Why Economic Growth Will Fall • Hacker News Board

Re: Why Economic Growth Will Fall

#161

Post by georgeecollins » Mon, Aug 01, 2016, 11:50 PM UTC

splintercell wrote: post #88

georgeecollins wrote: post #56

Thomas Piketty is so important about this because he shows how exceptional America was in that it had plentiful capital in terms of land, so that labor was unusually valuable vs capital when compared to Europe. It shapes American's thinking in a positive way, but we need to acknowledge things have changed. Formerly, almost anyone who was willing to work hard and take a risk could build a homestead. Now the conditions…

> Now the conditions for opportunity are available but more restricted. Restricted, yet it beats rest of the world hands down in terms of opportunities. When the rest of the world looks at America, they just see a nation which got lucky with land and capital. But the fact is, America had people before it was discovered by the Europeans, and there was no great civilization here unlike almost everywhere else in the wor…

I didn't mean to disparage the U.S.A., just to share Piketty's point that it was particularly exceptional two hundred years ago because of reasons of geography and development.

Re: Why Economic Growth Will Fall

#162

Post by georgeecollins » Mon, Aug 01, 2016, 11:53 PM UTC

snowwrestler wrote: post #155

georgeecollins wrote: post #56

Thomas Piketty is so important about this because he shows how exceptional America was in that it had plentiful capital in terms of land, so that labor was unusually valuable vs capital when compared to Europe. It shapes American's thinking in a positive way, but we need to acknowledge things have changed. Formerly, almost anyone who was willing to work hard and take a risk could build a homestead. Now the conditions…

With respect to Piketty, the industries in which the U.S. is a world leader today include finance, entertainment, software, pharmaceuticals, and industrial equipment. None of these depend on the availability of land or other physical capital.

That is totally orthogonal to his point. He isn't talking about what industries succeed. He is making that point that because land was relatively cheap, labor was relatively valuable.

Re: Why Economic Growth Will Fall

#163

Post by georgeecollins » Mon, Aug 01, 2016, 11:56 PM UTC

badsock wrote: post #106

splintercell wrote: post #88

Earlier quoted context omitted.

> Now the conditions for opportunity are available but more restricted. Restricted, yet it beats rest of the world hands down in terms of opportunities. When the rest of the world looks at America, they just see a nation which got lucky with land and capital. But the fact is, America had people before it was discovered by the Europeans, and there was no great civilization here unlike almost everywhere else in the wor…

That belief is widespread in America, but is unsupported by data. If you look at how hard it is for an American to rise out of the conditions they were born in, they're worse off than if they'd been born in (for example) France, Germany, Canada, or Denmark: https://en.wikipedia.org/wiki/File:Intergenerational_mobilit... From: https://en.wikipedia.org/wiki/Economic_mobility (see the "Worldwide" section).

Piketty's work was a history of the previous century. You are pointing out current statistics, which make his point that things have changed.

Re: Why Economic Growth Will Fall

#164

Post by wildmusings » Tue, Aug 02, 2016, 12:54 AM UTC

internaut wrote: post #85

wildmusings wrote: post #31

Earlier quoted context omitted.

> Very-low cost higher education was a thing in mid-20th-century America--it was possible to attend your in-state university for a few thousand bucks in today's dollars. What happened? As long as we pretend these things are too expensive to invest in, then we're sure to enter a long slow decline. I don't think your point about education makes sense. You want more investment, but then bemoan the fact that it costs mor…

> People are investing in their education at record levels! They are investing in formal qualifications . Certificates. As Thiel points out, a university degree has transmogrified from "investment" to "insurance" to "tournament". The reality is that the previous generation knows jack shit about the environment facing the current generation. Their 'common sense' can be thrown out nearly entirely with few exceptions. I…

I agree actually, but state funding of higher education, as the GP is suggesting, would probably only further cement the current broken system.

Re: Why Economic Growth Will Fall

#165

Post by placebo » Tue, Aug 02, 2016, 1:28 AM UTC

crimsonalucard wrote: post #137

placebo wrote: post #11

Earlier quoted context omitted.

While it's definitely true that many a time certain crowds tend to have lost touch with reality regarding the potential of a specific activity (as illustrated in repeated economic bubbles), to say that economic growth is limited suggests that economy is in principle a zero sum game. I don't believe that to be the case. Any attempt to predict the absolute limits of economic potential is an attempt to limit the potenti…

All observations point to limits and thus suggest that reality and therefore the economy is a zero sum game. You talk as if limiting reality doesn't make any sense when scientific observation describes a reality that is in fact limited. Conservation of energy, conservation of mass, the speed of light, these are limits built into the fabric of existence.

I think it's a bit premature to conclude we have uncovered what the fabric of existence is made of. History has repeatedly shown we have no idea how much we don't know (just until recently we thought we understood more or less what the universe is made of and we now realise we understand less than 5% of it) and the reality keeps delivering surprises.

But just for the sake of the argument, let's suppose we do know how everything works. There's enough matter and energy out there to supply endless economic growth if creative minds continue to come up with ideas on how to leverage it.

Besides that, from a quick research, I see many economists with a much deeper understanding in economy then myself are convinced that economy isn't a zero sum game. This doesn't necessarily make it true, but I'd study their claims before dismissing it.

Re: Why Economic Growth Will Fall

#166

Post by skybrian » Tue, Aug 02, 2016, 1:30 AM UTC

tome wrote: post #122

skybrian wrote: post #121

Earlier quoted context omitted.

Here's an interesting theoretical argument that growth can't continue forever (not saying this applies now): "[I]f energy became arbitrarily cheap, someone could buy all of it, and suddenly the activities that comprise the economy would grind to a halt. Food would stop arriving at the plate without energy for purchase, so people would pay attention to this. Someone would be willing to pay more for it. Everyone would.…

That doesn't seem to have anything to say about growth.

Well, it does. If there is a limit on how small X can be as a percentage of the total economy (because we value it), and the amount of X that can be produced is finite, this puts a limit on the size of the total economy.

Re: Why Economic Growth Will Fall

#167

Post by mcguire » Tue, Aug 02, 2016, 2:03 AM UTC

petra wrote: post #142

riskneural wrote: post #119

Earlier quoted context omitted.

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…

The problem with this argument is that it mixes global effects and personal effects. A person could have an appealing investment - for example building a more attractive fruit shop, with better customer service - taking all the sales from the current fruit shop . But the GDP will remain the same.

You are describing a zero-sum game.

Re: Why Economic Growth Will Fall

#168

Post by eru » Tue, Aug 02, 2016, 3:03 AM UTC

gutnor wrote: post #60

eru wrote: post #13

Earlier quoted context omitted.

Oh, there are some very simple adjustments we could make right now (without even any new technology) to get a great amount of real growth. Just open some pretty standard economics textbooks: On the demand side: target nominal GDP to all but eliminate recessions. (Or at least target the long term growth of the price level instead of letting bygones be bygones.) On the supply side: completely shift the tax burden from…

> start with silly zoning laws perhaps Why not keep them and invest in remote working instead of packing even more people in major cities. You probably work most of your time with remote people anyway and tech is definitively there. Also it is a lot easier to organise plenty of small towns (think hospital, school, road infrastructure, ...) rather than a megacity where you can have literally thousands of people per bl…

Let the people who want to be packed live in major cities. Than we have more space left over for people who prefer sparser living.

Singapore and Hong Kong seems pretty well organised. Even other big cities like New York seem to work reasonably well on an organisational level. Hospitals, schools, road infrastructure are more efficient with shorter distances and diversified over more people's demand.

Re: Why Economic Growth Will Fall

#169

Post by vivekd » Tue, Aug 02, 2016, 3:20 AM UTC

allendoerfer wrote: post #148

psadri wrote: post #144

Earlier quoted context omitted.

Same goes for food, etc. my point was that not everything has to be for financial gain -- we have basic needs that are higher in the priority stack and will always be there. About homes specifically - they have a life span too so they eventually have to be rebuilt or, as others have pointed out, maintained.

But who would want to own a company producing food, when owning cash would be a better investment?

There has got to be some ways in which this basic economic assumption is wrong. Like with cars, I can buy a car and when I sell the car it will be worth much less. But I will buy that car anyways because I need a car.

Or for a business perspective, I buy a dairy cow as an investment, when I sell the cow it will be worth much less than what I bought it for, but I don't mind because the cow has provided a steady stream of milk based income over the years.

So in these ways at least, it doesn't seem like economic prosperity is always dependent on growth.

Maybe in some economic circumstances cash might be a better investment or worth more than my dairy cow, but such a circumstance can't last for long because supply and demand affect money too right - so if enough people get rid of their dairy cow for the cash, eventually that would decrease the supply of milk, increasing price which would put me and my milk business back on top again would it not?

Re: Why Economic Growth Will Fall

#170

Post by crimsonalucard » Tue, Aug 02, 2016, 3:23 AM UTC

elcapitan wrote: post #8

piaste wrote: post #4

Earlier quoted context omitted.

This is some of the shallowest, most misleading insight I've ever read. "Human achievement will probably reach a limit at some point" is effectively an empty statement. Even if you could take its truth for granted, it is completely useless information. There is zero actionable difference between a limit that doesn't exist, and a limit that is unknowable and unguessable. Your behaviour should stay exactly the same eit…

The simple logical flaw in GP's argumentation is that it summarizes rather abstract phenomena (human inventions, potential of startups) to compare it against concrete, limited phenomena (oil production). To make that jump, that assumption would have to be proven.

It is only seemingly a flaw. Concrete phenomena and abstract phenomena are in fact the same thing. For abstract phenomena to even exist they must be concrete and thus limited by the concreteness of the physical world.