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Low economic growth is a slow-burning crisis for Britain

dafty4 4y ago
Looking to economic growth only without any regard for unemployment is myopic.
- londons_explore 4y ago
  People can be very employed doing pointless tasks which have no overall economic benefit. When you look deeper, you see that many jobs are 'pointless' from an overall economic perspective. For example how many parking attendants is the right number to employ? In a perfect society, everyone would pay for parking according to the sign, and those attendants could have another more beneficial role. If you get rid of 20% unemployment by just making 20% of everyone's role pointless busywork, you haven't really fixed the problem.
  - bumby 4y ago
    Isn't the converse also true? If, in theory, you automate everyone's jobs away you could increase productivity and economic growth. But if there's nobody working, that productivity is also pointless because there's nobody with money to consume the product. I think the OP's point was there has to be balanced approach.
    - marcinzm 4y ago
      >nobody with money to consume the product. Then tax production and just give people money (ie: Universal Basic Income). You're doing the exact same thing with pintless jobs anyway so may as well be less wasteful about it.
      - rootusrootus 4y ago
        It would be interesting to see what kind of caste system we would end up with if we did such a thing.
      - spinach 4y ago
        People derive self-worth, dignity and meaning from their jobs. How will you replace that?
        xyzzy123 4y ago
        They could join voluntary organisations. Or they could voluntarily do any of the infinite number of jobs to do in the world which cannot and will never be automated, even though they don't really need the money. Unless there's something special about being forced to work that boosts the dignity and self worth people feel?
        M2Ys4U 4y ago
        People do things that give them self-worth, dignity and meaning even if they don't get paid to do them. I mean that's pretty much the definition of a hobby.
        bumby 4y ago
        There's an added value to being felt as necessary to one's society that a hobby may not capture. To the point of the commenter above, something like volunteer work would probably fulfill that need better than a hobby.
        M2Ys4U 4y ago
        I guess that depends on the hobby - some are more solo pursuits but others are more social.
      - bumby 4y ago
        To a similar point, I think there's at least an argument to be made for an automation tax. But I also think that is politically unpalatable due to the potential impact on economic growth.
    - csomar 4y ago
      Not really. These people will work in services instead (and develop valuable skills as a result). They could do things (even like Pet Grooming) that benefits other people and free more of their time.
      - bumby 4y ago
        I agree, but the issue is people are paid according to their impact on the economy. Sob while they may spend time doing things that benefit society, it doesn’t mean they will have the money to consume. If a hedge fund manager quits to be a social worker, they are doing something to benefit society but they aren’t going to be able to support the lifestyle of an economically productive hedge fund manager
    - jwmhjwmh 4y ago
      If you automate everything, how is profit made? Say every firm charges a 5% markup above costs of materials and machine upkeep. A given firm must pay other firms' 5% markups on the materials it needs, making it cheaper for the firm to produce those materials itself. This tends toward complete centralization. There are two ways to fix this. The first is to have an economy based on many monopolies trading resources. This obviously suboptimal for economic calculation. The second way is to adopt a planned economy. As labor productivity increases, profitability decreases, as historical data shows[1]. In the long term, this problem of capitalism cannot be avoided. [1]: https://thenextrecession.wordpress.com/2022/01/22/a-world-rate-of-profit-important-new-evidence/ https://thenextrecession.wordpress.com/2022/01/22/a-world-ra...
      - deleted 4y ago
        [deleted]
      - imtringued 4y ago
        Or you could just allow the interest rate on capital to fall to 0% by introducing a negative interest rate on cash and close up all the economic rent seeking via land value taxes and similar approaches. That would eliminate the profitability and growth requirement and result in the end of capitalism as we will have too much capital to care about it specifically.
      - bumby 4y ago
        If you automate everything, how is profit made? I think profit is a different issue. Profit is not necessarily dependent of automation. Automation is just a means to reduce human labor. Generally, this increases efficiency which leads to increased productivity, but it's definitely not the only way to improve efficiency. There are other ways of increasing productivity and I would argue you will never have completely efficient processes. And innovation is always a potential disrupter to generate new profit. Even Marx said it's just a tendency for profit to fall and not an absolute maxim.
  - chrisco255 4y ago
    By that logic anything could be considered pointless. A parking lot attendant's job is useful so long as there is demand for the services they provide. It's arrogant to presume any job as "pointless". And at any rate the world isn't "perfect" whatever your definition of that is, which is far different than my definition, so it's important to accept reality as it is. Paid parking lots need security and to be maintained, just as any other business. Without that maintenance the lot falls to crime and decay. So long as the world is not "perfect" (forever) it's not pointless (as long as there's real demand for the services).
    - hahaxdxd123 4y ago
      You are being overly pedantic to the example he provides. Let's do a more classical example - should they government stimulate job growth in the glass and construction industries by smashing windows? No - the world doesn't become a better place even if there's a growth in GDP from the economic activity of increased glass making. Some jobs simply produce more goods or intellectual property than others (or better facilitate such production). The main point here is it's not good for governments to misallocate resources by encouraging more ~0-production jobs for sake of low unemployment. https://en.wikipedia.org/wiki/Parable_of_the_broken_window https://en.wikipedia.org/wiki/Parable_of_the_broken_window
      - chrisco255 4y ago
        To your first question, of course not, but that does not mean a parking lot attendant's job is pointless. The need for maintenance and security of a parking lot is inescapable. Clearly doing destructive things is destructive. Maintenance and security are productive activities, though. Yes, in an imaginary Kumbaya world where things don't deteriorate or get dirty and no one takes advantage of unattended, unsupervised property, you could do without the maintenance and the security. But that world will never exist, will it? So it's not pointless and it's not destructive. In fact, without the maintenance and security, the productive asset in this case would not be able to exist to provide the service to those who need it.
  - imtringued 4y ago
    We can employ them to do pointless tasks like restoring the soil and afforestation or building housing. Fusion is necessary for space exploration so we can also hire them for that. Isn't it weird, how there are these logical societal investments and yet the economic system isn't set up to let us do them even though the capacity to do them exists and we have unemployed people desperate for work? We dislike these investments and deride them as zombie companies.
- mise_en_place 4y ago
  Unemployment is generally low when inflation is high, but depending on stagflation could also start spiking up dramatically
miohtama 4y ago
The neighboring EU is not doing any better and maybe heading to the crumble of Eurozone - though not immediately. Italy is now living basically on the debt funded by Northern European countries and soon this might come to the end with the widening spreads and markets not believing Italy’s ability to serve its debt. Either the money printer must brrrr, with massive inflation, or Italy, maybe Greece and Spain to default their bonds. https://www.reuters.com/business/finance/some-european-states-rising-debt-costs-rekindle-2011-crisis-memories-2022-05-10/ https://www.reuters.com/business/finance/some-european-state...
- jacobolus 4y ago
  This estimate has British economic woes mostly down to Brexit, compared to a model built from the observed performance of other advanced economies: https://www.cer.eu/publications/archive/policy-brief/2022/cost-brexit-so-far https://www.cer.eu/publications/archive/policy-brief/2022/co...
  - krona 4y ago
    Not a single error bar or measure of statistical confidence. In other words, unfalsifiable econometric woo-woo.
    - stevesimmons 4y ago
      So what is your estimate?
      - toxicFork 4y ago
        Pandemic
    - Imnimo 4y ago
      What is on pages 8-10?
  - mypastself 4y ago
    I encourage others here to read the study and analyze its methodology before outright accepting the conclusions of a self-described “think-tank devoted to making the EU work better, and strengthening its role in the world“. One of the several issues is with how the “dopplegängers” are selected. A basket of (weighted) countries is selected with economic structures and pre-Brexit performance similar to the UK. I haven’t analyzed the linked Python code and datasets, but the text gives scant information on what exactly makes a specific country similar or dissimilar to the UK. The rare exception is when it compares UK’s GDP growth with Australia’s and New Zealand’s instead of Italy’s, when it says it ignored the latter because of its “rapidly ageing” population. In the “Services trade” rubric, UK actually outperforms the dopplegänger, until the author removes the country with the largest weight, at which point the UK’s advantage disappears. This could be interpreted as some questionable data massaging. None of which is to say that I necessarily think Brexit was, or will be, an economic success for the UK. This is not something that can be easily determined at this point, especially with Covid. But these studies should be taken with a grain of salt.
avidiax 4y ago
https://web.archive.org/web/20220611231105/https://www.economist.com/leaders/2022/06/09/low-economic-growth-is-a-slow-burning-crisis-for-britain https://web.archive.org/web/20220611231105/https://www.econo... What's the structural problem at play here? Brexit is definitely isolating, which promotes "comparative disadvantage", i.e. doing things domestically that are more efficient to achieve through trade. Maybe there are demographic problems? Too many elderly, not enough youth and skilled labor? They allude to democratic inefficiencies, i.e. voting blocs that receive more than they pay, creating poor allocation and disincentive. But all of the above don't seem to be solvable. UK won't re-enter the EU, demographics can only be tweaked by immigration, and voting blocs are part of democracy. So what does that leave in terms of solutions?
- formerkrogemp 4y ago
  > So what does that leave in terms of solutions? https://youtu.be/ZuXzvjBYW8A https://youtu.be/ZuXzvjBYW8A
  - deleted 4y ago
    [deleted]
  - burlesona 4y ago
    For others who won’t know what this video link is, it leads to a pretty good talk about the generational wealth gap in Britain and potential solutions to close it. I found it very informative. Thanks for sharing!
    - formerkrogemp 4y ago
      Thanks for providing an overview that I neglected to provide! I found this video on Y-Combinator News. I thought it worthwhile to share as I've learned from it as well.
- WalterBright 4y ago
  The likely suspect - too much voting themselves money out of the treasury. The same problem the US is facing.
troon-lover 4y ago
Barrin92 4y ago
In my opinion, mostly formed from personal experience in the UK the biggest issue is the extreme cultural and political centralization around South-East England. The gulf between London and the rest of the country, particularly the North of England is immense. There is incredible potential wasted in large parts of the UK. The tone of the article itself reflects that culture, one particular government or set of policies cannot be responsible for malaise that is so generalized. I think the UK needs much more devolution of power, autonomy and less financial and political dependence between its regions.
- bsder 4y ago
  > There is incredible potential wasted in large parts of the UK. Except that those parts are the ones who benefited most from being in the EU and are also the parts that overwhelmingly voted for Brexit.
  - scaramanga 4y ago
    All corners of the media fed them decades of lies about how it was the EU that was holding them back, and not the british ruling class.
    - iqkznnft 4y ago
    - deleted 4y ago
      [deleted]
  - rayiner 4y ago
    How are they benefitting from cheap labor and goods coming over from Eastern Europe? That sounds like something London benefits from.
    - ben_w 4y ago
      IIRC, the poorer parts of the UK are where the car factories are, and they used to export a lot — might still do, but the investment in that sector is down due to Brexit, and that's because the cheap imports included parts for manufacturing cars. As for labor, again IIRC, the (fruit?) farms are labor intensive and locals aren't interested, at least not at the wages that the farms can afford given what they get paid by the supermarkets, who can't meaningfully pay more without raising prices, which they can't do without hurting more people: even before I left, I was seeing "donate food to the food bank" baskets at the doors to supermarkets in well-off areas like Cambridge.
deleted 4y ago
[deleted]
kapuasuite 4y ago
> When it comes to growth, Britain’s politicians will the ends but not the means. They run scared of the homeowning elderly, who turn up to vote and make up a growing share of the electorate. So tax rises are heaped on businesses and workers instead, further harming the economy. The government has likewise watered down its plans for reforming the planning system—because elderly homeowners object. This is it - over taxing and over regulating productive activity eventually leads to less growth and lower standards of living.
- scaramanga 4y ago
  The article is quite inaccurate, the ruling class runs scared of precisely nobody. They own the country and they will dispose of its capital as they chose, enjoying their property rights without the ignorant meddling of marginalised outsiders. The Tory party run essentially unopposed and the political preferences of isolated elderly people are shaped largely by the deluge of lies and fantasy which stream constantly at them from the murdoch press. Tax breaks are awarded to businesses, and tax rises are heaped on workers and the youth who are increasingly impoverished. Failing to adequately tax or regulate all of this "productive activity" results in a windfall of profits for a few who hoard it and stagnate the economy while the demand for basic goods and services dries up and actually-productive sectors wither in favour of extractive rent-seeking "productive activity". The resultant budget deficits lead to crises in basic services, crumbling infrastructure, inability to intervene to keep incomes in line with living costs (even if a political party with the will to do that existed, and could get elected, which it doesn't and can't), and a spiralling budget deficit.
  - seibelj 4y ago
    Yeah just gotta raise taxes more on whatever businesses are left and that will solve it.
    - imtringued 4y ago
      High taxes on workers and low taxes on companies means wealth concentrates and those companies slowly lose their customer base which then leads to mergers and acquisitions and the formation of monopolies.
zmmmmm 4y ago
> Mr Johnson ought to have resigned for lying repeatedly to Parliament about whether he broke his own laws There seems to be a problem developing across many western democracies that a large segment of voters have developed a tolerance for lying by their leaders. Perhaps it's just me getting older and more cynical but I really feel like this was not how it was 30 years ago. I'm not sure where it will lead but it feels like this is one of the hallmarks that you would expect to see at the beginning of the breakdown of a civilised society.
- sudosysgen 4y ago
  What consequences were there, really, for the Gulf of Tonkin? I think lying was tacitly accepted in US politics since living memory.
  - wutbrodo 4y ago
    > accepted in US politics Is your impression that this is US-specific? Mine is that lying is accepted in politics in general.
    - sudosysgen 4y ago
      The US is the oldest continuous western democracy, so it makes sense to use it as an example here, but of course the problem isn't limited to it.
      - benj111 4y ago
        How are you defining "continuous western democracy" because the subject of this piece (the UK) would seem to have a better claim.
        sudosysgen 4y ago
        Would it? Before 1832 almost half of the seats in the UK were nomination boroughs and there was no secret ballot until 1872 - the country was practically controlled fully by the aristocracy.
olivermarks 4y ago
The challenge for the UK is that the flywheel of the City of London corporation and its offshore wormholes were at the core of globalization. Ironically the nation state the CoL coexists with (the UK) is as large a casualty of this as the many colonial nation states ravaged by globalization. This was compounded by the globalists - which the Economist exists to promote - forcing the merger of the UK into the european union. The vote to leave by the proletariat demonstrated massive dissatisfaction, but sadly there are subsequently no credible political parties or leadership that are not closely aligned with the CoL and/or the EU, resulting in a becalming. The Spider's Web: Britain's Second Empire | Documentary Film https://youtu.be/np_ylvc8Zj8 https://youtu.be/np_ylvc8Zj8 'Michael Oswald's film The Spider's Web reveals how at the demise of empire, City of London financial interests created a web of secrecy jurisdictions that captured wealth from across the globe and hid it in a web of offshore islands. Today, up to half of global offshore wealth is hidden in British jurisdictions and Britain and its dependencies are the largest global players in the world of international finance'. 80 minutes, well worth watching imo
- iLoveOncall 4y ago
  > The vote to leave by the proletariat demonstrated massive dissatisfaction The only thing it demonstrated is massive propaganda, that's it. People were dissatisfied with the current state of their life, not with the EU. Then people just fed them lies saying that their problems were due to being in the EU.
  - olivermarks 4y ago
    Please watch the video I linked to for context
usrn 4y ago
If the population isn't growing then there shouldn't be concern about the economy not growing. Unlimited growth isn't sustainable and shouldn't be expected.
kypro 4y ago
I live in the UK and I had a chat with my partner about an hour ago about quitting our jobs and going on benefits. I was 60% joking, but I'm absolutely fed up with this country. Things are extremely difficult here if you're working for a living and are not ultra wealthy. Just last year I brought a house which put in me hundreds of thousands of pounds of debt because of how ridiculous house prices are. I've worked and saved my whole life since I was a teenager (32 now), yet there are 20 year olds on benefits in my family who live in houses that are worth more than mine and have never worked. I'm so stressed out right now because interest rates are obviously rocketing up so I'll be paying a much higher rate when I go to remortgage next year and at the same time house prices could potentially crash. The reality is if I lose my job over the next few years I'm probably going to be screwed and the last 15 years of work was probably all for nothing. Fun. At the same time significantly more than half my income goes on taxes when you consider taxes like VAT, council tax, TV license, car tax, fuel taxes, stamp duty tax, and all the others I'm forgetting on top of the income and NI tax that comes out of our wages. For the hundreds of thousands of pounds of tax I've paid over my career I have the benefit of getting literally no help whenever I need it because I work and I also get to enjoy our barely functional public services. I'm not complaining about my situation, but it does upset me when I've struggled my whole live to get where I am, yet single mums in their 20s in my family still get to live in nicer houses than me, get free cars from the government while not having to work a day in their lives. I'm driving a Fiat Punto with 90,000 miles on the clock while several people in my family on benefits have gotten new BMWs because of government schemes. The low growth we have in this country doesn't surprise me at all. Last week I was looking for a weekend job to help with the bills, but given my tax rate it's basically pointless looking for extra work. People in my family on benefits are also routinely advised not to work by the job centre because it would leave them financially worse off. But we're not just disincentivised people from working, we're also massively over regulated. It never ceases to amaze me just how difficult it is to do anything here. For example, my girlfriend likes making bath bombs she wanted to sell some so I looked into helping her set up an online store, but I found out you have to pay hundreds of pounds to have every product you want to sell reviewed and approved first making the whole thing pointless at the scale she would be operating at. Another example is something I'd love to do which is sell cakes, pastries and pizzas as a delivery service from my home kitchen because I love cooking and always have too much food. But I can't sell food because to do that I need to have health and safety inspections, and again at the scale I'd be operating at it makes no sense. And it's like this with everything here. Unless you're super rich or know someone in the industry who can get you through all the regulatory hope I don't really understand how anyone starts any business without being terrified that they're operating in violation of some regulation. Apparently I can't even cut the tree down in my own garden without telling the local council because it's over a certain width. It's a beyond a joke. I very much agree that Britain is heading for a crisis if we're not already in one. The core problem we have is that people here truly believe the government can fix everything by spending more money and increasing taxes, and until that attitude changes nothing will get better. So instead of cutting taxes and incentivising people to work, I can almost guarantee the public will demand the government fixes this problem by increasing taxes on people who earn more than them while spending ever more money on various inefficient wellfare schemes. And if you want an example of this then just look at what's happening right now with the energy bill crisis... No one is asking for tax cuts to help people with affordability, they're asking for handouts to pay for their bills while increasing taxes on the energy companies.
intunderflow 4y ago
Honestly it feels like the floor is about to fall through. On waiting for services: I was actually (and still technically am) on an NHS waitlist which I've been on for the last 5 years, my new employer is just paying a private doctor to handle everything which begins next week. Just wanted to put that out there to give an idea to the non-UK HN audience of how bad things have got. The only other state that comes to mind where typical service delivery times were measured in years was the DDR in the late 80s, and we all know how that ended. One other thing few talk about is the recent noticeable drop in the ability of the state to enforce it's laws (especially when those laws are seen to be morally wrong), for example there's been multiple documented instances now of immigration raids being stopped by hundreds of people surrounding the vans until the police leave (https://news.sky.com/story/peckham-man-arrested-for-immigration-offences-released-after-protesters-block-van-12632214 https://news.sky.com/story/peckham-man-arrested-for-immigrat...) and jury nullification is starting to become a noticeable thing even for those who are arrested (a prominent example being the Colston Four: https://en.wikipedia.org/wiki/Colston_Four https://en.wikipedia.org/wiki/Colston_Four) - the fact the state can't even consistently enforce its laws anymore speaks to its rapidly diminishing power, even domestically. Maybe I'm just mad and have read too much into everything, but it feels like the British state is a few mistakes away from putting itself into a slow and irreversible collapse. Maybe it will take a few years so that a noticeable disparity forms between the UK and it's neighbours like Ireland and etc, but it feels it's slowly marching that way.
- seibelj 4y ago
- M2Ys4U 4y ago
  The Coulston Four outcome wasn't the result of jury nullification, the defendants were acquitted because they had a lawful defence. I suppose it's possible that the jury found that they found the defendants guilty of breaking the law but returned a "perverse verdict" anyway (jury deliberations are secret after all), but their behaviour certainly had the possibility of being lawful and the jury were directed to decide whether or not it was lawful.
int_19h 4y ago
Do we seriously just keep assuming that economic growth is the natural state of affairs that is indefinitely sustainable, in 2022?
- nemo44x 4y ago
  Yes, why not? We continue to discover new things, make things faster and cheaper, become more efficient and automated, and scale globally. Why wouldn’t we continue to see economic growth? We aren’t anywhere close to tapping out, if that’s even possible.
  - stavros 4y ago
    If you sell ten widgets that cost $100 each, and then you make them faster and cheaper so you can sell a hundred widgets that cost $10 each, you have not achieved any economic growth, as the latter is defined as "the increase or improvement in the inflation-adjusted market value of the goods and services produced by an economy over a certain period of time".
    - smrk007 4y ago
      Do widgets not provide any utility to consumers?
    - ciphol 4y ago
      If you got the price of widgets down from $100 to $10, that's because directly or indirectly you figured out how to make them with less labor/materials. That labor and materials can be redirected to other purposes, aka economic growth.
    - imtringued 4y ago
      If we assume that people only want ten widgets and you sit on your 90 extra widgets the yes there is no economic growth.
  - 88840-8855 4y ago
    That is one part. The second part why capitalism was so successful in post ww2 was exponential global population growth. This is NOT sustainable, especially when you want to reduce resource consumption per person. The post ww2 capitalism led to growth because the resource consumption per person increased. Stagnating populations and the goal of sustainability will lead to economic stagnation. To add to the actual article: Well, this is the price of democracy. People voted, now they have to pay. This is democracy! Populism instead of technocracy. Instead of doing the right thing, the majority decides the direction. And further, you want to support corrupt Ukraine and punish evil Russia? Then you gotta pay, too. We will see how long this "value driven politics" approach will work with the Western majorities and how long it takes until yet another populist is elected fully democratically who promises so much good stuff and in the end just delivery crap like Brexit. I personally lost the trust in our Western system and stopped voting.
swayvil 4y ago
Can somebody explain to me, briefly and plainly, why an absence of growth comprises a crisis? If the bills are paid and the people are fed then it's ok to keep things at their present size. Right?
- tmnvix 4y ago
  I'm no economist, but my understanding is that it's the nature of our debt based financial system. The money that exists in our system (except for an insignificant fraction) is loaned into existence. Borrowers must repay the principle and the interest. For this to be possible in aggregate, the money supply must grow, which means more loans must be issued....
  - imtringued 4y ago
    It is not the debt based system itself. It is the fact that when no growth occurs or there is even a decline the interest rate doesn't fall low enough, you get a liquidity trap where people keep their money in liquid bank accounts and don't spend it. The money supply in circulation decreases while the money supply in stagnation increases. People save more than others want to be in debt. So the government steps in and "restores" the balance by forcing itself to go in debt. The circulating money supply is necessary for employment and paying off debts. You need money to be in circulation and the way to do that is by introducing a demurrage fee or negative interest rate which is only paid when people hold onto liquidity for a prolonged period of time. The problem also exists with a gold standard because people hoard gold instead of letting it circulate.
rayiner 4y ago
> This newspaper has long argued that Mr Johnson ought to have resigned for lying repeatedly to Parliament about whether he broke his own laws. By “laws” do they mean covid regulations?
- Nursie 4y ago
  Yes, those laws he brought in to establish covid regulations.
- M2Ys4U 4y ago
  Yes - the Partygate article on Wikipedia explains what's gone on: https://en.wikipedia.org/wiki/Partygate https://en.wikipedia.org/wiki/Partygate
anothernewdude 4y ago
I'm surprised they have growth
mjfl 4y ago
There really is no economic growth in Europe, outside of Germany. If you look at the largest market-cap companies in UK and France, for instance, they are all petroleum based. Since these businesses have done poorly for the past 20 years, you get the phenomenon of their stock indices not growing even a little in 20 years[1][2][3]. This would be disastrous, but luckily there is the US stock market present for their citizens and institutions to invest in. [1] https://www.thisismoney.co.uk/money/diyinvesting/article-8101459/The-FTSE-100-15-20-years-invest-long-term.html https://www.thisismoney.co.uk/money/diyinvesting/article-810... [2] https://www.google.com/search?q=ftse+index https://www.google.com/search?q=ftse+index [3] https://www.google.com/search?q=cac40+index https://www.google.com/search?q=cac40+index (click max on the google searches and look at 20 year history).
- mwint 4y ago
  Genuine question from a non-economist: in the absence of the US stock market, what dynamics would make this disastrous?
  - lotsofpulp 4y ago
    This is just a completely amateur opinion. Society has made promises decades ago about returns that would be delivered in the future, which would then translate to people being able to procure labor/services, especially in old age. Without those returns, actual quality of life will not meet expected qualify of life (which is and has been happening for decades for greater and greater portions of the population, hence all the political turmoil). Typically, this growth was easy to achieve due to almost all women having 3+ kids each. Then, advances in technology picked up some of the slack from decreasing birth rates. But seems like advances in technology are not able to make up for the decreasing birth rates since a while now, especially in non US countries.
  - mjfl 4y ago
    Take the money in your retirement account and divide it by 10, and that's how much money you would have left. Your money wouldn't grow anymore, and it's growth due to stock appreciation is responsible for roughly 90% of its value. I would learn this stuff, pretty important for your retirement...
lifeisstillgood 4y ago
One possible solution to lying politicians is to recognise they lie (mostly) not to hide a scandal but to appeal to everyone. This is the big fear behind facebook / cambridge analytica - the problem was that a computer could generate different policies for each cohort of voters, essentially lying to everyone so that the same politician seemed to be on everyone's side. There are two solutions - a clear single manifesto that everyone has to read, or we stop voting for politicians manifestos together - instead we vote for dozens of individual policies and then vote for the people to implemtnthen it's a terrible idea inthink
tlocke 4y ago
Curiously, in this case the people of the UK actually wanted to be lied to in order to 'get Brexit done'. The previous prime minister (Theresa May) was honest about Brexit, saying that it would involve putting a customs border down the Irish Sea, cutting off Northern Ireland. She was removed for voicing this inconvenient truth and replaced by Johnson, who said that he would 'get Brexit done' without any border. Hence his famous, 'we'll have our cake and eat it' comment. So the upshot is that the UK purposely voted for a shifty character, and that's what they got!
- MattPalmer1086 4y ago
  It was indeed the "get Brexit done" that won it, along with distrust of Corbyn. People were so sick of it, including many remainers.
- adammarples 4y ago
  "cutting off" northern Ireland. Aka putting them in an enormous free trade area to their massive benefit. Reminds me of the headline "fog in the channel, continent cut off".
MafellUser 4y ago
>When it comes to growth, Britain’s politicians will the ends but not the means. They run scared of the homeowning elderly, who turn up to vote and make up a growing share of the electorate. So tax rises are heaped on businesses and workers instead, further harming the economy. The government has likewise watered down its plans for reforming the planning system—because elderly homeowners object. Introduce an ageist voting system. Your vote is worth 1/(how many years you've been eligible to vote). I'm only half joking of course.
- 0xy 4y ago
  [flagged]
  - MafellUser 4y ago
    Sure keep cherry picking examples to support your points. Allow me to cherry pick mine: https://yougov.co.uk/topics/politics/articles-reports/2019/12/17/how-britain-voted-2019-general-election https://yougov.co.uk/topics/politics/articles-reports/2019/1... In the UK the most important indicator of how you'll vote is your age.
mmarq 4y ago
> When it comes to growth, Britain’s politicians will the ends but not the means. They run scared of the homeowning elderly, who turn up to vote and make up a growing share of the electorate. So tax rises are heaped on businesses and workers instead, further harming the economy. The government has likewise watered down its plans for reforming the planning system—because elderly homeowners object. This is the crux of the matter. The UK has entered the same trajectory Italy entered a few decades ago. The old have become the most important constituency, if not the only that really matters and their economic objectives are at odds with growth and with the welfare of younger generations. From cutting taxes on work and increasing taxes on property, to building new houses and making the life of private renters less miserable. While the cost of childcare and education goes to the roof, pension increases are financed with tax hikes that only affects workers younger than 65. Even the push against remote work, I think, should be analysed in this light: the home owning elderly don't want the price of their property to go down due to reduced demand. Johnson and Cameron are equally incompetent and equally damaged the country and its character in ways that I’m not sure are reversible. Cameron was just, let’s say, more composed. The Conservative party is in a power for power’s sake game that doesn't have precedents in this country, at least since the 80s. Here I’m not saying that Thatcher and Blair didn’t have personal ambitions, but they certainly had a vision for the country and they left it in a better shape than when they found it. The current strain of the Conservative party handled the financial crisis so badly, that one may argue that the UK never came out of it. The country became poorer and, so, uglier and nastier, xenophobia has been totally normalised, especially against eastern and central Europeans. Those, that like me, moved to the UK in the mid-2000s, were promised Love Actually and ended up in the Jeremy Kyle Show. Johnson now is in the process of buying consensus with fiscal transfers and gifts of all sorts, not much differently from what the worst Italian governments of the past 30 years have been doing. 30 years later, we know where this journey ends. My economic situation is rather comfortable: I own my flat and I should be able to pay off my mortgage with next year’s bonus in my mid-30s. But I’m wondering if I want my child to grow here, to live in a country where, from the 11+ exam, people are in a never ending rat race just to get what the average EU resident takes for granted. Do I want him to be a renter at constant risk of eviction and, so, homelessness? Do I want him to spend 10K a year in tuition fees? Do I want him to participate in the most classist school system in Western Europe? We are lucky enough to be dual nationals.

Looking to economic growth only without any regard for unemployment is myopic.

londons_explore 4y ago
People can be very employed doing pointless tasks which have no overall economic benefit. When you look deeper, you see that many jobs are 'pointless' from an overall economic perspective. For example how many parking attendants is the right number to employ? In a perfect society, everyone would pay for parking according to the sign, and those attendants could have another more beneficial role. If you get rid of 20% unemployment by just making 20% of everyone's role pointless busywork, you haven't really fixed the problem.
- bumby 4y ago
  Isn't the converse also true? If, in theory, you automate everyone's jobs away you could increase productivity and economic growth. But if there's nobody working, that productivity is also pointless because there's nobody with money to consume the product. I think the OP's point was there has to be balanced approach.
  - marcinzm 4y ago
    >nobody with money to consume the product. Then tax production and just give people money (ie: Universal Basic Income). You're doing the exact same thing with pintless jobs anyway so may as well be less wasteful about it.
    - rootusrootus 4y ago
      It would be interesting to see what kind of caste system we would end up with if we did such a thing.
    - spinach 4y ago
      People derive self-worth, dignity and meaning from their jobs. How will you replace that?
      - xyzzy123 4y ago
        They could join voluntary organisations. Or they could voluntarily do any of the infinite number of jobs to do in the world which cannot and will never be automated, even though they don't really need the money. Unless there's something special about being forced to work that boosts the dignity and self worth people feel?
      - M2Ys4U 4y ago
        People do things that give them self-worth, dignity and meaning even if they don't get paid to do them. I mean that's pretty much the definition of a hobby.
        bumby 4y ago
        There's an added value to being felt as necessary to one's society that a hobby may not capture. To the point of the commenter above, something like volunteer work would probably fulfill that need better than a hobby.
        M2Ys4U 4y ago
        I guess that depends on the hobby - some are more solo pursuits but others are more social.
    - bumby 4y ago
      To a similar point, I think there's at least an argument to be made for an automation tax. But I also think that is politically unpalatable due to the potential impact on economic growth.
  - csomar 4y ago
    Not really. These people will work in services instead (and develop valuable skills as a result). They could do things (even like Pet Grooming) that benefits other people and free more of their time.
    - bumby 4y ago
      I agree, but the issue is people are paid according to their impact on the economy. Sob while they may spend time doing things that benefit society, it doesn’t mean they will have the money to consume. If a hedge fund manager quits to be a social worker, they are doing something to benefit society but they aren’t going to be able to support the lifestyle of an economically productive hedge fund manager
  - jwmhjwmh 4y ago
    If you automate everything, how is profit made? Say every firm charges a 5% markup above costs of materials and machine upkeep. A given firm must pay other firms' 5% markups on the materials it needs, making it cheaper for the firm to produce those materials itself. This tends toward complete centralization. There are two ways to fix this. The first is to have an economy based on many monopolies trading resources. This obviously suboptimal for economic calculation. The second way is to adopt a planned economy. As labor productivity increases, profitability decreases, as historical data shows[1]. In the long term, this problem of capitalism cannot be avoided. [1]: https://thenextrecession.wordpress.com/2022/01/22/a-world-rate-of-profit-important-new-evidence/ https://thenextrecession.wordpress.com/2022/01/22/a-world-ra...
    - deleted 4y ago
      [deleted]
    - imtringued 4y ago
      Or you could just allow the interest rate on capital to fall to 0% by introducing a negative interest rate on cash and close up all the economic rent seeking via land value taxes and similar approaches. That would eliminate the profitability and growth requirement and result in the end of capitalism as we will have too much capital to care about it specifically.
    - bumby 4y ago
      If you automate everything, how is profit made? I think profit is a different issue. Profit is not necessarily dependent of automation. Automation is just a means to reduce human labor. Generally, this increases efficiency which leads to increased productivity, but it's definitely not the only way to improve efficiency. There are other ways of increasing productivity and I would argue you will never have completely efficient processes. And innovation is always a potential disrupter to generate new profit. Even Marx said it's just a tendency for profit to fall and not an absolute maxim.
- chrisco255 4y ago
  By that logic anything could be considered pointless. A parking lot attendant's job is useful so long as there is demand for the services they provide. It's arrogant to presume any job as "pointless". And at any rate the world isn't "perfect" whatever your definition of that is, which is far different than my definition, so it's important to accept reality as it is. Paid parking lots need security and to be maintained, just as any other business. Without that maintenance the lot falls to crime and decay. So long as the world is not "perfect" (forever) it's not pointless (as long as there's real demand for the services).
  - hahaxdxd123 4y ago
    You are being overly pedantic to the example he provides. Let's do a more classical example - should they government stimulate job growth in the glass and construction industries by smashing windows? No - the world doesn't become a better place even if there's a growth in GDP from the economic activity of increased glass making. Some jobs simply produce more goods or intellectual property than others (or better facilitate such production). The main point here is it's not good for governments to misallocate resources by encouraging more ~0-production jobs for sake of low unemployment. https://en.wikipedia.org/wiki/Parable_of_the_broken_window https://en.wikipedia.org/wiki/Parable_of_the_broken_window
    - chrisco255 4y ago
      To your first question, of course not, but that does not mean a parking lot attendant's job is pointless. The need for maintenance and security of a parking lot is inescapable. Clearly doing destructive things is destructive. Maintenance and security are productive activities, though. Yes, in an imaginary Kumbaya world where things don't deteriorate or get dirty and no one takes advantage of unattended, unsupervised property, you could do without the maintenance and the security. But that world will never exist, will it? So it's not pointless and it's not destructive. In fact, without the maintenance and security, the productive asset in this case would not be able to exist to provide the service to those who need it.
- imtringued 4y ago
  We can employ them to do pointless tasks like restoring the soil and afforestation or building housing. Fusion is necessary for space exploration so we can also hire them for that. Isn't it weird, how there are these logical societal investments and yet the economic system isn't set up to let us do them even though the capacity to do them exists and we have unemployed people desperate for work? We dislike these investments and deride them as zombie companies.
mise_en_place 4y ago
Unemployment is generally low when inflation is high, but depending on stagflation could also start spiking up dramatically

The neighboring EU is not doing any better and maybe heading to the crumble of Eurozone - though not immediately. Italy is now living basically on the debt funded by Northern European countries and soon this might come to the end with the widening spreads and markets not believing Italy’s ability to serve its debt. Either the money printer must brrrr, with massive inflation, or Italy, maybe Greece and Spain to default their bonds. https://www.reuters.com/business/finance/some-european-states-rising-debt-costs-rekindle-2011-crisis-memories-2022-05-10/ https://www.reuters.com/business/finance/some-european-state...

jacobolus 4y ago
This estimate has British economic woes mostly down to Brexit, compared to a model built from the observed performance of other advanced economies: https://www.cer.eu/publications/archive/policy-brief/2022/cost-brexit-so-far https://www.cer.eu/publications/archive/policy-brief/2022/co...
- krona 4y ago
  Not a single error bar or measure of statistical confidence. In other words, unfalsifiable econometric woo-woo.
  - stevesimmons 4y ago
    So what is your estimate?
    - toxicFork 4y ago
      Pandemic
  - Imnimo 4y ago
    What is on pages 8-10?
- mypastself 4y ago
  I encourage others here to read the study and analyze its methodology before outright accepting the conclusions of a self-described “think-tank devoted to making the EU work better, and strengthening its role in the world“. One of the several issues is with how the “dopplegängers” are selected. A basket of (weighted) countries is selected with economic structures and pre-Brexit performance similar to the UK. I haven’t analyzed the linked Python code and datasets, but the text gives scant information on what exactly makes a specific country similar or dissimilar to the UK. The rare exception is when it compares UK’s GDP growth with Australia’s and New Zealand’s instead of Italy’s, when it says it ignored the latter because of its “rapidly ageing” population. In the “Services trade” rubric, UK actually outperforms the dopplegänger, until the author removes the country with the largest weight, at which point the UK’s advantage disappears. This could be interpreted as some questionable data massaging. None of which is to say that I necessarily think Brexit was, or will be, an economic success for the UK. This is not something that can be easily determined at this point, especially with Covid. But these studies should be taken with a grain of salt.

avidiax 4y ago

https://web.archive.org/web/20220611231105/https://www.economist.com/leaders/2022/06/09/low-economic-growth-is-a-slow-burning-crisis-for-britain https://web.archive.org/web/20220611231105/https://www.econo... What's the structural problem at play here? Brexit is definitely isolating, which promotes "comparative disadvantage", i.e. doing things domestically that are more efficient to achieve through trade. Maybe there are demographic problems? Too many elderly, not enough youth and skilled labor? They allude to democratic inefficiencies, i.e. voting blocs that receive more than they pay, creating poor allocation and disincentive. But all of the above don't seem to be solvable. UK won't re-enter the EU, demographics can only be tweaked by immigration, and voting blocs are part of democracy. So what does that leave in terms of solutions?

formerkrogemp 4y ago
> So what does that leave in terms of solutions? https://youtu.be/ZuXzvjBYW8A https://youtu.be/ZuXzvjBYW8A
- deleted 4y ago
  [deleted]
- burlesona 4y ago
  For others who won’t know what this video link is, it leads to a pretty good talk about the generational wealth gap in Britain and potential solutions to close it. I found it very informative. Thanks for sharing!
  - formerkrogemp 4y ago
    Thanks for providing an overview that I neglected to provide! I found this video on Y-Combinator News. I thought it worthwhile to share as I've learned from it as well.
WalterBright 4y ago
The likely suspect - too much voting themselves money out of the treasury. The same problem the US is facing.

troon-lover 4y ago

Barrin92 4y ago

In my opinion, mostly formed from personal experience in the UK the biggest issue is the extreme cultural and political centralization around South-East England. The gulf between London and the rest of the country, particularly the North of England is immense. There is incredible potential wasted in large parts of the UK. The tone of the article itself reflects that culture, one particular government or set of policies cannot be responsible for malaise that is so generalized. I think the UK needs much more devolution of power, autonomy and less financial and political dependence between its regions.

bsder 4y ago
> There is incredible potential wasted in large parts of the UK. Except that those parts are the ones who benefited most from being in the EU and are also the parts that overwhelmingly voted for Brexit.
- scaramanga 4y ago
  All corners of the media fed them decades of lies about how it was the EU that was holding them back, and not the british ruling class.
  - iqkznnft 4y ago
  - deleted 4y ago
    [deleted]
- rayiner 4y ago
  How are they benefitting from cheap labor and goods coming over from Eastern Europe? That sounds like something London benefits from.
  - ben_w 4y ago
    IIRC, the poorer parts of the UK are where the car factories are, and they used to export a lot — might still do, but the investment in that sector is down due to Brexit, and that's because the cheap imports included parts for manufacturing cars. As for labor, again IIRC, the (fruit?) farms are labor intensive and locals aren't interested, at least not at the wages that the farms can afford given what they get paid by the supermarkets, who can't meaningfully pay more without raising prices, which they can't do without hurting more people: even before I left, I was seeing "donate food to the food bank" baskets at the doors to supermarkets in well-off areas like Cambridge.

deleted 4y ago

[deleted]

kapuasuite 4y ago

scaramanga 4y ago
The article is quite inaccurate, the ruling class runs scared of precisely nobody. They own the country and they will dispose of its capital as they chose, enjoying their property rights without the ignorant meddling of marginalised outsiders. The Tory party run essentially unopposed and the political preferences of isolated elderly people are shaped largely by the deluge of lies and fantasy which stream constantly at them from the murdoch press. Tax breaks are awarded to businesses, and tax rises are heaped on workers and the youth who are increasingly impoverished. Failing to adequately tax or regulate all of this "productive activity" results in a windfall of profits for a few who hoard it and stagnate the economy while the demand for basic goods and services dries up and actually-productive sectors wither in favour of extractive rent-seeking "productive activity". The resultant budget deficits lead to crises in basic services, crumbling infrastructure, inability to intervene to keep incomes in line with living costs (even if a political party with the will to do that existed, and could get elected, which it doesn't and can't), and a spiralling budget deficit.
- seibelj 4y ago
  Yeah just gotta raise taxes more on whatever businesses are left and that will solve it.
  - imtringued 4y ago
    High taxes on workers and low taxes on companies means wealth concentrates and those companies slowly lose their customer base which then leads to mergers and acquisitions and the formation of monopolies.

zmmmmm 4y ago

> Mr Johnson ought to have resigned for lying repeatedly to Parliament about whether he broke his own laws There seems to be a problem developing across many western democracies that a large segment of voters have developed a tolerance for lying by their leaders. Perhaps it's just me getting older and more cynical but I really feel like this was not how it was 30 years ago. I'm not sure where it will lead but it feels like this is one of the hallmarks that you would expect to see at the beginning of the breakdown of a civilised society.

sudosysgen 4y ago
What consequences were there, really, for the Gulf of Tonkin? I think lying was tacitly accepted in US politics since living memory.
- wutbrodo 4y ago
  > accepted in US politics Is your impression that this is US-specific? Mine is that lying is accepted in politics in general.
  - sudosysgen 4y ago
    The US is the oldest continuous western democracy, so it makes sense to use it as an example here, but of course the problem isn't limited to it.
    - benj111 4y ago
      How are you defining "continuous western democracy" because the subject of this piece (the UK) would seem to have a better claim.
      - sudosysgen 4y ago
        Would it? Before 1832 almost half of the seats in the UK were nomination boroughs and there was no secret ballot until 1872 - the country was practically controlled fully by the aristocracy.

olivermarks 4y ago

The challenge for the UK is that the flywheel of the City of London corporation and its offshore wormholes were at the core of globalization. Ironically the nation state the CoL coexists with (the UK) is as large a casualty of this as the many colonial nation states ravaged by globalization. This was compounded by the globalists - which the Economist exists to promote - forcing the merger of the UK into the european union. The vote to leave by the proletariat demonstrated massive dissatisfaction, but sadly there are subsequently no credible political parties or leadership that are not closely aligned with the CoL and/or the EU, resulting in a becalming. The Spider's Web: Britain's Second Empire | Documentary Film https://youtu.be/np_ylvc8Zj8 https://youtu.be/np_ylvc8Zj8 'Michael Oswald's film The Spider's Web reveals how at the demise of empire, City of London financial interests created a web of secrecy jurisdictions that captured wealth from across the globe and hid it in a web of offshore islands. Today, up to half of global offshore wealth is hidden in British jurisdictions and Britain and its dependencies are the largest global players in the world of international finance'. 80 minutes, well worth watching imo

iLoveOncall 4y ago
> The vote to leave by the proletariat demonstrated massive dissatisfaction The only thing it demonstrated is massive propaganda, that's it. People were dissatisfied with the current state of their life, not with the EU. Then people just fed them lies saying that their problems were due to being in the EU.
- olivermarks 4y ago
  Please watch the video I linked to for context

usrn 4y ago

If the population isn't growing then there shouldn't be concern about the economy not growing. Unlimited growth isn't sustainable and shouldn't be expected.

kypro 4y ago

I live in the UK and I had a chat with my partner about an hour ago about quitting our jobs and going on benefits. I was 60% joking, but I'm absolutely fed up with this country. Things are extremely difficult here if you're working for a living and are not ultra wealthy. Just last year I brought a house which put in me hundreds of thousands of pounds of debt because of how ridiculous house prices are. I've worked and saved my whole life since I was a teenager (32 now), yet there are 20 year olds on benefits in my family who live in houses that are worth more than mine and have never worked. I'm so stressed out right now because interest rates are obviously rocketing up so I'll be paying a much higher rate when I go to remortgage next year and at the same time house prices could potentially crash. The reality is if I lose my job over the next few years I'm probably going to be screwed and the last 15 years of work was probably all for nothing. Fun. At the same time significantly more than half my income goes on taxes when you consider taxes like VAT, council tax, TV license, car tax, fuel taxes, stamp duty tax, and all the others I'm forgetting on top of the income and NI tax that comes out of our wages. For the hundreds of thousands of pounds of tax I've paid over my career I have the benefit of getting literally no help whenever I need it because I work and I also get to enjoy our barely functional public services. I'm not complaining about my situation, but it does upset me when I've struggled my whole live to get where I am, yet single mums in their 20s in my family still get to live in nicer houses than me, get free cars from the government while not having to work a day in their lives. I'm driving a Fiat Punto with 90,000 miles on the clock while several people in my family on benefits have gotten new BMWs because of government schemes. The low growth we have in this country doesn't surprise me at all. Last week I was looking for a weekend job to help with the bills, but given my tax rate it's basically pointless looking for extra work. People in my family on benefits are also routinely advised not to work by the job centre because it would leave them financially worse off. But we're not just disincentivised people from working, we're also massively over regulated. It never ceases to amaze me just how difficult it is to do anything here. For example, my girlfriend likes making bath bombs she wanted to sell some so I looked into helping her set up an online store, but I found out you have to pay hundreds of pounds to have every product you want to sell reviewed and approved first making the whole thing pointless at the scale she would be operating at. Another example is something I'd love to do which is sell cakes, pastries and pizzas as a delivery service from my home kitchen because I love cooking and always have too much food. But I can't sell food because to do that I need to have health and safety inspections, and again at the scale I'd be operating at it makes no sense. And it's like this with everything here. Unless you're super rich or know someone in the industry who can get you through all the regulatory hope I don't really understand how anyone starts any business without being terrified that they're operating in violation of some regulation. Apparently I can't even cut the tree down in my own garden without telling the local council because it's over a certain width. It's a beyond a joke. I very much agree that Britain is heading for a crisis if we're not already in one. The core problem we have is that people here truly believe the government can fix everything by spending more money and increasing taxes, and until that attitude changes nothing will get better. So instead of cutting taxes and incentivising people to work, I can almost guarantee the public will demand the government fixes this problem by increasing taxes on people who earn more than them while spending ever more money on various inefficient wellfare schemes. And if you want an example of this then just look at what's happening right now with the energy bill crisis... No one is asking for tax cuts to help people with affordability, they're asking for handouts to pay for their bills while increasing taxes on the energy companies.

intunderflow 4y ago

Honestly it feels like the floor is about to fall through. On waiting for services: I was actually (and still technically am) on an NHS waitlist which I've been on for the last 5 years, my new employer is just paying a private doctor to handle everything which begins next week. Just wanted to put that out there to give an idea to the non-UK HN audience of how bad things have got. The only other state that comes to mind where typical service delivery times were measured in years was the DDR in the late 80s, and we all know how that ended. One other thing few talk about is the recent noticeable drop in the ability of the state to enforce it's laws (especially when those laws are seen to be morally wrong), for example there's been multiple documented instances now of immigration raids being stopped by hundreds of people surrounding the vans until the police leave (https://news.sky.com/story/peckham-man-arrested-for-immigration-offences-released-after-protesters-block-van-12632214 https://news.sky.com/story/peckham-man-arrested-for-immigrat...) and jury nullification is starting to become a noticeable thing even for those who are arrested (a prominent example being the Colston Four: https://en.wikipedia.org/wiki/Colston_Four https://en.wikipedia.org/wiki/Colston_Four) - the fact the state can't even consistently enforce its laws anymore speaks to its rapidly diminishing power, even domestically. Maybe I'm just mad and have read too much into everything, but it feels like the British state is a few mistakes away from putting itself into a slow and irreversible collapse. Maybe it will take a few years so that a noticeable disparity forms between the UK and it's neighbours like Ireland and etc, but it feels it's slowly marching that way.

seibelj 4y ago
M2Ys4U 4y ago
The Coulston Four outcome wasn't the result of jury nullification, the defendants were acquitted because they had a lawful defence. I suppose it's possible that the jury found that they found the defendants guilty of breaking the law but returned a "perverse verdict" anyway (jury deliberations are secret after all), but their behaviour certainly had the possibility of being lawful and the jury were directed to decide whether or not it was lawful.

int_19h 4y ago

Do we seriously just keep assuming that economic growth is the natural state of affairs that is indefinitely sustainable, in 2022?

nemo44x 4y ago
Yes, why not? We continue to discover new things, make things faster and cheaper, become more efficient and automated, and scale globally. Why wouldn’t we continue to see economic growth? We aren’t anywhere close to tapping out, if that’s even possible.
- stavros 4y ago
  If you sell ten widgets that cost $100 each, and then you make them faster and cheaper so you can sell a hundred widgets that cost $10 each, you have not achieved any economic growth, as the latter is defined as "the increase or improvement in the inflation-adjusted market value of the goods and services produced by an economy over a certain period of time".
  - smrk007 4y ago
    Do widgets not provide any utility to consumers?
  - ciphol 4y ago
    If you got the price of widgets down from $100 to $10, that's because directly or indirectly you figured out how to make them with less labor/materials. That labor and materials can be redirected to other purposes, aka economic growth.
  - imtringued 4y ago
    If we assume that people only want ten widgets and you sit on your 90 extra widgets the yes there is no economic growth.
- 88840-8855 4y ago
  That is one part. The second part why capitalism was so successful in post ww2 was exponential global population growth. This is NOT sustainable, especially when you want to reduce resource consumption per person. The post ww2 capitalism led to growth because the resource consumption per person increased. Stagnating populations and the goal of sustainability will lead to economic stagnation. To add to the actual article: Well, this is the price of democracy. People voted, now they have to pay. This is democracy! Populism instead of technocracy. Instead of doing the right thing, the majority decides the direction. And further, you want to support corrupt Ukraine and punish evil Russia? Then you gotta pay, too. We will see how long this "value driven politics" approach will work with the Western majorities and how long it takes until yet another populist is elected fully democratically who promises so much good stuff and in the end just delivery crap like Brexit. I personally lost the trust in our Western system and stopped voting.

swayvil 4y ago

Can somebody explain to me, briefly and plainly, why an absence of growth comprises a crisis? If the bills are paid and the people are fed then it's ok to keep things at their present size. Right?

tmnvix 4y ago
I'm no economist, but my understanding is that it's the nature of our debt based financial system. The money that exists in our system (except for an insignificant fraction) is loaned into existence. Borrowers must repay the principle and the interest. For this to be possible in aggregate, the money supply must grow, which means more loans must be issued....
- imtringued 4y ago
  It is not the debt based system itself. It is the fact that when no growth occurs or there is even a decline the interest rate doesn't fall low enough, you get a liquidity trap where people keep their money in liquid bank accounts and don't spend it. The money supply in circulation decreases while the money supply in stagnation increases. People save more than others want to be in debt. So the government steps in and "restores" the balance by forcing itself to go in debt. The circulating money supply is necessary for employment and paying off debts. You need money to be in circulation and the way to do that is by introducing a demurrage fee or negative interest rate which is only paid when people hold onto liquidity for a prolonged period of time. The problem also exists with a gold standard because people hoard gold instead of letting it circulate.

rayiner 4y ago

> This newspaper has long argued that Mr Johnson ought to have resigned for lying repeatedly to Parliament about whether he broke his own laws. By “laws” do they mean covid regulations?

Nursie 4y ago
Yes, those laws he brought in to establish covid regulations.
M2Ys4U 4y ago
Yes - the Partygate article on Wikipedia explains what's gone on: https://en.wikipedia.org/wiki/Partygate https://en.wikipedia.org/wiki/Partygate

anothernewdude 4y ago

I'm surprised they have growth

mjfl 4y ago

There really is no economic growth in Europe, outside of Germany. If you look at the largest market-cap companies in UK and France, for instance, they are all petroleum based. Since these businesses have done poorly for the past 20 years, you get the phenomenon of their stock indices not growing even a little in 20 years[1][2][3]. This would be disastrous, but luckily there is the US stock market present for their citizens and institutions to invest in. [1] https://www.thisismoney.co.uk/money/diyinvesting/article-8101459/The-FTSE-100-15-20-years-invest-long-term.html https://www.thisismoney.co.uk/money/diyinvesting/article-810... [2] https://www.google.com/search?q=ftse+index https://www.google.com/search?q=ftse+index [3] https://www.google.com/search?q=cac40+index https://www.google.com/search?q=cac40+index (click max on the google searches and look at 20 year history).

mwint 4y ago
Genuine question from a non-economist: in the absence of the US stock market, what dynamics would make this disastrous?
- lotsofpulp 4y ago
  This is just a completely amateur opinion. Society has made promises decades ago about returns that would be delivered in the future, which would then translate to people being able to procure labor/services, especially in old age. Without those returns, actual quality of life will not meet expected qualify of life (which is and has been happening for decades for greater and greater portions of the population, hence all the political turmoil). Typically, this growth was easy to achieve due to almost all women having 3+ kids each. Then, advances in technology picked up some of the slack from decreasing birth rates. But seems like advances in technology are not able to make up for the decreasing birth rates since a while now, especially in non US countries.
- mjfl 4y ago
  Take the money in your retirement account and divide it by 10, and that's how much money you would have left. Your money wouldn't grow anymore, and it's growth due to stock appreciation is responsible for roughly 90% of its value. I would learn this stuff, pretty important for your retirement...

lifeisstillgood 4y ago

One possible solution to lying politicians is to recognise they lie (mostly) not to hide a scandal but to appeal to everyone. This is the big fear behind facebook / cambridge analytica - the problem was that a computer could generate different policies for each cohort of voters, essentially lying to everyone so that the same politician seemed to be on everyone's side. There are two solutions - a clear single manifesto that everyone has to read, or we stop voting for politicians manifestos together - instead we vote for dozens of individual policies and then vote for the people to implemtnthen it's a terrible idea inthink

tlocke 4y ago

Curiously, in this case the people of the UK actually wanted to be lied to in order to 'get Brexit done'. The previous prime minister (Theresa May) was honest about Brexit, saying that it would involve putting a customs border down the Irish Sea, cutting off Northern Ireland. She was removed for voicing this inconvenient truth and replaced by Johnson, who said that he would 'get Brexit done' without any border. Hence his famous, 'we'll have our cake and eat it' comment. So the upshot is that the UK purposely voted for a shifty character, and that's what they got!

MattPalmer1086 4y ago
It was indeed the "get Brexit done" that won it, along with distrust of Corbyn. People were so sick of it, including many remainers.
adammarples 4y ago
"cutting off" northern Ireland. Aka putting them in an enormous free trade area to their massive benefit. Reminds me of the headline "fog in the channel, continent cut off".

MafellUser 4y ago

0xy 4y ago
[flagged]
- MafellUser 4y ago
  Sure keep cherry picking examples to support your points. Allow me to cherry pick mine: https://yougov.co.uk/topics/politics/articles-reports/2019/12/17/how-britain-voted-2019-general-election https://yougov.co.uk/topics/politics/articles-reports/2019/1... In the UK the most important indicator of how you'll vote is your age.

mmarq 4y ago

> When it comes to growth, Britain’s politicians will the ends but not the means. They run scared of the homeowning elderly, who turn up to vote and make up a growing share of the electorate. So tax rises are heaped on businesses and workers instead, further harming the economy. The government has likewise watered down its plans for reforming the planning system—because elderly homeowners object. This is the crux of the matter. The UK has entered the same trajectory Italy entered a few decades ago. The old have become the most important constituency, if not the only that really matters and their economic objectives are at odds with growth and with the welfare of younger generations. From cutting taxes on work and increasing taxes on property, to building new houses and making the life of private renters less miserable. While the cost of childcare and education goes to the roof, pension increases are financed with tax hikes that only affects workers younger than 65. Even the push against remote work, I think, should be analysed in this light: the home owning elderly don't want the price of their property to go down due to reduced demand. Johnson and Cameron are equally incompetent and equally damaged the country and its character in ways that I’m not sure are reversible. Cameron was just, let’s say, more composed. The Conservative party is in a power for power’s sake game that doesn't have precedents in this country, at least since the 80s. Here I’m not saying that Thatcher and Blair didn’t have personal ambitions, but they certainly had a vision for the country and they left it in a better shape than when they found it. The current strain of the Conservative party handled the financial crisis so badly, that one may argue that the UK never came out of it. The country became poorer and, so, uglier and nastier, xenophobia has been totally normalised, especially against eastern and central Europeans. Those, that like me, moved to the UK in the mid-2000s, were promised Love Actually and ended up in the Jeremy Kyle Show. Johnson now is in the process of buying consensus with fiscal transfers and gifts of all sorts, not much differently from what the worst Italian governments of the past 30 years have been doing. 30 years later, we know where this journey ends. My economic situation is rather comfortable: I own my flat and I should be able to pay off my mortgage with next year’s bonus in my mid-30s. But I’m wondering if I want my child to grow here, to live in a country where, from the 11+ exam, people are in a never ending rat race just to get what the average EU resident takes for granted. Do I want him to be a renter at constant risk of eviction and, so, homelessness? Do I want him to spend 10K a year in tuition fees? Do I want him to participate in the most classist school system in Western Europe? We are lucky enough to be dual nationals.