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> Very low growth and a democracy are a very bad combination. Why? It would be interesting to see a justification for this. Very low growth and capitalism are

> Very low growth and a democracy are a very bad combination. Why? It would be interesting to see a justification for this. Very low growth and capitalism are a problematic combination if you believe Piketty, in the sense that the combination can become poisonous for democracy and many other values of the enlightenment.[0] But I don't see how democracy is necessarily incompatible with very low growth (or even a shrinking economy). Note that I still believe growth is a good thing regardless of this (unlike some people especially from an environmentalist bent), but it irks me when statements like this are thrown around with an unjustified air of authority. Other than that, sama really misses the elephant in the room, which is plain old macroeconomics. This is more of a problem in Europe than in the US, but bad macroeconomic beliefs are pretty pervasive within the political elite, to the point where the same person will wring their hands asking for how to enable growth, but refuse to listen to what mainstream academic economists are saying (let alone heterodox academic economists). [0] With the typical rate of growth below the typical rate of return on capital, society necessarily becomes more divided by wealth and poverty.

malisper 12y ago
He linked to another essay of his: http://blog.samaltman.com/growth-and-government http://blog.samaltman.com/growth-and-government
nostromo 12y ago
Democracies generally don't live within their means. That's because elected officials know that voters demand more services than they're willing to pay for. Democracies have gotten away with this by inflating past debts away (in effect, paying for debt via growth). But in a low-growth world, many more western democracies are going to end up like Greece. http://www.economist.com/node/21561932 http://www.economist.com/node/21561932
- nhaehnle 12y ago
  Yes, that seems to be where sama is coming from. On the other hand, I suspect that this is again one of those truisms that may not really be true at all. Consider that in Europe (and to a lesser extent also in the US), mainstream academic economists have essentially been begging politicians to spend more, as that is what the macroeconomic models have been advising them to do for the last few years. And yet there has been a lot of austerity. This really clashes with the idea that elected officials simply give in to demands by voters. The story is obviously more nuanced than this simple truism. Add to this that it is unclear what "living within their means" even means. If you look at it in terms of physical goods and services available, then of course they are living within their means, because living beyond means at the level of a society is physically impossible. You could then clarify your definition to encompass something like "being on a sustainable path into the future", but again, if you evaluate that in terms of physical reality a fair evaluation is probably that democratic states are on average better at preserving resources etc. than states with other forms of government. The cynic in me would say that the whole "democracy and low growth don't go together" is really code for "democracy and low growth and the kind of unequal society I like don't go together",[0] because of course democratic voting outcomes will demand fairness in the sense that if a belt-tightening across society is necessary, the belts of those at the top have to be tightened the most. So: democracy, low growth, unequal society: pick any two out of three, but you can't have all three at once. [0] Though I assume most people talking about these issue are not consciously aware that there even is a distinction.

malisper 12y ago

He linked to another essay of his: http://blog.samaltman.com/growth-and-government http://blog.samaltman.com/growth-and-government

nostromo 12y ago

Democracies generally don't live within their means. That's because elected officials know that voters demand more services than they're willing to pay for. Democracies have gotten away with this by inflating past debts away (in effect, paying for debt via growth). But in a low-growth world, many more western democracies are going to end up like Greece. http://www.economist.com/node/21561932 http://www.economist.com/node/21561932

nhaehnle 12y ago
Yes, that seems to be where sama is coming from. On the other hand, I suspect that this is again one of those truisms that may not really be true at all. Consider that in Europe (and to a lesser extent also in the US), mainstream academic economists have essentially been begging politicians to spend more, as that is what the macroeconomic models have been advising them to do for the last few years. And yet there has been a lot of austerity. This really clashes with the idea that elected officials simply give in to demands by voters. The story is obviously more nuanced than this simple truism. Add to this that it is unclear what "living within their means" even means. If you look at it in terms of physical goods and services available, then of course they are living within their means, because living beyond means at the level of a society is physically impossible. You could then clarify your definition to encompass something like "being on a sustainable path into the future", but again, if you evaluate that in terms of physical reality a fair evaluation is probably that democratic states are on average better at preserving resources etc. than states with other forms of government. The cynic in me would say that the whole "democracy and low growth don't go together" is really code for "democracy and low growth and the kind of unequal society I like don't go together",[0] because of course democratic voting outcomes will demand fairness in the sense that if a belt-tightening across society is necessary, the belts of those at the top have to be tightened the most. So: democracy, low growth, unequal society: pick any two out of three, but you can't have all three at once. [0] Though I assume most people talking about these issue are not consciously aware that there even is a distinction.