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June 22, 2018



Perhaps nostalgia for when growth was good and full employment the norm is why so many governments all over the world seem to be trying to get back to the 60s?

Dave Timoney

Broadly, growth is driven by productivity (which in turn is largely driven by technology) and/or population increase. The latter can be organic (a high birth rate), but that tends to undermine productivity (women removed from the labour pool), so the most reliable method to maximise growth is immigration.

I've not read Cohen's book, so I don't know whether he mentions this at all, but it strikes me that the issue of growth cannot be addressed in isolation from economic migration. When Nigel Farage confessed he would accept lower growth in return for lower immigration he was, however unconsciously, making a profound point.


> Whereas the Enlightenment offered freedom and autonomy for
> all, these values are denied to people in capitalistic workplaces.

I'm sympathetic to the posting, but this is glib. Are other types of workplaces more generous with these values? Reports suggest that soviet workplaces weren't big on autonomy and freedom.

Jason Facchin

Isn't his argument disproved by Japan where the GDP per capita has been consistently growing although the countries total GDP is not reflective of the per capita increases. In the 21st century, Japan surpassed America on a per capita GDP basis although their population is aging and I assume the prime working age population is shrinking.

The future is here

Peter K.

"This is perhaps the single most important fact about western politics today. "

I agree with this completely. Was their something you didn't like about my other comment? If so it was an innocent mistake and I wasn't trolling on purpose. Do you not like hyperlinks in comments?

Jo Park

Ben Friedman’s observation that slower economic growth breeds intolerance and racism
Since the Brexit referendum racism as expressed by the number of people citing immigration as an important issue has dropped by about 3/5ths. The UKIP vote has been pummelled. And this is alongside anaemic growth compared to our colleagues in the EU. Ok, it's only one datum, but it does run counter to Friedman's claim.


«“experiencing an industrial revolution without growth.” Whereas earlier industrial revolutions saw workers leave agriculture to work in capital-intensive factories where they became more productive»

I have come (some time ago) that this is a huge misreading of the past 100-200 years, and a better misreading is that 90% (or more) of productivity and lifestyle improvements have come not from "capital-intesive factories" but because of the replacement of muscle power from vegetable fuel to engine power from coal and oil fuel; and that no small part of that 90% was due to coal fields and oil fields not being in competion with farm fields, being underground, or in deserts or under the sea.

Said another way, the deserts of Arabia are probably the most fertile land ever found, producing very energy dense food for a very low cost and the past 100 years have been the result of a fantastic increase in economic rent from that.

The first wave of great productivity improvement was I reckon almost entirely due to coal being a fuel far cheaper and more energy dense than corn, rice, oats, and the second wave to oil being even cheaper and more energy dense than coal.

So far no fuel cheaper and more energy dense than oil has been discovered, and the diffusion of oil based machines has become pretty complete across the "first world". Now "growth" only comes from technical improvements, and those are much smaller than the improvements from adopting coal or oil.


«Sure, tech giants such as Apple and Facebook are very productive.»

That is very questionable: they have very high margins, that is the dollar/hours of their employees is high, but their output may be hugely mispriced, so their effective productivity may be quite low.

Also the output of Facebook is advertising space, and that of Apple is social status financed by borrowing, and while both command a fine price from their customers, they don't necessarily contribute to living standards for many. In the case of Apple also their subcontractor's productivity should be averaged with that of their headquarters...

For another example consider the most dollar/hour productive people ever: property owners in south-England and London.
For every 1 dollar invested they get more than 1 dollar a year of net returns, or around 60-70% net returns per year *compound*, a fantastic level of "productivity" increase that they have kept up for over 35 years, and this by working 1-2 hours every 4-5 years, by going to to vote for a tory government.

«But they are too small a part of the economy.»

Then let's imagine that insatead of being "too small a part of the economy", 50% of the workers of the USA or UK were working for Facebook producing online advertising space or for Apple designing status symbols (or were amazingly "productive" south-east and UK property owners). How much higher would be the "productivity" and thus the living standards of most people in the USA and the UK?

Dennis Smith

One of the problems here is the difficulty that mainstream economics and politics has in balancing material forms of wealth against non-material ones (culture, art, personal relationships, etc.) Growth and wealth tend to be understood in purely material terms, partly because these are so much easier to measure. (Marx’s distinction between base and superstructure has also had a malign influence here.)

Many of our present discontents are due not just to low economic growth (exacerbated by growing inequality) but to the simultaneous destruction of non-material goods in the fields of culture and identity. Like most progressives I favour the reduction of inequalities based on gender, race and religion; but I also recognise that this causes real problems for people who are heavily invested in traditional values and identities. Men have lost their role as breadwinners; whites have lost their sense of innate superiority. Cherished certainties have been swept away and no adequate substitute is in sight. This helps to explain the appeal of Brexit and of populist movements across the developed world.

Even if we could regenerate material growth for the mass of the population (and this looks unlikely) this would not address the issue of identity degradation. Some of this is inescapable in times of technological change: mining communities were destroyed as much by technology as by Maggie Thatcher. But the problem is exacerbated by the digital revolution. Where traditional identities evolved over generations the internet encourages constant change: fluid and fake identities flourish alongside fake news. In time we may develop strategies for negotiating satisfying identities that are honest, open and mutually acceptable. But the route from here to there is not obvious.

George Carty

From Arse To Elbow: "Broadly, growth is driven by productivity (which in turn is largely driven by technology) and/or population increase. The latter can be organic (a high birth rate), but that tends to undermine productivity (women removed from the labour pool), so the most reliable method to maximise growth is immigration."

Surely the standard of living is determined by GDP per capita, not total GDP? Immigration would only help here if it was done according to a points system to ensure that the immigrants were more productive on average than the native population. And even that wouldn't be a solution to anti-immigrant hostility -- disproportionately-successful minorities (such as Jews in old Europe, or Chinese in much of East Asia) are often specifically targeted for that very reason!

Blissex: "So far no fuel cheaper and more energy dense than oil has been discovered"

Actually we already have three fuels with an energy density _thousands_ of times greater than that of oil or any other puny chemical fuels: uranium-235, plutonium-239 and uranium-233. The first of these occurs naturally, while the others are manufactured from uranium-238 and thorium respectively.

The problem is not that we lack a superior fuel, but that oil has fabulously enriched a rentier elite as coal never could, both because it is more plentiful and because of the labour required to mine it.

This rentier elite has suppressed the use of nuclear energy by various means: funding scaremongering propaganda (look at where the money came from to found Friends of the Earth, or how the Sierra Club got so big in a pre-nuclear world), bribing politicians (including Ed Markey of Massachusetts, Bettino Craxi of Italy, and Gerhard Schröder of Germany) and promulgating a fantasy future where every household generates its own energy using solar and/or wind power.

This latter point is especially effective because nuclear energy cannot be used in small, lightweight engines of the type that ordinary individuals might control (because its use emits deadly neutron radiation that requires many tons of shielding to stop).

Arthur Murray

George Carey:

Every one of the 7.6 billion people on the Earth requires, on average, a total of 2.2 kiloWatts—largely from oil, coal, gas or wood—just to live.
As you might expect this power rating varies wildly around the world: whilst 14% of the Earth’s population are not even connected the electric mains, Americans require 11.4 kW which is over five times the world’s mean.
The Earth’s population should plateau at 11 billion in 2100 (Hans Rosling TED Talk) and a lot of these people will aspire to something rather greater than 2.2 kW. How about, say, 7.5 kW per person ? That would mean that the world would need five times our present generating capacity to cope as we move from the internal combustion engine to the electric motor. Burning more fossil fuels to bring about this increase is out of the question if we wish to prevent severe climate change.
Ask any physicist what the answer is and s/he will say “fusion power, because all other methods are incapable of meeting the need”. The IPCC says there is a 95% probability that the Earth will warm 2 degrees Celsius above pre-industrial levels by 2040—enough to cause dangerous climate change—because by then we will have burned a trillion tonnes of fossil fuel since pre-industrial times. There’s a lot more of it still in the ground, and it needs to stay there.


Some of the productivity puzzle is the post-war population boom has left the labor force creating a chain reaction of less productivity new comers, who will take time to merge into the job so to speak. This is a global phenom as well. It will begin to reverse in the 2020's and that will help productivity.

Maybe it is time to admit with population growth decaying, It isn't total growth that is key, but total growth above population growth. If population growth is 0%, you probably only should grow about 1% above trend in general. Anything more is a bubble, contraction a recession.

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