Economics and the End of Growth - May 2
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The death of innovation, the end of growth
Robert Gordon, TED
The US economy has been expanding wildly for two centuries. Are we witnessing the end of growth? Economist Robert Gordon lays out 4 reasons US growth may be slowing, detailing factors like epidemic debt and growing inequality, which could move the US into a period of stasis we can't innovate our way out of. Be sure to watch the opposing viewpoint from Erik Brynjolfsson.
Robert J. Gordon is among the most influential macroeconomists in the world. And the big picture he sees is not altogether rosy.
Transcript available at source
Argument: Is it time to ditch the pursuit of economic growth?
Dan O’Neill, Daniel Ben-Ami, The New Internationalist
Economist and author Dan O’Neill and journalist and author Daniel Ben-Ami [Enough is Enough] go head-to-head.
Dan: Kenneth Boulding once warned that anyone who believes exponential growth can go on forever in a finite world is either a madman or an economist. It’s time for us to put an end to this mad pursuit in wealthy nations like the US and Britain.
Besides being a recipe for environmental disaster, we have reached a point where economic growth is no longer improving people’s lives...
Daniel: Before I make the case for economic progress it is necessary to challenge your peculiar premise that the US and Britain are obsessed with economic growth. On the contrary, the sentiments you express are essentially a stronger form of an outlook that has long prevailed among the élites in both countries.
Admittedly, Western leaders sometimes proclaim support for growth. But they also, like you, talk incessantly about various types of alleged limits to prosperity: environmental constraints, the need for happiness and the dangers of inequality. Both US President Barack Obama and British Prime Minister David Cameron have made countless statements along these lines. Indeed, they became mainstream in Western thought back in the 1970s...
(1 May 2013)
The End of Growth?
Satyajit Das, Economonitor
Driven by massive monetary stimulus from central banks, the performance of financial markets, especially stocks, have decoupled from that of a moribund real economy. Financiers assume that the strong rise in equity markets anticipates a strong economic recovery. However, there are fundamental reasons why the world may be entering a period of low or no growth. If that turns out to be the case, then the optimism of financial markets may prove premature.
Arthur Miller wrote that “an era can be said to end when its basic illusions are exhausted”. The central illusion of the age of capital -economic growth- may be ending.
All brands of politics and economics are deeply rooted in the idea of robust economic growth, combined with the belief that governments and central bankers can exert substantial control over the economy to bring this about. Economic growth has become the universal solution for all political and economic problems, from improving living standards, reducing poverty to now solving the problems of over indebted individuals, businesses and nations.
Politicians and policy makers relentlessly pursue growth. In his 1929 novel The Great Gatsby, F. Scott Fitzgerald identified this fatal attraction: “Gatsby believed in the green light, the orgiastic future that year by year recedes before us. It eluded us then, but that’s no matter – tomorrow we will run faster, stretch out our arms farther”.
But in nature, growth is only a temporary phase which ceases with maturity. As academic Jay Forrestor noted: “Past civilisations have grown into overshoot and decline. In every growth situation, growth runs its course, be it in seconds or centuries.”...
(22 April 2013)
Global Wealth Inequality - What you never knew you never knew
The extreme truth about how wealth is divided globally.
References detailed here.
(3 April 2013)
There's no need for all this economic sadomasochism
David Graeber, The Guardian
The intellectual justification for austerity lies in ruins. It turns out that Harvard economists Carmen Reinhart and Ken Rogoff, who originally framed the argument that too high a "debt-to-GDP ratio" will always, necessarily, lead to economic contraction – and who had aggressively promoted it during Rogoff's tenure as chief economist for the IMF –, had based their entire argument on a spreadsheet error. The premise behind the cuts turns out to be faulty. There is now no definite proof that high levels of debt necessarily lead to recession.
Will we, then, see a reversal of policy? A sea of mea culpas from politicians who have spent the last few years telling disabled pensioners to give up their bus passes and poor students to forgo college, all on the basis of a mistake? It seems unlikely. After all, as I and many others have long argued, austerity was never really an economic policy: ultimately, it was always about morality. We are talking about a politics of crime and punishment, sin and atonement. True, it's never been particularly clear exactly what the original sin was: some combination, perhaps, of tax avoidance, laziness, benefit fraud and the election of irresponsible leaders. But in a larger sense, the message was that we were guilty of having dreamed of social security, humane working conditions, pensions, social and economic democracy...
(21 April 2013)
Link to James Hamilton's explaination of the Reinhart-Rogoff data problems
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