I have also looked into the economics literature for insight into growth, and
found it lacking.
IMHO:
1. Some growth is driven by population growth (I emphatically deny that we are
overlooking that issue, but I think we all recognize it's "third-rail" quality
in politics).
2. Some growth is driven by most folks' tendency to increase their standard of
living, and I don't just mean consumption of unnecessary consumer goods (e.g.
modern, very expensive, medical procedures; increasing demand for college
education).
3. Some growth is actually artificial, created by expansion of the money
supply well above the rate of the increase in real production.
This last one cannot be overlooked, especially as the Fed is now creating a
tremendous amount of new dollars out of thin air (which they've actually been
doing for quite a while). This devalues every dollar out there, but increases
nominal money flows, so we have the illusion of growth.
So growth isn't just a mechanistic outcome of markets - it's a policy enacted
by central banks. Why? It makes everything look good, and keeps the peasants
from revolting, despite the economic stratification evident in our society.
Joe
>
> Hi again,
>
> Sure, growing populations demand that economies grow.
> Either that, or
> the population will exist in a world of diminishing per
> capita
> resources.
>
> But wait! Many economies in Europe continue to grow even
> though their
> population is stagnating. Further, they continue to be
> obsessed with
> economic growth, and currently, the lack of it. Why? That
> is the
> $700 billion question. The answer, which appears only to
> be dimly
> perceived even by professional economists, lies in the
> nature of
> modern (i.e. post 1820) economies. The economic
> multiplier, whereby a
> dollar spent ends up generating more than a dollar in
> additional
> revenue, can work in reverse. i.e a dollar not spent can
> cause more
> than a dollar of deflation. Technology and productivity
> gains
> produced by technology demand further gorwth in
> consumption.
>
> These factors do not proviude a complete answer for why
> economies have
> to grow or collapse, but the vast literature on economic
> growth
> appears ot be silent on the subject. We can say, however,
> that
> populatinon is only one factor in the growth conundrum.
>
> My previous question had to do not with the incentives that
> lie behind
> growth, but in the mechanics of growth that produce this
> catch 22 of
> growth or collapse.
>
> As to the question of cultural imperatives behind
> population growth,
> here are two short stories.
>
> [1] - I go into a bar in tanzania, and get engaged in the
> usual
> conversation, why aren't you married; What, you have no
> children?".
> "So, how many kids do you have", I ask the guy at
> the bar. "Ten".
> "Wow, that's a lot of kids". "Yes, and
> I must have more". "But don't
> they cost a lot to keep fed and clothed?" "Why
> yes, they do, but I
> have ot have many children, becasue otherwise, how can I
> come here and
> drink beer?" "Beer?!!" "Yes, when I
> come here to see my friends, how
> could I hold up my head and drink beer without having may
> children".
>
> [2] - I am in a pickup truck on a dirt road in Mexico. I
> engage the
> lady passenger in conversation. "So, signora, are you
> married".
> "Yes". "Kids?" "Yes, I have
> five." "Five, wow; that must be quite a
> handfull?" "Oh no, I would like to have
> more?" "You'd like more; how
> come?" "Why, to be more happy of
> course!!!!!!!!!!!!"
>
>
> Best,
>
> Andy
