Utter rot
Dinner table philosophy.
So, how does your economy grow?
The economy is, as is being gleefully pointed out to us, gathering speed as it swirls its way towards the U-bend. No or little economic growth, unemployment still monstrously high. The glee comes of course from those who say we should be doing more to polish it up: not always simply a euphemism for spending more on whatever it …
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Monday 13th June 2011 14:03 GMT Fred Goldstein
Total size of the economy is not all that matters
Distribution of income matters too. If you have a society where the King or equivalent makes all of the money, then the increase in total wealth does not benefit the people, so what's the point? National wealth does not translate to quality of life. American society in particular is becoming iike that, with 1% of the population getting much richer and 80% getting considerably poorer on their behalf. This is where right-wing focus on GDP growth is irrelevant.
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Monday 13th June 2011 14:06 GMT Steen Hive
Marx himself said it
That entrepreneurs add value. A thriving entrepreneurial ecosystem is indeed what provides real, tangible growth - improving the circumstances of all connected. The social engineer architects of the Swedish model were well aware of that 80-odd years ago too.
"Economic growth" in itself is a skewed term used to punt sophistry by economists - witness many countries with high "economic growth" figures being shitefests to actually exist in, because the real growth is wasted propping up the infrastructure of capital and socialising losses.
Sweden has something very precious - a real social contract that enables it to gain more for less - it's a far more entrepreneur-friendly here than so-called "liberal" economies, while still protecting the situation of the most vulnerable in their society to a high degree. Now I'm talking about entrepreneurs mind you, not people bouncing shedloads of virtual money around.
That this tiny, high-tax economy has pretty much held it's own up against the behemoth predatory economies of other western nations is testament to it's workability. Notice that what brought down en even tinier, but similar and otherwise pretty well-run economy in Iceland was nothing other than international capital.
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Monday 13th June 2011 15:55 GMT Naughtyhorse
almost as annoying
As having to put up with the petty mean spitirted whinings of that group of individuals who have never thought, and have no intention of ever thinking.
But what can you do? it's a democracy after all, the feckless, shiftless and hard of thinking all get a vote.
And the governement always gets in
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Monday 13th June 2011 16:04 GMT Tom 13
That's part of the solution, but not all of it.
The perverse incentives of paying people not to work must also be reversed for legitimate citizens of the country.
The problem here is that being "fair" and "just" in the sense used in this article are problems on the margins of agreement about what constitutes "fair" and "just". Governments aren't good at working those out. Governments are good when you have super-broad agreement about what constitutes "fair" and "just" - things like murder, and aggravated assault. For justice questions at the margin, you need non-governmental charitable organizations - places where citizens seeking that justice donate the money to achieve those ends without imposing their morality on those who disagree with them.
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Monday 13th June 2011 15:38 GMT Anonymous Coward
Bias?
Curious as to why you didn't mention that we are already pretty economically free - OK Denmark is 'freer' but we are 'freer' than Sweden. Nice to see examplars of freedom such as Bahrein ahead of us. worth a look at the trends as well - looks like economic freedom in the UK grows under Labour and falls under Conservatives!
And the IT anglle.....?
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Monday 13th June 2011 15:58 GMT Puck
I'd go with this but
think capitalism requires a lot of protecting, often from itself, often from out-of-control markets (e.g. housing, other assets), in order that it function.
For example, the distortions which the housing markets (and lack of freedom to build a house - the reversal of which would require serious capital controls to stop a re-inflation of said markets), then observe tax credits: they subsidise employers paying low wages, in order to offset the mispricing of housing affecting low-paid employees' ability to retain enough of their earnings to eat.
We do require low-paid workers to work for low pay, but we subsidise the housing market with tax credits rather than reform it in a manner which might give said workers a materially better life.
ok this is me theorising, i might be wrong. and please don't give me the 'oh that'll cause a deflatinoary spiral' thing - one can attempt to peg nominal house prices over a 25-year period via a macro target at BOE (well that was the good iea of an ft columnist a few months ago.)
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Monday 13th June 2011 16:05 GMT Tom 13
Good to see an article like this posted here.
It's good tonic for the socialist rot which has set in for too many countries.
For those who think it isn't relevant to tech: how do you pay for tech for the masses if you don't have real economic growth so people can afford the tech you are selling them?
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Monday 13th June 2011 19:14 GMT clanger9
Top stuff
Excellent. Nice to see the economists using hard(ish) data for once instead of just wildly speculating.
Some of the reaction above seems a bit odd. The paper isn't saying "Your politics suck, loser!", it's simply looking back at historic data to see if there's any measurable correlation between policies and economic growth.
Is this really such a bad thing?
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Monday 13th June 2011 19:22 GMT Mickey Finn
The Swiss get it..
The federal government of Switzerland only meets to "govern" four times a year, the rest of the time these people do something else.
The Swiss people govern themselves, through a process called direct democracy, and when they cock up, there is no embarassment, they put it right at a later attempt, no loss of face, no U turn jibes etc..
Oh, and they are the richest per head in Europe and among the richest in the world.
Now, I will sit back and wait for the inevitable comment about Nazi gold...
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Monday 13th June 2011 19:22 GMT Richard IV
Cherry Picking
The graphs in the paper don't really show a phenomenally strong correlation - the lines of best fit are pretty chubby. Also, choosing to compare the biggest improver since the 1970's: Uganda against the worst: Zimbabwe would have been a touch more representative if the graphs had actually started in the 1970's - when Uganda was under the capable thumb of Idi Amin. But then "economies tend to do better when not presided over by nutters" doesn't match the ultra free market world view, does it? The way the figures have been picked would suggest that the conclusion was drawn before the paper was written.
Also, would someone please show me a successful economy built on laissez-faire economics? I'll be generous :- so long as your chosen example hasn't indulged in a shred of protectionism since 1991, you win.
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Tuesday 14th June 2011 08:24 GMT Anonymous Coward
It should be plain to see...
It should be plain to see you cannot sustain a situation where the public sector is larger than the private sector that funds it.
Too much government, too much meddling - people need opportunity and reward, carrot and stick - not just to be given the carrot (anyway).
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Wednesday 15th June 2011 19:25 GMT Brennan Young
The problem with cherry picking 'hard economic data'
...is that all public spending is put in the column marked "outgoing" and all the taxes are in the column marked "ingoing", which leads to the wrong ideological conclusions about how to balance the budget.
The thing is, spending can also be an investment which will be good for business (e.g. railway infrastructure, education or sewers) in the long term, and refraining from spending on these areas, or allowing them to decline, can actually generate overheads in the medium term. Businesses don't run like this. They understand very well that 'you have to speculate to accumulate'. For some reason, politicians are allowed to ignore this basic fact of business economics.
Trouble is, politicians (like the author of this article) only have to worry about the few years until the next election, and all their policy is subservient to the short term aim of getting re-elected, rather than any long term aim which might be better for the constituency/nation.
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Biting the hand that feeds IT
