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> Two-income households: doubled the labor supply without making an equally large increase in demand Interesting perspective. In Norway the consensus is that e

by e12e 9y ago

> Two-income households: doubled the labor supply without making an equally large increase in demand Interesting perspective. In Norway the consensus is that equal employment and the resulting doubling of productivity was a major force in increasing standard of living - way before the oil boom (corally: Sweden and Denmark are also rich/high standard of living - with no/hardly any oil industry).

roymurdock 9y ago
Growing consensus among economists is that productivity slowdown is key to understanding stagnation. The top commenter almost put his finger on it when he said that workers aren't paid more because they aren't worth more, before attributing it to the "monopoly of capitalism". In reality if the machines we rely on to be productive aren't improving much themselves, then our productivity is capped. Technological innovation has slowed down a lot over the past 20-30 years, and is now diffusing throughout the world rather than being pushed forward by the large industrial conglomerates, pharmaceuticals, chipmakers, OEMs, etc.
- roymurdock 9y ago
  A recent post on this topic: https://mainlymacro.blogspot.com/2017/09/productivity-and-monetary-policy.html https://mainlymacro.blogspot.com/2017/09/productivity-and-mo...
adventured 9y ago
It's worth noting that doubling the output of a tiny economy of 5 million people, and doubling the output of a large nation that in 1968 had half of all global manufacturing - are two very, very different things. If you double America's output today, and take the GDP up toward $40 trillion - who is going to buy all of those products and services in the near term? Nobody, it couldn't happen over a short period of historical time (10-20 years); that supply could not be absorbed, it would be a disaster for the producing nation. If you're Norway in 1990, and you have a $100 billion GDP, doubling that into a global economy of $28 trillion, is very feasible. If you're the US in 1990 with a $6.x trillion economy (20-25% of global GDP), doubling that quickly is essentially impossible. A global economy of $28 trillion can absorb an additional $100 billion in output from Norway fairly easily over a few years, assuming it's competitive / desired output. As a smaller economy selling into a massive ocean globally, you're dramatically less bound by the global growth rate; if you're the world's largest economy, you're tightly (not strictly) bound to global growth rates. From its smaller base, Norway can see huge economic gains and defy global growth rate limits; for example, imagine Norway having an Apple size company, that grew from $30b to $200b in sales over six or seven years, it would add 50% to their economy and that output could be easily absorbed by the global economy.
- allendoerfer 9y ago
  It also helps to sit on oil, while your own country uses hydropower.
- e12e 9y ago
  Good points - however, not sure if you're arguing against yourself here (or if you're talking about different time frames): > If you double America's output today, and take the GDP up toward $40 trillion - who is going to buy all of those products and services in the near term? Nobody, it couldn't happen over a short period of historical time (10-20 years); that supply could not be absorbed (...) > If you're the US in 1990 with a $6.x trillion economy (20-25% of global GDP), doubling that quickly is essentially impossible. US GDP[1], inflation adjusted : Dec 31, 1990 8.91 trillion Dec 31, 2010 14.94 trillion It's not quite double in 20 years, but it's closeish at 1.67x? (An actual question, I'm not sure if you'd consider it close). Looks like it'll be doubled this year - so I guess one could view that as the slow-down (the extra 7 years). [1] http://www.multpl.com/us-gdp-inflation-adjusted/table http://www.multpl.com/us-gdp-inflation-adjusted/table Apparently those numbers are in "2009" dollars - while the numbers in "current" dollars is more like 6 to 15 (as opposed to 9 to 16) in the same period - I guess this might have to do with the 2008 crash? https://bea.gov/national/xls/gdplev.xls https://bea.gov/national/xls/gdplev.xls
geodel 9y ago
Did I miss something? I think their point was labor supply increased without equivalent labor demand. You are talking about standard of living which of course will increase if more people earn per household. I can see this happening in countries with large population. I observed directly in India where there are double income households working in IT sector and their living standard is way higher in terms of material consumption and on other hand huge army of unemployed IT graduates desperate to find any job.

by e12e 9y ago

roymurdock 9y ago

Growing consensus among economists is that productivity slowdown is key to understanding stagnation. The top commenter almost put his finger on it when he said that workers aren't paid more because they aren't worth more, before attributing it to the "monopoly of capitalism". In reality if the machines we rely on to be productive aren't improving much themselves, then our productivity is capped. Technological innovation has slowed down a lot over the past 20-30 years, and is now diffusing throughout the world rather than being pushed forward by the large industrial conglomerates, pharmaceuticals, chipmakers, OEMs, etc.

roymurdock 9y ago
A recent post on this topic: https://mainlymacro.blogspot.com/2017/09/productivity-and-monetary-policy.html https://mainlymacro.blogspot.com/2017/09/productivity-and-mo...

adventured 9y ago

It's worth noting that doubling the output of a tiny economy of 5 million people, and doubling the output of a large nation that in 1968 had half of all global manufacturing - are two very, very different things. If you double America's output today, and take the GDP up toward $40 trillion - who is going to buy all of those products and services in the near term? Nobody, it couldn't happen over a short period of historical time (10-20 years); that supply could not be absorbed, it would be a disaster for the producing nation. If you're Norway in 1990, and you have a $100 billion GDP, doubling that into a global economy of $28 trillion, is very feasible. If you're the US in 1990 with a $6.x trillion economy (20-25% of global GDP), doubling that quickly is essentially impossible. A global economy of $28 trillion can absorb an additional $100 billion in output from Norway fairly easily over a few years, assuming it's competitive / desired output. As a smaller economy selling into a massive ocean globally, you're dramatically less bound by the global growth rate; if you're the world's largest economy, you're tightly (not strictly) bound to global growth rates. From its smaller base, Norway can see huge economic gains and defy global growth rate limits; for example, imagine Norway having an Apple size company, that grew from $30b to $200b in sales over six or seven years, it would add 50% to their economy and that output could be easily absorbed by the global economy.

allendoerfer 9y ago
It also helps to sit on oil, while your own country uses hydropower.
e12e 9y ago
Good points - however, not sure if you're arguing against yourself here (or if you're talking about different time frames): > If you double America's output today, and take the GDP up toward $40 trillion - who is going to buy all of those products and services in the near term? Nobody, it couldn't happen over a short period of historical time (10-20 years); that supply could not be absorbed (...) > If you're the US in 1990 with a $6.x trillion economy (20-25% of global GDP), doubling that quickly is essentially impossible. US GDP[1], inflation adjusted : Dec 31, 1990 8.91 trillion Dec 31, 2010 14.94 trillion It's not quite double in 20 years, but it's closeish at 1.67x? (An actual question, I'm not sure if you'd consider it close). Looks like it'll be doubled this year - so I guess one could view that as the slow-down (the extra 7 years). [1] http://www.multpl.com/us-gdp-inflation-adjusted/table http://www.multpl.com/us-gdp-inflation-adjusted/table Apparently those numbers are in "2009" dollars - while the numbers in "current" dollars is more like 6 to 15 (as opposed to 9 to 16) in the same period - I guess this might have to do with the 2008 crash? https://bea.gov/national/xls/gdplev.xls https://bea.gov/national/xls/gdplev.xls

geodel 9y ago

Did I miss something? I think their point was labor supply increased without equivalent labor demand. You are talking about standard of living which of course will increase if more people earn per household. I can see this happening in countries with large population. I observed directly in India where there are double income households working in IT sector and their living standard is way higher in terms of material consumption and on other hand huge army of unemployed IT graduates desperate to find any job.