Excellent read from Yale economist and Federal Reserve Bank of Minneapolis consultant Timothy Kehoe. He expresses that economic growth is driven by productivity growth as opposed to prevailing view of capital accumulation as driver.
This is shown with his use, as the beginning stage and presented in excerpt below, of the Malthusian Trap. Fascinating to me and fundamentally important is how this can be applied to global economic growth beyond his analysis.
From 1999 to 2013 (set in 2013 dollars) the World GDP – per capita (PPP) rose from $6800 to $13,100.
How do we move forward with this information?
- wait and see: continued development and economic growth
- search for post Kehoe analysis: next level (Kehoe 4?) and new cycle of leader-style
- present consideration: spread of investment into a global economy
“The median annual household income worldwide is $9,733, and the median per-capita household income is $2,920″ by Glenn Phelps and Steve Crabtree via Gallup.
Stages of economic growth
We classify the countries in our sample into four stages of economic growth. (For details on country data and classification, see the appendix.)
0. Malthusian trap
1. Taking off into growth
2. Catching up to the economic leader
3. Joining the economic leader
The Stages of Economic Growth Revisited, Part 1
The Stages of Economic Growth Revisited, Part 2
The Commonwealth Scientific and Industrial Research Organisation (CSIRO) released findings from two-year project: the Australian National Outlook report. The report “integrated a model of the economy with no less than eight models of different aspects of the global and domestic natural environment in which the economy exists,” as reported by Ross Gittins in his article Economic growth doesn’t need to cost the world. The article covers findings on the 18 scenarios with variables, that include global population and economic development in Australia, and impact on ecological concerns, such as greenhouse gas emissions and water stress.
Continue reading Ecologically Sustainable Growth
Analysis of the nine boundaries critical to human existence and how macroeconomics recognition is integral. Author discusses ‘ruthless’ growth, ‘futureless’ growth, and transition steps pre-2050.
Time to Stop Worshipping Economic Growth
With Extreme-Poverty, living on less than $1.90 per day, on the decline this article looks briefly at the need to analyze Global Economics with regard to the Trans-Pacific Partnership, India, China, South America, and sub-Saharan Africa. Also noted is Moderate-Poverty, living on less than $4.00 per day.
The Good (and Bad) News About Poverty and Global Trade
by John Cassidy
Staff Writer at the New Yorker
Real Wage has remained the same and flexible spending has decreased on average per year since 1964 (see previous post).
One of two ways I will discuss viewing this is that I would like to see a real wage growth as incentive to keep working as part of paying for enjoyment in life. This seems fair and reasonable in the sense that the cost of living increases. In order to maintain a lifestyle and pay for a retirement and healthcare expenses as time passes.
The second way I look at this is that perhaps this is a plateau minimum standard of living wage, or that cost of living with regard to true necessities has little growth, and that without Wage Growth – others who were not at the minimum standard of living wage are getting closer to it partly at the average Wage earners expense.
I think it is desirable to increase the speed at which we meet this equilibrium so that perhaps we may all enjoy a life that sustains one another. The difficulty with a decrease in the amount of time to reach equilibrium is that societal shock is considered personally negative. Individual A does not necessarily wish to remain at a constant wage as personal performance improves; it is more preferable for another personal, rather than self, to sacrifice wage growth for the betterment of all others.
It is challenging to think that we can all increase productivity and wage at a fast enough rate to take care of those left behind through charitable means. In fact this is where society is at and has been. I find that perhaps we are going in the right direction at an uncomfortably slow pace but we are getting there.
Short of shocking the system, creating an equilibrium, and disenfranchising those ahead of average real wage to the detriment of the entire capitalist approach, we should be philosophically wise to remember that we as an individual are not the only one involved. In fact to consider anyone else it is valuable and necessary to consider all others at the same time.
This does not mean I believe either of my two ways is the best solution to a stagnancy in average real wage; but it does mean that I would like to see all the information on all others (this is especially important in the global economy).
The largest group is in the middle income range. There is no growth in the real wage. High income earners have seen significant increases. And global poverty has significantly decreased. This seems the appropriate direction at an uncomfortably slow rate. The next step is to see how we are accomplishing this and if it is truly at anyone’s expense or if it is at a flexible spending expense (which would include charitable spending).