It's just to say: 1. productivity is always very misunderstood by people (hence Malthus); 2. poverty is better fought with growth, not re-distribution of wealth
Over the last 20 years the U.S. economy has grown 25% but the income for the bottom quintile has stagnated.[1][2]
I would agree growth is probably the best medicine for the third world but the IMF shows it's not at odds with redistribution.
I would strongly disagree that we can solve poverty in the 1st world using growth. We have two options for replacing the $7,000 the bottom quintile missed out on in the last 20 years because of rising inequality. We could redistribute $7,000 to the bottom quintile or grow by 25%. Redistributing $7,000 is doable. I don't know of any policies, or even any set of policies that would increase the size of the economy by 25%. This is even more insurmountable given that in recent history the gains from growth have not been distributed equitably. We would need to see an order of magnitude more growth, an increase in the economy of 250%-500% before the poor would be substantially better off.
[0] - https://www.imf.org/external/pubs/ft/sdn/2014/sdn1402.pdf [1] - https://research.stlouisfed.org/fred2/series/A939RX0Q048SBEA [2] - https://www.census.gov/hhes/www/income/data/historical/famil...
The growth over the last 20 years is much less than before, which is a likely cause of the increasing inequality. In a zero-sum economy, trade tends to concentrate wealth.[1] Growth is plausibly strong enough to counteract this, and historically, is overwhelmingly correlated with falling inequality.
Policy is much weaker than growth at doing anything. I personally favor progressive taxation and a basic income, and I think we can continue to improve the effectiveness of policy, but governments (and humans generally) don't have so much freedom in economic matters as is often supposed.[2][3]
Free trade doesn't cause growth (as ten thousand years of history prior to 1800 shows) but it may be a necessary condition for it.
[1] http://nbviewer.ipython.org/url/norvig.com/ipython/Economics... [2] https://plus.google.com/+CarlLumma/posts/T2fdtAHtU9W [3] https://plus.google.com/+CarlLumma/posts/fWhcsTxvZVM
Income remaining stagnant or going down for bottom quintile is not really a problem. When you look at the economy over decades what truly matters is the quality of life people could afford at that time compared to 20 years back despite being in the same quintile. That is going consistently up thanks to the efficiency brought in by the growth. A focus on redistribution might help the bottom quintile temporarily but it would hurt the efficiency of economy by moving the money from private hands to government hands. This hurts not just the poor people but also the middle class and rich.
I linked to a paper by the IMF where they could not find any evidence that redistribution hurt growth.
To my knowledge GDP captures changes in efficiency. If we become more efficient we produce more stuff. What efficiency changes do you think are invisible to GDP but make the poor's life significantly better?
If we want to help the "poor", then we should make things more competitive, starting with relaxing immigration policies as much as possible...
It has very little real effect on middle income taxpayers who both pay for and receive it, because in the middle range the benefit cancels the tax.
And the consequence for immigrants is hugely advantageous to nearly everyone. The problem we have today is that we have a large number of undocumented immigrants, which consume the capacity we have to absorb immigrants and therefore reduce the number of documented immigrants we can reasonably accept.
Something that makes it economically infeasible to be an undocumented immigrant would allow us to accept that many more documented immigrants through official channels and give them the basic income, thereby allowing much the same people to immigrate, modulo the few criminals who can't pass the background check and we don't want anyway. And then they're above board and don't have to live in the shadows, which is clearly much better for them. But meanwhile it allows us to affirmatively choose how much immigration we want instead of having people who break the law choose for us.
Not all the growth come from free markets. More efficient use of resources and the discovery of new technologies come from improving our knowledge. Sometimes this is done by business, sometimes no.
Also, there are economic theories (even mainstream economic theories) that express the view that some kind of redistribution is necessary for keeping the engines of growth working.
Anyway, concentration of wealth seems to reduce growth. No idea what way causation points, but your advice against redistribution look very naive.
1. Fortunately, longer schooling and birth control has reduced the rate of growth in the model of Malthus. This is dumb luck, not divination from GDP.
2. Please remember that we won WWII and went to the moon in the periods with highest marginal tax rates. Growth is probably highest with higher rates of taxation and government investment in R&D.
This is a clear failure in understanding of the exponential function.
A hunter gather lifestyle from 10,000 years ago takes ~0.5-5$/day in food assuming everything else [ed: produced 10,000 years ago] has zero value. US Per capita GDP = ~125$ / day. Actual growth per year is on the order of 0.04% / year
PS: Remember meat more than 1$/lb. For much of human history per capita GDP by todays measurements was actually dropping.
Ah, so if you ignore almost everything, you have a point. Like, for example 99% of the people on the planet. Because there is no way a hunter-gatherer system could support our population.
Not to mention I for one think not dying of the common cold has quite a lot of value.
Child care for example has actual value which is part of current US GDP. A bow, tent, or clothing constructed using methods from 10,000 years ago has real world value today. But, I am calling all that 0 and just looking at food.
Also, this is per capita GDP, having more people does not mean peoples standards of living automatically increases.
PS: The common cold was not an issue back then as the population was to low to spread it around. In fact a large chunk of diseases only showed up as population density increased.
Generally when you're doing data analysis and some textbook curve pops out, that's a very strong indication you've screwed up your data, not that you've actually discovered anything. Far more likely despite attempts at short term correction the value of a supposedly fixed standard 1990 international dollar inflated exponentially over the past century or so, on a long enough scale. Once that correction is made, the data could be re-run to gather actual, useful results. Or rather than using inflation adjusted counters, just pick a valuable commodity like gold. Supposedly an ounce of gold has represented a year of labor from the dawn of trade up to the invention of steam powered mine pumps. A graph vs gold price might be useful. Or a hybrid of gold/oil for more recent stats.
Its fun to watch the debate about the "before" clause, as if the precise fraction or integer matters in the long run, when the real problem is nobody wants to face the reality of chopping off the entire "before" clause.
Once we stop economically extracting cheap oil energy, resulting in a roll back of the green revolution productivity gains, in a couple years at best its game over for about 95% of present humanity. Good thing the supply of cheap oil is infinite, right?
For readability I recommend a logarithmic graph, it helps to bring out the structure of the graph more. Not as dramatic maybe for people who are not used to reading graphs, but I hate to see a graph that is just a thin line stuck to the bottom followed by a sudden upward rocket. Not very readable to my eyes.
Pessimist: Look how good things have been, we're clearly only a few generations away from this prosperity bubble bursting.
Back in the time of hunter gatherers, humans "worked" for a few hours a day. The rest of the time was spent socializing and in leisure. It is fair to say they were happier compared to, let's say, an African American debt-laden minimum wage worker in the US today.
Do we really need economic growth?
(Modern USA infant mortality is less than 0.6%)
Death is a part of life. Everyone hopes that they outlive all their children, but even if you do not, tragedies during your life do not mean that your entire life was unhappy.
Also, how do you weight the absence of toys and creature comforts?
Your point about people being sick is valid, but not to the extent that you think. Firstly, it is not wise to suggest that hunter-gatherers were physically worse off than us. They got a lot of exercise, and were in all likelihood better physically. Secondly, the shorter lifespans statistic is an artifact of increased childhood mortality. Once you discount the child mortality, they had lifespans very similar to ours. Without all the diseases of affluence that we have, mind you (diabetes, for example).
i use infant mortality as an objective measure of any society's success. that's because everyone in the world can agree that dead babies are a bad thing. and the data is objective and easy to measure. it is, in a sense, a better indicator than GDP. the recent example of China is probably the best example of this. For decades after the cultural revolution, China was able to decrease infant mortality, without similar increase in GDP per capita (which came later).
And most importantly, it measures the velocity at which these things occur.
Isn't a society that can allow itself better alcohol, expensive medicine, better weapons, has more liquid cash, pays more in brutality suits (and pays them at all, to this matter), and spends more on daycare objectivelly better and more well-off than a society that doesn't have these things?
And how asia is pretty much being the richest region in the world(but the largest, so maybe its a matter of proportions)
