Monday, June 28, 2010

On economic growth...

With the G20 or whatever the most recent international economic talk-fest is being called in Toronto this past few days - along with the obligatory silly-shirt day - thoughts are filtering through the ol probligo's neurones carrying tags like "growth", "recession" and the like.

And I keep coming back to the same brick wall.

How can there be continuing "economic growth"? What is the basis for the measure of "economic growth"?

NZ has a record of our economy growing at an annual rate of 1.8%. Over the same period, China's economy has grown at a rate of some 9.5% p.a. I have to presume that these measures exclude the impact of inflation, currency changes, and the other "influences" that impact upon monetary measures.

Y'see, if the NZ economy has "grown" by 1.8%, does this mean we have spent and consumed that much more (very likely) or produced and made that much more (less likely).

Underlying that question is an even more fundamental bother. Is there a limit to the true value of the global economy. If there is, then the fight to increase "growth" has to be considered as a change in balance; more to one meaning less to another.

The immediate suspicion is that is only part of the answer. It is as likely that the limits are in the measurement of "wealth" and "total resource".

Thoughts?

10 comments:

王婷珊 said...

人不能像動物一樣活著,而應該追求知識和美德.................................................................

The probligo said...

t"The human cannot look like the animal to live equally, but should pursue the knowledge and the moral excellence ........."

Hmm, I think I can get the drift.

What that has to do with economic theory I can not be at all sure.

什么那和经济理论有关我不可能是在所有肯定。

I hope that babelfish knows its Chinese :)

Eugene Tan said...

What she meant was "humans cannot just live like animals; instead, humans should seek knowledge and morals."

Your Babelfish is babbling nonsense.

My thoughts on the "growth" issue are simple: We must stop growth-driven growth. How much more can we consume?

Do we need/can we afford that second, third, fourth car? If not, then what is the purpose of measuring growth based on car sales?

The probligo said...

Thanks very much Eugene. That is the last of that particular experiment. Can I hire you as permanent resident translator? :)

What you say is right, and to my point from a different direction.

I have to say that outward appearance at least gives the truth to China's rate of growth over the past few (10?) years. There are appearances that the benefit of that growth is being realised by a "growing middle class".

Reflection on that and consideration of the likely state of China's rural population - in the places where outsiders are discouraged from visiting - gives me the stronger feeling that the benefits are far from universally realised.

At the same time, my mind brings the images of "subsistence farmers" in Samoa, Tonga, Vanuatu and the other Pacific Islands I have visited. I could not live as they do for the simple reason I do not have their survival skills. They are "happy" in that their immediate needs are met; at the same time they have their conflict between remembering and preserving the past and wishing to provide better for their descendants.

There is such a lot that sounds right but is in fact quite wrong.

I don't have the answers.

asdas said...

死亡是悲哀的,但活得不快樂更悲哀。....................................................................

asdas said...

知識可以傳授,智慧卻不行。每個人必須成為他自己。....................................................................

The probligo said...

I have been thinking about your comment Eugene.

Why do we need a second, third, fourth car?

In my case I plead self-interest and convenience.

I need a car to get me to work because there is one "direct" bus service per day to and one from. The morning service would have me leaving home at about 7:10, and arriving at work about 8:50. The only service from work would see me leaving the office at 4:15 and arriving home about 6:15.

By way of comparison, by car I can leave home at 7:45 and arrive at work about 8:15. The trip home I can leave at 5:15 and be home by 5:50.

Why is this so?

Because the politicians who run this "city" believe that I work in the "central city". There are buses every 15 minutes, every second is an "express" which would get me to the CBD in half the time of my needed trip despite it being twice the distance.

How is this so?

Because "public transport" in Auckland seems to be designed to be the most inconvenient it is possible rather than provide the services needed.

When was the world ever any different?

Eugene Tan said...

Bob,

Still on cars: there will come a time when you cannot find a good reason to buy yet another car, can you? I mean, suppose a couple in their 30s, and with 2 children, living in some rural no-man's land in NZ owns two cars because they need it, it makes all the sense. But would they buy 5 Toyota Corolla Altis and put them in their garage for no good reason? Even when their two children grow up, 4 Toyota Corolla Altis are probably all they are going to need, not 5, right?

But our current economic growth determination model measures consumption. People need to consume and consume and consume if we wanna see growth. My point is, there will come a point when we cannot consume any more. Buying 10 cars wouldn't make any sense unless there is a good reason to buy 10 cars.

My bigger beef is with speculation. Why are people allowed to speculate in property? Share market speculation is fine. You can gamble away what you can afford to lose. But housing is a basic need; one does not need shares! When people speculate on property and drive housing costs out of my reach - and yet the economy notes this as a growth - I am perturbed. Why should my existence (people need roofs over their heads) be threatened because of other people's greed? There is some kind of greed and perversion that need to be addressed.

Recessions make me happy. Depressions make me elated. Share market crashes make me hopeful. These are the only times when a sane, non-greedy folk like me can finally afford something.

Eugene Tan said...

Email me when you need a translation.

The probligo said...

Eugene

I happen to agree, hence my beef with the fashion for buzz-words like "growth", and particularly when that is directly connected to "going forward".

There was a very good sci-fi yarn (American author) I read very many years back ('60s as I recall). It centred on a family that was unable to keep up its "consumption points". Quite scarey.

I am trying to take this topic a whole step further; toward the idea that increasing "growth" ( or consumption as you so rightly point out) really does nothing for overall (and I mean global here) well-being.

The objection to speculation I will come back to some time shortly.
____________________________

A comment overheard at lunchtime is a propos -

The human body is designed for the storage of water, fat and salt. So, what does modern man do? He loads his food with fat and salt. Then he tries to cure the failures in bodily health that follow.

Thanks for the translation offer. It is much appreciated.

BTW I am back reading Tao TeChing again; for the first time in about 30 years. Where did THAT impulse come from?