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There are limited resources so defining success on growth will eventually lead to a point of no more growth and no longer be successful by a growth definition.

by jrs235 13y ago

There are limited resources so defining success on growth will eventually lead to a point of no more growth and no longer be successful by a growth definition. Comparing to GDP gets tricky. Is GDP growing due to actual output growth and wealth generation or due to inflation? I suppose we need to first agree on what were looking at defining what a successful business based on a non moving target or defining success based on comparing it to other businesses. Do I think a businesses revenue should grow with GDP? Yes. Does the profit margin need to? Not necessarily. To be more successful at investing you definitely want businesses that have higher ROIs. However, are we discussing successful investing or successful businesses? Edit: typos

robzyb 13y ago
> There are limited resources so defining success on growth will eventually lead to a point of no more growth and no longer be successful by a growth definition. Growth depends on resources AND technology. Its quite possible to have growth without any change in resourcing. > Comparing to GDP gets tricky. Is GDP growing due to actual output growth and wealth generation or due to inflation? It doesn't make a difference. In this case we are definitely talking nominal growth. My bottom line would be that a business would generally(!) not be classed as successful if it is not growing. Of course there are other factors that might make a stationary business considered a success.
dredmorbius 13y ago
Is GDP growing due to actual output growth and wealth generation or due to inflation? "True" GDP should be inflation-adjusted, hence you'll see real GDP growth in adjusted statistics. Measuring inflation is its own kettle of worms. The more relevant challenge IMO is that GDP is a highly flawed measure. NNP (net national product) corrects for some of this via accounting for externalities, but both are still cash flow measures, when what would be more appropriate as a net measure of wealth would be a capital growth account -- equivalent to a businesses balance sheet. Sadly, this is one area in which macroeconomics has been stubbornly and persistently lacking.

by jrs235 13y ago

robzyb 13y ago

> There are limited resources so defining success on growth will eventually lead to a point of no more growth and no longer be successful by a growth definition. Growth depends on resources AND technology. Its quite possible to have growth without any change in resourcing. > Comparing to GDP gets tricky. Is GDP growing due to actual output growth and wealth generation or due to inflation? It doesn't make a difference. In this case we are definitely talking nominal growth. My bottom line would be that a business would generally(!) not be classed as successful if it is not growing. Of course there are other factors that might make a stationary business considered a success.

dredmorbius 13y ago

Is GDP growing due to actual output growth and wealth generation or due to inflation? "True" GDP should be inflation-adjusted, hence you'll see real GDP growth in adjusted statistics. Measuring inflation is its own kettle of worms. The more relevant challenge IMO is that GDP is a highly flawed measure. NNP (net national product) corrects for some of this via accounting for externalities, but both are still cash flow measures, when what would be more appropriate as a net measure of wealth would be a capital growth account -- equivalent to a businesses balance sheet. Sadly, this is one area in which macroeconomics has been stubbornly and persistently lacking.