Real Economic Growth Analyzed

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?

  1. wait and see: continued development and economic growth
  2. search for post Kehoe analysis: next level (Kehoe 4?) and new cycle of leader-style
  3. 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.

Article excerpt:

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

by Timothy J. Kehoe

The Stages of Economic Growth Revisited, Part 2

Political Communication – Why we struggle to communicate

Milton Friedman is a renowned economist. Many people reference his views on Capitalism, Freedom, Free-Trade, and smaller Government as the entire picture in defense of points of view. Line of sight is incredible and advantageous; in fact simply taking a tiny segment of a conversation or debate to create an impenetrable defense works many times over as most people are too busy with their personal lives and struggles to dig deeper and look at the whole Friedman picture. Were one to do so they would see that Friedman supports Government spending on Public Education, both Secondary and Post-Secondary, to create Civic Leaders and a more educated Government – he goes so far as to indicate this is in part what public education was created to do. Imagine education through a college degree to become a politician (local, state, federal) and that is the baseline, minimum wage to the politician. If you desire to have any other degree it becomes an out of pocket expense. Everyone has an education to have government employment and if you desire private sector work you either use this knowledge to become employed or you pay for education related to your desired employment interest. Now that to me is exceptional – from this point of view, minimum wage work is in politics (why not, we’re the boss – shouldn’t our employees make minimum wage).

If you were to ask people who know me they would suggest my super-power is tangents; at the same time if you were to ask who the superhero tangent man is they would not recognize that person as the same as me (nor would I). But it’s the same as Clark Kent and Superman; a pair of glasses and a uniform can make all the difference. I have enjoyed the experience many times of working at a job and shopping at my work and people suggesting they didn’t recognize me until they were directly in front of me. This is not unnatural nor am I offended, instead I recognize that people have their own lives and own perspectives and categories. “Jerhail, that’s the guy I work with,” and not, “Jerhail is Jesse,” truly it’s only simple when you are looking and as simple as no one actually knows me but me – the same is true for each of you; you are you and no one knows you as you but you.

If you didn’t follow that don’t worry, I’m tangential and not offended. I respect that I won’t understand your perspective either, but sometimes I’m happy to listen and try to understand. When I ask a question it isn’t to be degrading or disrespectful, I am curious and completely respectful as I attempt to know you better. But perhaps the glasses Clark Kent wore are the same for me except my glasses don’t give me a different view of humanity instead they are ‘rose-colored glasses’ meaning that I am optimistic but not that kind of optimistic – the simplistic kind of optimism. I am terrible with curves and three dimensions; instead of visualizing the curve, I work diligently to make an excessive amount of small straight lines but when I step back I can see that it appears to be a curve to my eyes and perhaps even yours. Perhaps we both see the little straight lines I drew but we both see the curve, or perhaps you only see a curve; and even better, if you were to show me the drawing a few years (more likely weeks) from now I would see only a curve and forget all the straight lines or that it was even my drawing.

Tangentially tired? I like to picture the Wright Brothers drawing many, many straight lines to create their first flight above the ‘smooth’ surface of the planet only to fly above it and see a smooth planet. Were I to run along the planet there would be plenty of me twisting and turning following straight paths around difficult terrain but if I weren’t to deviate entirely, from high above in a plane, it might appear I were traveling along a smooth path.

I’ll attempt to get to the point. I believe the struggle to having a successful discussion between people about politics, economics, from left, right, conservative, liberal, progressive, democratic, republican (it doesn’t really matter the perspective or pov, los) there needs to be a baseline understanding. I think the big miss is as simple as everyone’s favorite (sarcastic – though it is actually one of my favorites and many others) Mathematics.

So allow me to show you my perspective on why people struggle to have a conversation via mathematics.

Taking the total amount of money supply (wealthy + middle class): 4 + 4 = 8

This is one perspective and glaringly obvious is we’re missing the lower income: 4 + 4 + 0 = 8

No big deal right? (and please be patient as I know the number isn’t zero).

This is where we get to actually talk about what the argument about equality comes in:

Four and four are two numbers, but zero is also a number; equality would be representing them equally. This means that each counts as one (1 + 1 + 1) not that the two fours should give to the zero (not just yet conversationally anyhow).

So why does this matter? Because of divisibility (and in a minute additionally); eight divided by two is much different than eight divided by three.

Not only do I believe there are differing perspectives about how to add and subtract with regard to people but I think there is a huge gap conversationally about what this means when we look at multiplication and division.

Tired yet, too bad 😛

I really believe that people are so busy working on their own lives and struggles/enjoyments that they forget about the zeros and multiplication and division. Please allow me to express my meaning.

I think when we draw a ‘smooth curve’ people think we’re making it up, we’re being theorists or conspiracy driven.

Not so, it comes down to perspective. 3 x 3 = 9 is not theoretical nor is it a conspiracy, 3 + 3 + 3 = 9 is simply the perspective you might be taking, some of us just using different methodology. Now I’m not saying people don’t know multiplication I’m saying that people forget approaches, or never learned approaches, to political points of view and economics as others have not forgotten or learned. Some people literally need to see that 3 + 3 = 6 first and then that 6 + 3 = 9. This isn’t a problem until two people try to have a discussion.

Cool so far (and bored or like this Jerhail is kind of a jerk – that’s okay, I’m at least trying). Please hang in there, I’m coming more to the point. This multiplicative perspective applies to addition and subtraction more so than previously indicated and here it is.

Money supply: 4 – 3 + 5 = 6, which is awesome, 4 became 6, but wait a minute in order to get there we need to look at some other perspective. 4 – 3 =  1 and wow this is not good. 4 became 1 and this is awfully negative (ha, love jokes). That’s okay, you’re right! 4 did become 1; so what do we need to really look at in discussions because going negative could be negative no matter how much it will become 6. Your point of view is just as relevant as someone who jumps right to 6.

This is why it matters (and how). The big question is how long did it take us to subtract and how long did it take us to add. If within six months we subtract 3 and stay at 1 for ten years, it’s totally relevant that maybe this isn’t good no matter how good it is that it becomes 6 after ten years.

Have I made sense? I don’t know but it seems incredibly important to be able to see each others perspectives conversationally because if we don’t then we don’t get anywhere except into disparate categories; especially if you are the 1 and the 3 which were taken away were from the other three of the original 4.

I said I’d get back to it so I will with regard to the zero. Sometimes people ask how is it possible that 3 + 2 = 4; someone must be embezzling (well maybe) but for now let me look through the other type of rose-colored glasses and suggest we aren’t and in fact that when we look we see that it is actually that third category was missing because we took the other approach: 3 + 2 = 5 (not four) but we didn’t take the next step which is that maybe there is a negative one which we didn’t get to yet. 3 + 2 – 1 = 4.

And this is where it can get messy in conversation. But that negative one might represent government spending on people in the third group who are trying to make it in life beyond get a job, you know from the job tree. Perhaps I’ll climb into my job cannon and get shot out into the job world and just get a job (and yes this is a perspective by some). But what if the just as before it takes longer to add than subtract. Or maybe we have two separate math problems and one is population + population growth. And the other is jobs + job growth. And in the one case the addition takes longer than in the other – this would be an incredible problem. One is growing faster than the other so maybe I could shoot myself out of the job cannon but the job tree is relatively empty and even worse maybe the jobs available only sustain 75% of the ability to live (similar to the car insurance commercial about three-fourths of a vehicle). Yes 75% is better than 0% but that’s kind of a jerk move (which clearly I’m familiar with being a jerk – sub what word you will) when you’re asking a person trying to find four-walls, transportation, work, food, and all the like to cut out 25% for the time being. That’s stressful and here’s me being a jerk: guess what, not everyone is you. Not everyone can get over it or make the tough decisions as quickly. Sometimes the flower blooms late or not at all. And my favorite reply back (especially from ‘Christians’) is “survival of the fittest.”

LAWLS and seriously WTF; “I don’t have time to tell you how wrong you are.” … “Wait, it’s going to bug me if I don’t.”

Do you seriously think people dying on the streets is going to be better than handing out money to aid in their recovery thus creating the negative one.

People will take advantage you say? Well how about this – I put on the rose-colored glasses for embezzling so how about before we get into the argument, you just predict what the math will be if you compare embezzled money to free-riders.

Now, I don’t want to walk outside and see that the homeless population is growing and ‘encroaching’ nor do I wish to see you spend your money on gating your community to keep the ‘rif-raf’ out or “secure your privacy.”

The same as Friedman, you might not understand exactly what racism is. The same as you might not see how class-ism is nearly exactly the same as racism except it’s ‘less-visible.’

Racism, Class-ism, Sexism, most of the –isms; tend to be more problematic than just getting over it. Friedman suggests that a black can grow grain and sell bread and anyone would buy, economics is color blind. Not true, if the wheat farm can’t find a purchaser of wheat because of racism that means the wheat farmer must now become a flour maker (or et al) and are still prone to the same issues of racism. This does cross apply to the –isms and we all know it; the problem is sometimes we need to go slow and explain the three step mathematical process rather than jump ahead because we didn’t receive (or recall) the same education.

Please, all sides, slow down and do a perspective check. Thanks for your time today.

Sincerely the jerk,

Jerhail 😛


Poverty is a deficiency.

I have been asked to define poverty as I am of the belief that we need to reduce world poverty. Poverty is challenging to define with any specificity due to perspective being key to ‘AN’ understanding for a definition and so aside from the $1.90 per day border to extreme poverty we read about now, I will try a more generalized idea before pursuing a more specific definition. Poverty is a deficiency.

poverty is a deprivation of time…a lack of autonomy

Poverty sits on the one side of equality. Wealth is an excess on the other side of equality. I believe that the action behind this idea is time. I believe that poverty is a deprivation of time that some would call a freedom but I would like to describe it as autonomy. To me poverty is then defined as a lack of autonomy.

a minimum standard of living should be recognized and realized as we globally approach equality

Within this scope I believe a more specific definition can be explored reaching closer to the idea that a minimum standard of living should be recognized and realized as we globally approach equality.

culture defies the ability to create equality in nearly every aspect

The major challenge in doing so is recognizing that culture defies the ability to create equality in nearly every aspect. In fact, culture almost assuredly requires any creation of equality to be that of cultural autonomy and in this sense, there remains poverty within each culture. I refuse to suggest that there are correct cultures and incorrect cultures but I do suggest that within each culture there is an equality that can be reached and within this scope we can establish minimum standards of living by culture. I recognize that there are groups and international organizations working toward these ends so I’m simply seeking to explore how we can move more quickly in the direction of global equality and a severe reduction in poverty. To me this begins with education and education in cultural diversity. The more anyone can understand a culture, the easier it is to understand how to work within the culture to attain equality. I believe this is challenging to conceptualize as I do not wish to bring a change to a culture that isn’t the culture’s own, but with each person added to a group of philosophers or thinkers, the greater the chances of discovering or recognizing opportunities for growth, development, and change. This is why to begin, a great test would be to recognize equality at home and abroad; certainly there is no shortage of poverty within the United States which needs to be reconciled (and we should continue to work on this) but perhaps there are other cultures in other parts of the world that have greater inequality than here.

how dare we not help when there is greater need elsewhere…how dare we help elsewhere when there is still need at home

There are always two sides; on the one side, how dare we not help when there is greater need elsewhere. On the other side, how dare we help elsewhere when there is still need at home. I believe this is in large part why as part of international organizations we have a strong obligation to participate and at the national level we need to recognize our neighbors and communities and try to work at the municipal levels as well as the state levels to accomplish a strong reduction of poverty as defined most simply and generally as insufficient autonomy. I will continue with the specifics of autonomy in a following piece.

Ecologically Sustainable Growth

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 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

Wage Growth Possible?

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).