4 ms·

An interesting question, but I think theoretical at this point. The evidence is very strong, not only in the U.S. but in other advanced economies who all perfor

An interesting question, but I think theoretical at this point. The evidence is very strong, not only in the U.S. but in other advanced economies who all perform similarly. In addition to the evidence, expert opinion (economists) seem unanimous; that is, I've never heard one say otherwise. Fundamentally, the size, i.e., the output of the economy is easy to compute: Inputs (resources, such as labor and capital) x Productivity (how much benefit is wrung from the same resources). The inputs generally increase. One major input that increases is labor. As the population grows, there are more people doing productive work. Productive workers, which is almost everyone with a paying job and very many without one (homemakers, volunteers, etc.), produce more than they consume - an important point. It's not a zero-sum situation; adding people doesn't reduce everyone's slice of the pie, it makes the pie bigger. Productivity also increases. You see it in SV every day, with better and better software, as one simple example. Every improvement in knowledge and technology, in every field, adds to productivity. Is there a limit to productivity? It's hard to imagine, but if there is then we're nowhere near it. > Everyone is very highly incentivized Or maybe the evidence is very strong. For example, is everyone is incentivized to believe the theory of gravity, or is the evidence very strong?

tboyd47 9y ago
I appreciate that business is not zero-sum, but what happens to a non-zero sum when parts start getting subtracted from it? The population is growing at a rate of about 1%, but labor participation is down around 14 million people since 2002, and has not started to bounce back. And how does widespread underemployment, a growing deficit, and billions of dollars in debt owned to foreign countries play into the picture? Call me Chicken Little but I don't see how economists can be optimistic about growth until all or at least some of these trends start going in reverse. Economic growth doesn't just result from coming up with snazzier software - it requires citizens to acquire and deploy capital.
- hackuser 9y ago
  A few thoughts, though I'm not an economist: * 14 million is a big number, but it's less than 5% of the U.S. population. I do agree that it's a serious concern, but because of the welfare and economic opportunity for those people, and because of the social disruption of economic inequality; the economy in aggregate is doing well. For those interested, you can find the numbers here (you can adjust the years at the top): https://data.bls.gov/timeseries/LNS11300000 https://data.bls.gov/timeseries/LNS11300000 * Debt is a bad word colloquially, but in finance / business / economics, it's actually a great efficiency: Instead of useful resources (e.g., money) sitting around unused (e.g., in a vault), they are lent out to others to make productive use of. Financial institutions are like Airbnb for money - others get to rent your asset while you don't need it, and you make something from it. Borrowing is fine as long as you are generating more income from the borrowed funds than it costs you - e.g., as long as the software you build with the borrowed funds earns a better return than the interest you owe. Generally, that works out well or people wouldn't have a reason to lend or borrow. * As of December 2015, of the total U.S. federal government debt, 40% was held by foreigners. Interest paid was $94.9 billion that year. The U.S. economy was ~18 trillion that year, so the debt service was ~1/180th of U.S. income; not a problem. Source: https://fas.org/sgp/crs/misc/RS22331.pdf https://fas.org/sgp/crs/misc/RS22331.pdf
  - tboyd47 9y ago
    I'm glad you're not an economist, because neither am I! I'm of the mind that the recent jump in indicators like GDP and the Dow are more likely a result of corporate stock buyback programs than any real recovery. Corporate America spent about 4% of GDP on buybacks just last year. Meanwhile the GDP grew by half that amount. Stock buybacks are specifically designed to move stock prices higher. I understand that debt can be used strategically, but America is running consistently in the red. So although the part of the national debt that's foreign-owned is small, it represents wealth that has permanently left the country.
    - tboyd47 9y ago
      Eh, never mind. Guess I assumed that stock prices are included in GDP. Turns out they aren't.

tboyd47 9y ago

I appreciate that business is not zero-sum, but what happens to a non-zero sum when parts start getting subtracted from it? The population is growing at a rate of about 1%, but labor participation is down around 14 million people since 2002, and has not started to bounce back. And how does widespread underemployment, a growing deficit, and billions of dollars in debt owned to foreign countries play into the picture? Call me Chicken Little but I don't see how economists can be optimistic about growth until all or at least some of these trends start going in reverse. Economic growth doesn't just result from coming up with snazzier software - it requires citizens to acquire and deploy capital.

hackuser 9y ago
A few thoughts, though I'm not an economist: * 14 million is a big number, but it's less than 5% of the U.S. population. I do agree that it's a serious concern, but because of the welfare and economic opportunity for those people, and because of the social disruption of economic inequality; the economy in aggregate is doing well. For those interested, you can find the numbers here (you can adjust the years at the top): https://data.bls.gov/timeseries/LNS11300000 https://data.bls.gov/timeseries/LNS11300000 * Debt is a bad word colloquially, but in finance / business / economics, it's actually a great efficiency: Instead of useful resources (e.g., money) sitting around unused (e.g., in a vault), they are lent out to others to make productive use of. Financial institutions are like Airbnb for money - others get to rent your asset while you don't need it, and you make something from it. Borrowing is fine as long as you are generating more income from the borrowed funds than it costs you - e.g., as long as the software you build with the borrowed funds earns a better return than the interest you owe. Generally, that works out well or people wouldn't have a reason to lend or borrow. * As of December 2015, of the total U.S. federal government debt, 40% was held by foreigners. Interest paid was $94.9 billion that year. The U.S. economy was ~18 trillion that year, so the debt service was ~1/180th of U.S. income; not a problem. Source: https://fas.org/sgp/crs/misc/RS22331.pdf https://fas.org/sgp/crs/misc/RS22331.pdf
- tboyd47 9y ago
  I'm glad you're not an economist, because neither am I! I'm of the mind that the recent jump in indicators like GDP and the Dow are more likely a result of corporate stock buyback programs than any real recovery. Corporate America spent about 4% of GDP on buybacks just last year. Meanwhile the GDP grew by half that amount. Stock buybacks are specifically designed to move stock prices higher. I understand that debt can be used strategically, but America is running consistently in the red. So although the part of the national debt that's foreign-owned is small, it represents wealth that has permanently left the country.
  - tboyd47 9y ago
    Eh, never mind. Guess I assumed that stock prices are included in GDP. Turns out they aren't.