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"For the last 200 years, capitalism has indeed grown constantly, but only by constantly expanding its markets and its resource base".

(my thanks to whataboutbob and izzy for pointing out I was yelling and giving me a method not to yell)

Just to put a little more concreteness on your point: let's take two relatively new industries, computers and endovascular medicine, and I would ask you if they fit in your model.  The whole computer/internet industry has exploded in the last 50 years.  The treatment of many diseases, which were either not treatable, or treated only with very invasive surgery, are now treated with tiny catheters that thread there way through our vessels and treat diseases such as blocked vessels in the heart (treatment called angioplasty), cerebral anneurisms, lower leg thrombosis, etc. has also exploded over the last 30 years.  Our efficiency has been greatly increased by computers/internet, our pleasure and learning greatly expanded--ex. this very blog.  Lives have been saved with less invasive products, quality of life has been greatly expanded, people that would have died are walking around leading very productive lives.

I guess i'm just not sure how these industries fit in that statement.

The problem I have with this is not the realization that continued economic growth is no longer possible (it's about time politicians starting telling people to expect hard times ahead). My problem with a position like Gordon Brown's, or with the "official" reaction to Delphi's bankruptcy in the US, is that they do not question the need for the profits of capital to continue growing as before, at the expense of larger cuts in the general standard of living.

I just don't share your pessimism about economic growth and our future.  Once again sticking with these two industries, I think computerization is going to continue to give us wonderful tools for work and play.  And expand the ability for people in LCD's to learn and become very productive and happy in a more connected world economy.  In healthcare, there are some many new products and developments coming out of the base of these endovascular technologies, and i think they're going to have even more dramatic effect on length of life and quality of life.  And as countries become wealthier, they will have more money and can, if they choose, devote more of their wealth to higher tech medical devices.

I'm not so naive as to realize that there aren't world issues to overcome. But how would you see these two industries fitting into your above view of the future.

by wchurchill on Thu Oct 13th, 2005 at 09:59:17 PM EST
[ Parent ]
It was "general" standard of living. Migeru's arguments point to a future where your technical advances will benefit the few, the increasingly few (especially your medical advances). (And think of the whole world here, in which you and me are part of the "few".) And they won't save the general economy from resource shortages (in fact, might induce rare material shortages themselves).

Regarding computers, that 'explosion' is a bit overblown. But good you mentioned it, for this is used to overstate the US economic growth: instead of calculating with the real sum, for example the PC industry's income is added after multiplying with a so-called hedonic price index (HPI), which is supposed to express improvement in quality. If a computer with the same speed now costs the half, or if the average speed of PC processors increased by two, this is "corrected" in GDP calculation by multiplying the real sum with two. (Other countries have since adopted some HPI, but with less brutal ratios, and the USA remains the most 'consequent'.)

From 1995 to 2000, computer investitions rose from $20 to $87 billion. But with HPI, the sum added to the 2000 GDP was $240 billion. In the last figure I have a source for, Q4/2001, an increase of $1.9 billion was blown up to $23.5 billion.

This is troubling both because the majority of even 'analysts' (at least those writing or talking to the media) doesn't seem to have heard of HPI yet compare US GDP figures with other countries' as if the measure were the same, and because the chosen measure of quality increase is hogwash. If you use your computer most of the time as text editor or a terminal to some database, being twice as fast means not much, surely not "twice as good".

There is a lot of other such statistical wizardly behind every economic success claim, including those on productivity and 'efficiency'.

*Lunatic*, n.
One whose delusions are out of fashion.

by DoDo on Fri Oct 14th, 2005 at 08:19:17 AM EST
[ Parent ]
You WHAT?????? Time to run off to Google ...
by Colman (colman at eurotrib.com) on Fri Oct 14th, 2005 at 08:32:11 AM EST
[ Parent ]
A chief critic (but not the only I read) of the US use of HPI is Swiss economist Fredmund Malik, I took the figures from him (in German articles). I don't know where to look for raw data.

*Lunatic*, n.
One whose delusions are out of fashion.
by DoDo on Fri Oct 14th, 2005 at 08:38:37 AM EST
[ Parent ]
DoDo, this sounds like economic data reports are published by MiniPlenty and vetted by MiniTruth. Well worth a diary, if you ask me.

A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman
by Migeru (migeru at eurotrib dot com) on Fri Oct 14th, 2005 at 08:57:29 AM EST
[ Parent ]
My very first diary at ET touched on this (and this comment told the same story), but I might do a more focused diary once I do some research for more recent data. But not this weekend - I'll be at a family reunion in Slovakia. However, Colman sez he is off Googling - maybe he'll have better data and do it in my stead.  

*Lunatic*, n.
One whose delusions are out of fashion.
by DoDo on Fri Oct 14th, 2005 at 09:09:05 AM EST
[ Parent ]
I knew I'd seen it somewhere but couldn't remember where. I'll try and get a chance to dig through the OECD and so on at the weekend and see what the story is. If there aren't comparable figures published in the way that the SURs are then we're just being lied to again.
by Colman (colman at eurotrib.com) on Fri Oct 14th, 2005 at 10:38:30 AM EST
[ Parent ]
You need to google "hedonist" prices or GDP, i.e. taking into account the supposedly higher service provided by the same goods. I remember a pretty detailed article in the WSJ, not sure it will be available online.

In the long run, we're all dead. John Maynard Keynes
by Jerome a Paris (etg@eurotrib.com) on Fri Oct 14th, 2005 at 11:55:00 AM EST
[ Parent ]
I see it has already been covered downthread. Sorry.

In the long run, we're all dead. John Maynard Keynes
by Jerome a Paris (etg@eurotrib.com) on Fri Oct 14th, 2005 at 12:00:28 PM EST
[ Parent ]
"Hedonic".
by Colman (colman at eurotrib.com) on Fri Oct 14th, 2005 at 12:36:57 PM EST
[ Parent ]
Well, Googling turns up this article, which sounds familiar.
by Colman (colman at eurotrib.com) on Fri Oct 14th, 2005 at 10:45:15 AM EST
[ Parent ]
And eventually some definitions.
by Colman (colman at eurotrib.com) on Fri Oct 14th, 2005 at 10:55:46 AM EST
[ Parent ]
Also, when you trash a perfectly good computer full of high pollutants in order to buy a new computer which will mostly sit idle, you increase the GDP. The cost of properly disposing of the old hardware is also added to the GDP, while the environmental damage from improper disposal would not be subtracted from the GDP. And on, and on, and on...

A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman
by Migeru (migeru at eurotrib dot com) on Fri Oct 14th, 2005 at 09:03:28 AM EST
[ Parent ]
An Atlantic article from a while back (DeAnander posted the link here) has a swipe at the golden calf of GDP. It can be read here.

Quick quote:

By itself the GDP tells very little. Simply a measure of total output (the dollar value of finished goods and services), it assumes that everything produced is by definition "goods." It does not distinguish between costs and benefits, between productive and destructive activities, or between sustainable and unsustainable ones. The nation's central measure of well being works like a calculating machine that adds but cannot subtract. It treats everything that happens in the market as a gain for humanity, while ignoring everything that happens outside the realm of monetized exchange, regardless of the importance to well-being.
by afew (afew(a in a circle)eurotrib_dot_com) on Fri Oct 14th, 2005 at 10:59:19 AM EST
[ Parent ]
Here's a good explanation of hedonic pricing.

They really do assume that computing power is something you can value like apples and oranges.

by Colman (colman at eurotrib.com) on Fri Oct 14th, 2005 at 11:11:45 AM EST
[ Parent ]

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