I’m sure there was a better word. I cringed as I wrote it, but couldn’t think of the word I really wanted to use: calcified, stagnant, crystalized, entrenched. Entrenched might have been better.
Herman Daly, who is big in ecological circles (and - literally - a one-handed economist) pointed out that if I paid my neighbor $10 to mow my lawn and he paid me $10 to mow his, our welfare and net financial position would be no different than before, but GDP would grow by $20.
However, he forgot that if that income were taxable, we would actually be in a worse financial position, despite GDP growth.
His main point was that expenses for war, sickness, preventable repairs, divorce, etc. generally don’t add to people’s well-being, but they do jack up GDP, and so environmentally destructive activities are perceived to have a higher benefit to society than they generally do.
I think the key here was that in an agrarian economy, the primary productive asset is land, so by taking the land you aquire the most productive assets. In an industrial economy, that is less true, because most capital is mobile, and the productivity of the laborers is important, so you now have to govern them rather than just enslave them.
Now that the primary asset is financial capital, what one generally wants to do is carve out a microsovereignty for oneself, leaving to States the obligation to defend you and your property by taxing other people. There just isn’t much value in wars of conquest, other than alleviating nationalist sentiment or (occasionally) gaining access to a key asset like oil or ports.
you are right, but I was talking about things that cause net growth in the GDP, not so much about which ones are better or worse or longer-term or shorter-term. The point was that sources are growth are unpredictable, so it is not necessary to assume doom and gloom because you don’t see any obvious catalysts for economic growth.
Demographics on the other hand are a different story. But here too you have to be like Japan (less than replenishment rate) to generally forecast the downward direction.
it is as simple as this. to enhance quality of life and sustainably grow GDP, you must boost productivity (i.e. using fewer resources to acheive the same goal). Google boosts productivity of the system so it sustainably adds to GDP growth and well-being. Car manufacturers boost productivity by improving fuel consumption metrics. etc, etc. there will always be innovation and technological advances but the rate at which these advances are made is likely related to capital investment so lower capital investment = lower technological advances and lower productivity growth.
war + technological advances = using more resources to acheive the same goal. it is inflationary because resources go toward capital destruction and overallocation to rapidly depreciating military equipment. unless you kill enough people, or create enough in technological advances, to offset the per capita capital that is destoyed, everyone is worse off. this almost never happens.
peace + technological advances = using fewer resources to acheive the same goal. it is deflationary, but good deflation, meaning we can buy more crap with the same dollars and it doesn’t hurt the economy. this also destroys capital but the new capital it creates is always worth more. obviously if the new capital is only held by the creators, over time this could create societal issues, similar to what we’re seeing now in the West.
although i agree that some good comes out of war (e.g. technological advances), these advances could be achieved at much lower cost without the war.
an example of a lot of people dying resulting in a major improvement in general well-being is following the Black Plague in Europe. The Black Plague basically unchained labour from serfdom, allowed labour to demand its own wages, likely leading to the world as we know it today. Unlike war, it didn’t destroy much capital in its wake. Thanks Yersinia Pestis! We should have a Yersinia Pestis Day as it likely contributed more to our life than any president or religion.
but why even talk about GDP if you acknowledge that war has virtually no relevance to labour, capital or securities markets besides as they relate to the military industrial complex? stock markets, labour and capital typically don’t do well in times of war so if war = poor performance for everything that matters, then it’s bad, no matter what.
general well-being and living standards are what matter. i’m fine with GDP declining 99% as long as i’m the only person left living.
^ Because I am not making a value judgment but talking about economic consequences in a rational (cold-blooded) way. Not about what is good or what truly matters, but what would increase GDP and to get back to the original original point, where growth in economy is going to come from.
BTW Ohai, to your point of killing of productive people in war; the cold-blooded response is that the victors get to reproduce more. Population is a renewable resource.