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The Sorry State of the World Economy (project-syndicate.org)
41 points by elorant 45 days ago | hide | past | web | favorite | 33 comments

Maybe it’s time to stop focusing on growth and start thinking of other measurements. Maybe happiness, health, personal prosperity and other factors.

What worries me is the effect economic growth has had on the environment. Over the last 50 years we've killed most of the vertebrata animals on the planet and most of the fish in the oceans, plastic particles are in the water and food supply and cause serious harm to human and animal health, and global climate change is looking serious in the next 10 years. We have no real basis or knowledge of how to maintain a global economy without poisoning the planet. To fix it will take global cooperation on a scale that's never been shown to be possible.

On the upside I don't worry about saving for retirement because I don't think that I (or a great many many people) will live through the coming cataclysm to see it.

Well genengineered counter measures for the rescue. We allready have invasive, hardened species gaining foothold. Bamboo has survived 4000 years of boom and bust chinese civilisation. Ambrosia and other "dangerous" plants are dangerous enough to make a whole forrest uninhabitable for unprotected humans. Lots of weeds are 100 % resistant to multiple herbizides. Several species could very soon discover, that carrying infected material from plantation to plantation is a pretty good attack vector on our monocultures. Nature is not weak, and sitting there and just taking the hits. We going to get some hits back, very soon.

This seems a little alarmist. We still have growth, it's just not high enough for some people, it seems. But then, it never is :-)

It important to note, that, averaged over multiple decades, it only takes a growth rate of about 1% to lift a country out of poverty.

We would probably do better to focus on fixing the political logjams, corruption, small-scale conflicts, etc, that act as a brake on growth, rather than financial market tweaking.

The reason growth is important is tax revenue and debt payments depend on it.

This is crucial. The current way of governing the world depends on the pie of prosperity getting bigger and bigger each year, which allows the government to cut more and more pieces out of it. Without growth every policy that requires more spending must be countered by a policy that requires less spending.

Then there's the problem of governments debt, which historically has been reduced much more by growth than by imposing austerity.

It’s funny that all of these academic, government types seem to be signaling the end of the world. This, at least of late, has been reinforcing for me personally much of Nicholas Nassim Taleb has been saying about these guys; that in effect they don’t know shit. That many of these academic types have not actually worked in the real world and instead are directing policy from an ivory tower.

The world is doing better than it ever has, innovation has been steadily picking up, especially in the United States and in China. Just look at the amount of disruption in so many industries e.g. Taxis, Hotels, Office space, on and on. Even if Chinas economy isn’t doing great right now these things move in cycles. Poverty is significantly dropping across the whole globe and ultimately I think the future is much brighter than it is being painted by these pessimistic academic types that have suddenly lost their clout as people start to value real experience more.

Inequality, and not from a World level where all analyst and many others likes to put in the 3 Billion people lifted from poverty in China , India and SEA.

Individually Inequality are at their highest point in recent history across many nations. You say many of them are from an ivory tower, while others would argue you view the world from an ivory tower as well. Their lives are not better, not even back to pre 2008 level, while many would say the "world as a whole" are better off, do those people at the bottom or disappearing Middle Class actually cares if you lift poverty from the rest of the world? Well actually they do if you ask them, just not at the expense of their quality of life.

And the current economy barely holds itself together with low interest rate. But what happen when something breaks again? You are right they really don't know shit, because when it breaks they know they have limited tools to combat whatever that is left over.

Wait, if inequality is bad, then isn't it a good thing that the rest of the world is being lifted out of poverty? When in all of human history has this ever happened before? Seems like we're actually at a high point in time for most of the world's population.

Also, 2008 is a ridiculiously short time period to be looking back on and saying things are going down hill. For all intents and purposes we're still in the same time window we were in 2008. World history happens over decades and centuries, not 11 years.

> Wait, if inequality is bad, then isn't it a good thing that the rest of the world is being lifted out of poverty?

If the middle classes of the western countries are destroyed in order to make this happen then no this is not a good thing at all. The result of that is effectively feudalism.

Do you think the billions of people lifted out of poverty would feel the same way?

They would after a generation or two when they discovered just how low their ceiling is, along with the rest of of the destroyed middle class

How do you think the struggling middle class feels? You think they feel the same way about this "deal"?

You may still be right, and I agree with a lot of what you say, but it is extremely difficult to see clearly through the rose-colored glasses of low interest rates. And we have had very low interest rates for a very long time.

I tire of this very rarely being addressed. Both in boom and bust everyone is busy looking everywhere but the one single (central) policy that affects the value of half of every transaction conducted in an economy.

And GDP is overstated by the error in the proxy metrics for inflation (e.g. CPI) which I believe this is larger than most people estimate.

GDP is a funny measure. If an economy booms due to everyone thinking their houses are worth twice what they paid for them then is any 'product' grossly made domestically?

I think that aliens would probably look on us much like we look on microbes in a petri dish. Ignoring the paper money there is energy and right now the taps are open and the oil is flowing. Thanks to fracking America now exports oil and we are not in some Mad Max world where oil is a scarce resource hoarded by those that have got it. The Peak Oil people were scared of twenty years ago is but a distant memory of a future that never happened.

The 2008 QE printing of money kicked the can down the road. The reckoning still has to happen, capitalism cannot eat itself forever with GDP that is more to do with cannibalising industrial capitalism and becoming finance capitalism.

GDP requires transactions. You can overvalue anything until you sell it. Then the reality is made bare.

Your comment is weird to read because you say it’s fine because “these things move in cycles” [created by debt, tax, and monetary policy] and the article describes why the system that generates these cycles is “encumbered” and lacking in strength.

I could imagine you may not understand the cause of economic cycles. As you say in the “real” world, you only notice the lived experience of macroeconomic policy, which is what matters from a governance perspective. That’s why politicians talk about “kitchen table” issues to keep popular sentiment but govern through a seemingly backroom set of central bank, tax and trade policies.

It’s not complicated to see that the GDP will grow proportionally to the deficit growth and shrink proportionally to deficit cuts. That extra money is borrowed from the future and injected into today, goosing GDP.

Then the debts get expensive as capital gets tight, interest rates rise and the weakest businesses go under, contracting spending and destroying money as cancelled debt, tightening capital more and consumer confidence. And them the economy shrinks again.

It’s great when the central bank is buying the drinks but the party will end when their credit card is maxed.

> It’s great when the central bank is buying the drinks but the party will end when their credit card is maxed.

When will the credit card get maxed for the US? For other countries, the impact is visible right away with depreciation in their currencies. But that doesn't really apply to US. So what is the max?

We've met "peak cement" in 2015. What does that mean? We don't know yet... https://cassandralegacy.blogspot.com/2019/01/what-happened-i...

I do not think Taleb shares your opinion on world economy. He thinks the world economy is more fragile today than in 2008.

I dont know that simply paying people less counts as innovation.

I think you are daydreaming. It is actually the people in academia and government whose job is to maintain this illusion which has tricked you.

Daydreaming about what though?

Look at the US economy it’s the strongest it’s ever been. Maybe that’s not a good indicator for the rest of the world?

Let’s look at some of the poorest countries? Have they improved over the last 20 years or gone south?

I don’t think I’m day dreaming, I’m working hard and building things. I can sit there and speculate or I can worry about impacting things.

Strongest by what metric? If your measure doesn’t take into account political risks, demographic issues, climate change etc, then I question how ‘strong’ we can call it.

I just meant economics since the article is about the global economy.

I agree there is a large amount of division and political risk in the US.

Edit: but still we are far from the world ending.

There seems to be considerable feelings I read online that "economics" as you cite are a bit of a house of cards right now. The disproportion of increased income for _most_ people in the world compared with wealth is at the heart of it.

More concretely, home buying is a cornerstone of the American economic system, but a combination of income stagnation, student loan debt, and absurd overpricing nationwide has priced out much of the "millennial" demographic. In my local area, shoddy houses are going for $700k, but nobody approaching 30 is buying anything. That sort of thing just isn't sustainable. And this is from the point of view of having a good tech income, which is a bubble.

We have an entire generation that is ecstatic about rising house prices (and actively work to protect them) as they intend to retire on the eventual sale of their house. It’s going to be interesting if millennials just... don’t buy.

How will that be interesting? They’ll still be valuable as rental units that get sold to investors.

> The world is doing better than it ever has

This meme is so strong on HN. Is an illusion too beautiful and easy to believe, also, it have some backup.

The "world", aka us, is an addict. And is on an overdose. The chems make see thing sooooo great.

But the world is great? Not. Is just feasting when in from of it is coming a famine, but naaaaa, RIGHT NOW, all is "everything is amazing"!

When in all of human history have things been so good for so many people? Access to information and free communication is at a high, violent crime is at an all time low, racism and sexism against historical minorities is at an all time low.

Yes there are problems but there's never been a time in human history where so many people have enjoyed a basic quality of life plus some very real luxuries as they do today.

Like living on debt: we are riding high, until it's time to pay up.

Why is this so difficult for people to grasp? The consequence of cheap smartphones in every American pocket, vehicles in every Chinese and Indian suburban driveways, meat in every brazilian meal, etc, will be the destruction of vast resource banks accumulated over millions of years. Once those resources are extracted and converted into wealth, there will be very little left to maintain our lifestyles.

That is the good side, but the cost of it is too high. To make another imperfect analogy, is a bug infestation on a Hughe source of food. Yeah, the first generation will have it great with all that energy. But later...

according to MIT innovation has slowed dramatically since the 50's and as a result general productivity growth that has been boosted by technology since the industrial revolution has stagnated


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