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There just isn't one. Trying to measure the size of the economy "faithfully" is not possible. You can create abstractions like GDP that are useful where they a

by netcan 11y ago

There just isn't one. Trying to measure the size of the economy "faithfully" is not possible. You can create abstractions like GDP that are useful where they are useful, but you can't treat them as solid concepts. When the "IQ" debate was hot and contentious, people often ended up with a tautological definition that measured IQ is whatever IQ measures. This is because "intelligence" is not a solid concept and the test is not a direct measure of this fuzzy concept anyway. That doesn't mean IQ is meaningless. It has predictive power. It can serve as a goal (unless you game it and make it useless). GDP is a measure of transactions, ultimately. That tends to correlate with the size of an economy and can be used for comparison, if everything is structurally similar. You can compare France to Sweden. If you are trying to compare the economic output of Monaco to Zimbabwe, GDP is not as good. If you are trying to compare the economy of today to the economy of 1836 or 2065, you're also in trouble. If you want to compare the economy of an alien civilization to ours, GDP won't work. Referencing GDP (or anything else, this is just an inherently hard problem) in these contexts is trying to squeeze some useful information out of a very limited and buggy tool. You need to understand the subtleties of it. What it does well and poorly. Most importantly, accept that our tools and therefore knowledge is limited.

dougabug 11y ago
This would argue that economic growth is to a significant degree subjective, which would be consistent with the basic thrust of the original article. Economists once predicted that energy would be basically free, which turned out to be badly off base. Whether life can be made continuously better may be an open question, but the idea of essentially all major forms of scarcity disappearing due to never ending economic growth is cast into severe doubt.
- chipsy 11y ago
  One thing oft asserted in economics textbooks is price as an "information signal." That is, if we step back from its various origins that tie it to land, labor, and energy, pricing has similar utility to any other valuation method. A person using extremely expensive equipment that is owned by an institution cannot value it within their individual budget, even though it has a "price." The cost of access is the membership in that institution, which is not the same and may be priced in terms of service hours or political weight. As our economy hits more extremes of abundance vs. scarcity, decoupling of value mechanisms is a likely future step. Mainstream economic theory already has some accomodations for types of goods and externalities - it's not too radical to imagine a theory that recontextualizes them.
- netcan 11y ago
  I don't really have any strong opinions, but I tend towards the "no relevant natural barrier" to growth side. I think free energy in the sense that Facebook is free, is still a possibility. But, I think what we previously failed to envision is the depth of our consumption ability. If by energy, you mean the energy needs of a home in 1915, that's an achievable goal. But, the goalposts moved. Energy has been a constraint though, not the best example since we have't had good progress relative to other things. Consider food though, the basic consumption good. In pre-industrialized times, calories so cheap that they're free would have been a "singularity" like end goal. "Free food" in the form of a box of grains with sufficient calories would be perfectly doable if people wanted to do it, <$100 per year. But of course, we consume far more that $100 per year of food. It's just that calories are not a good measure of food anymore. Education, at whatever quality can be delivered without a teacher will be free. Housing isn't on any kind of virtuous curve, that's a resilient cost. Computers are getting close to "free." A Rasberry Pi is (on the scale we're talking about) essentially the same as a Macbook Pro. Even a fully cased and packaged laptop is moving towards free, at least in the sense that thumb drives are free. On one hand, I do think a lot of things can get so "abundant" that economic models ultimately break down entirely. Anything that is entertainment, information, education can be free. Anything that's a physical manufactured good like underpants or iphones can get so cheap it might as well be free. On the other, some things (housing) might prove more resilient to to accelerating change. Others things will discover levels of demand for more "quality". A 1996 cell phone for free is a bad deal relative to the $300 alternative. Basically, there are things we will want that still cost money. Another way to put this is demand distancing itself from "need." We need some stuff (food, water). Some stuff is a matter of definition (education). Some stuff (game of thrones) is squarely in the "want" bucket, but the want bucket produces economically identical demand.

by netcan 11y ago

dougabug 11y ago

This would argue that economic growth is to a significant degree subjective, which would be consistent with the basic thrust of the original article. Economists once predicted that energy would be basically free, which turned out to be badly off base. Whether life can be made continuously better may be an open question, but the idea of essentially all major forms of scarcity disappearing due to never ending economic growth is cast into severe doubt.

chipsy 11y ago
One thing oft asserted in economics textbooks is price as an "information signal." That is, if we step back from its various origins that tie it to land, labor, and energy, pricing has similar utility to any other valuation method. A person using extremely expensive equipment that is owned by an institution cannot value it within their individual budget, even though it has a "price." The cost of access is the membership in that institution, which is not the same and may be priced in terms of service hours or political weight. As our economy hits more extremes of abundance vs. scarcity, decoupling of value mechanisms is a likely future step. Mainstream economic theory already has some accomodations for types of goods and externalities - it's not too radical to imagine a theory that recontextualizes them.
netcan 11y ago
I don't really have any strong opinions, but I tend towards the "no relevant natural barrier" to growth side. I think free energy in the sense that Facebook is free, is still a possibility. But, I think what we previously failed to envision is the depth of our consumption ability. If by energy, you mean the energy needs of a home in 1915, that's an achievable goal. But, the goalposts moved. Energy has been a constraint though, not the best example since we have't had good progress relative to other things. Consider food though, the basic consumption good. In pre-industrialized times, calories so cheap that they're free would have been a "singularity" like end goal. "Free food" in the form of a box of grains with sufficient calories would be perfectly doable if people wanted to do it, <$100 per year. But of course, we consume far more that $100 per year of food. It's just that calories are not a good measure of food anymore. Education, at whatever quality can be delivered without a teacher will be free. Housing isn't on any kind of virtuous curve, that's a resilient cost. Computers are getting close to "free." A Rasberry Pi is (on the scale we're talking about) essentially the same as a Macbook Pro. Even a fully cased and packaged laptop is moving towards free, at least in the sense that thumb drives are free. On one hand, I do think a lot of things can get so "abundant" that economic models ultimately break down entirely. Anything that is entertainment, information, education can be free. Anything that's a physical manufactured good like underpants or iphones can get so cheap it might as well be free. On the other, some things (housing) might prove more resilient to to accelerating change. Others things will discover levels of demand for more "quality". A 1996 cell phone for free is a bad deal relative to the $300 alternative. Basically, there are things we will want that still cost money. Another way to put this is demand distancing itself from "need." We need some stuff (food, water). Some stuff is a matter of definition (education). Some stuff (game of thrones) is squarely in the "want" bucket, but the want bucket produces economically identical demand.