failure of the same imagination you find so limited. What makes humans different than all of the other parts of the natural world is that same imagination and technology that you seem to fundementally misunderstand. We can change our environment, and more importantly we can ch…

>Imagination itself is only limited by our technological progress and there are few limits beyond physics itself to stop us there.

What is the difference between the natural world and physics? I would argue that there is no difference. I use the language "natural world" as a synonym for "the nature of existence" and "physics." I would assume that in your vernacular, the meaning is the same.

Thus your own statement above validates My argument. You state physics limits technology and technology limits the imagination. Thus in turn imagination is limited by physics. This is exactly my argument.

Re: Why Economic Growth Will Fall

#118

Post by mason240 »

collyw wrote: post #42
cheriot wrote: post #25

Earlier quoted context omitted.

Well, we can produce what was considered enough back then without working so much. People just keep want more, more, more.

Most people under 40 can't afford a house in many western countries. Compared to 20 years ago, most people could (at least in the two countries I am familiar with - the UK or Spain). The very rich seem to be doing OK though.

It's not true in the US anyway.

Re: Why Economic Growth Will Fall

#119

Post by riskneural »

tome wrote: post #111
allendoerfer wrote: post #108

Earlier quoted context omitted.

You buy a stock, create a company, build a house, because you expect it to increase in value and be a worthwhile investment. If growth stops it will be increasingly hard to do this, because all stocks that are still increasing in value will be bought up, until they cannot anymore. So you keep your money. Deflation. System collapse.

OK, that's a rough argument that needs fleshing out. Has the rigorous argument actually been made and is widely accepted by economists or is this just a meme that's accepted and repeated without much basis?

Adam Smith makes the argument well in A Wealth of Nations. Essentially, the only reason to invest is that you expect to earn something above on top of the risk. Then add that up over everybody in the system. They cannot all get something extra, unless there is growth. That growth is spread over everybody as return on investment. So, if there is no growth, then investment stops earning that extra, so there no point in investment, so nobody hires anybody or builds new machines.

Importantly, it's growth in total value, not growth in number of things. Hence, it's okay that growth is infinite without gobbling up the universe - we can always be better. Stuff can always be sexier.

Re: Why Economic Growth Will Fall

#120

Post by norea-armozel »

collyw wrote: post #20
wildmusings wrote: post #12

There are many breakthroughs waiting to be made in medicine, energy production, geoengineering, space exploration, transportation, etc. Automation and AI will increase productivity and leisure time, which will allow the market for entertainment, travel, and luxury to grow much larger than today, and be accessible to many more people. But if we succumb to this pessimism, it will be a self-fulfilling prophecy.

"Automation and AI will increase productivity and leisure time". We got told this in the 70's (the automation part at least), yet seem to be working more and more hours now.

Mostly because it's the gains from automation that goes to Wall Street and not Main Street. The idea that you or I could personally enjoy the benefits of automation beyond the trivial devices we buy (IoTs, Washers/Dryers, etc) frightens the capital owners because that means we too could be competition. We too could produce for our own needs and not their designs on our needs. Keeping us away from automation is as much important to the capital owners as them utilizing it to reduce labor inputs to grow their expected ROI. It's a strange situation I think Wall Street has found itself in. It needs automation but equally fears the outcome of it (where people just take automation away from them and care for themselves).
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