Economy Gdp Quotes

About half the global economy is living beyond not only its means but its diminished number of children's means. Instead of addressing that fact, countries with government debt of 125 percent of GDP are being "rescued" by countries with government debt of 80 percent of GDP. Good luck with that.

Just like how most if not all poor boys look up to and aspire to someday be rich men, most if not all underdeveloped and developing countries look up to and aspire to someday be developed countries.

By 2060, India’s economy is projected to be larger than China’s because of its greater population growth. India is forecast to produce about one-quarter of world GDP from 2040 through the rest of this century.

In Singapore, as befits that no-nonsense city state, they followed this line of thinking even further, and pegged ministerial salaries to the national GDP. When the Singaporean economy grows, ministers get a raise, as if that is what their job is all about.

China the Communist Party still pays lip service to traditional Marxist–Leninist ideals, but in practice it is guided by Deng Xiaoping’s famous maxims that ‘development is the only hard truth’ and that ‘it doesn’t matter if a cat is black or white, so long as it catches mice’. Which means, in plain language: do anything it takes to promote economic growth, even if Marx and Lenin wouldn’t have been happy with it. In Singapore, as befits that no-nonsense city state, they followed this line of thinking even further, and pegged ministerial salaries to the national GDP. When the Singaporean economy grows, ministers get a raise, as if that is what their job is all about

But a progressive policy needs more than just a bigger break with the economic and moral assumptions of the past 30 years. It needs a return to the conviction that economic growth and the affluence it brings is a means and not an end. The end is what it does to the lives, life-chances and hopes of people. Look at London. Of course it matters to all of us that London's economy flourishes. But the test of the enormous wealth generated in patches of the capital is not that it contributed 20%-30% to Britain's GDP but how it affects the lives of the millions who live and work there. What kind of lives are available to them? Can they afford to live there? If they can't, it is not compensation that London is also a paradise for the ultra-rich. Can they get decently paid jobs or jobs at all? If they can't, don't brag about all those Michelin-starred restaurants and their self-dramatising chefs. Or schooling for children? Inadequate schools are not offset by the fact that London universities could field a football team of Nobel prize winners.

Unless we are able to bridge the gap between the rich and the poor, the GDP and other facts and figures would be merely decorative and of little significance.

When the volume of debt has grown as large as national income or GDP, and when it bears an interest rate (typically 5%) above the economy’s rate of growth (typically just 1% to 2%), then all the growth in national income is taken by the creditors.

Just a quick example: if the United Kingdom’s gross domestic product (GDP) continues on its current path of an average decline of 0.5 percent annually as it has from 2010 to 2021, the British economy will fall behind many of its European neighbors, including Poland by 2030 and Romania and Hungary by 2040.

And why do we measure the progress of economies by gross domestic product? GDP is simply the total annual value of all goods and services transacted in a country. It rises not only when lives get better and economies progress but also when bad things happen to people or to the environment. Higher alcohol sales, more driving under the influence, more accidents, more emergency-room admissions, more injuries, more people in jail—GDP goes up. More illegal logging in the tropics, more deforestation and biodiversity loss, higher timber sales—again, GDP goes up. We know better, but we still worship high annual GDP growth rate, regardless of where it comes from.

general trend is toward products that use fewer atoms. We might not notice this because, while individual items use less material, we use more items as the economy expands and we thus accumulate more stuff in total. However, the total amount of material we use per GDP dollar is going down, which means we use less material for greater value. The ratio of mass needed to generate a unit of GDP has been falling for 150 years, declining even faster in the last two decades. In 1870 it took 4 kilograms of stuff to generate one unit of the U.S.’s GDP. In 1930 it took only one kilogram. Recently the value of GDP per kilogram of inputs rose from $1.64 in 1977 to $3.58 in 2000—a doubling of dematerialization in 23 years.

Due to Nepal's dependence on foreign assistance as the principal source of funding for its expanding development spending, its indebtedness has increased on a large scale.

With declining state and local spending, total public spending on education, infrastructure, and basic research has dropped from 12 percent of GDP in the 1970s to less than 3 percent in 2011.

Consider this thought experiment: if Portugal has higher levels of human welfare than the United States with $38,000 less GDP per capita, then we can conclude that $38,000 of America’s per capita income is effectively ‘wasted’. That adds up to $13 trillion per year for the US economy as a whole. That’s $13 trillion worth of extraction and production and consumption each year, and $13 trillion worth of ecological pressure, that adds nothing, in and of itself, to the fundamentals of human welfare. It is damage without gain. This means that the US economy could in theory be scaled down by a staggering 65% from its present size while at the same time improving the lives of ordinary Americans, if income was distributed more fairly and invested in public goods.

Public R&D expenditures are already at their lowest level as a share of the economy in forty years, and they are slated to fall to their lowest level—0.5 percent of GDP in 2021—since before the great mobilization of science during World War II.85 If they were instead increased in line with the size of the economy, according to one cautious calculation, the economy would generate more than a half trillion dollars in additional income over the next nine years.86

The great irony, then, is that the nation’s most famous modern conservative economist became the father of Big Government, chronic deficits, and national fiscal bankruptcy. It was Friedman who first urged the removal of the Bretton Woods gold standard restraints on central bank money printing, and then added insult to injury by giving conservative sanction to perpetual open market purchases of government debt by the Fed. Friedman’s monetarism thereby institutionalized a régime which allowed politicians to chronically spend without taxing. Likewise, it was the free market professor of the Chicago school who also blessed the fundamental Keynesian proposition that Washington must continuously manage and stimulate the national economy. To be sure, Friedman’s “freshwater” proposition, in Paul Krugman’s famous paradigm, was far more modest than the vast “fine-tuning” pretensions of his “salt-water” rivals. The saltwater Keynesians of the 1960s proposed to stimulate the economy until the last billion dollars of potential GDP was realized; that is, they would achieve prosperity by causing the state to do anything that was needed through a multiplicity of fiscal interventions. By contrast, the freshwater Keynesian, Milton Friedman, thought that capitalism could take care of itself as long as it had precisely the right quantity of money at all times; that is, Friedman would attain prosperity by causing the state to do the one thing that was needed through the single spigot of M1 growth.

less than 1% of new businesses started each year in the U.S. receive venture funding, and total VC investment accounts for less than 0.2% of GDP. But the results of those investments disproportionately propel the entire economy. Venture-backed companies create 11% of all private sector jobs. They generate annual revenues equivalent to an astounding 21% of GDP. Indeed, the dozen largest tech companies were all venture-backed. Together those 12 companies are worth more than $2 trillion, more than all other tech companies combined.

Some estimate that the challenge, while immense, does not impose burdens comparable to those of 1941. Economist Jeffrey Sachs, in a careful study, concludes that 'contrary to some commentaries, decarbonization will not require grand mobilization of the U.S. economy on par with World War II. The incremental costs of decarbonization above our normal energy costs will amount to 1 to 2 percent of U.S. GDP per year during the period to 2050. By contrast, during World War II, federal outlays soared to 43 percent of GDP from the prewar level of 10 percent of GDP in 1940.

GDP doesn’t register, as Robert Kennedy put it, “the beauty of our poetry or the strength of our marriages, or the intelligence of our public debate.” GDP measures everything, Kennedy concluded, “except that which makes life worthwhile.” Nor does GDP take into account unpaid work, the so-called compassionate economy.

In early 2014, the global economy’s top five companies’ gross cash holdings—those of Apple, Google, Microsoft, as well as the US telecom giant Verizon and the Korean electronics conglomerate Samsung—came to $387 billion, the equivalent of the 2013 GDP of the United Arab Emirates.78 This capital imbalance puts the fate of the world economy in the hands of the few cash hoarders like Apple and Google, whose profits are mostly kept offshore to avoid paying US tax. “Apple, Google and Facebook are latter-day scrooges,” worries the Financial Times columnist John Plender about a corporate miserliness that is undermining the growth of the world economy.

Countries measured their success by the size of their territory, the increase in their population and the growth of their GDP – not by the happiness of their citizens. Industrialised nations such as Germany, France and Japan established gigantic systems of education, health and welfare, yet these systems were aimed to strengthen the nation rather than ensure individual well-being. Schools were founded to produce skilful and obedient citizens who would serve the nation loyally. At eighteen, youths needed to be not only patriotic but also literate, so that they could read the brigadier’s order of the day and draw up tomorrow’s battle plans. They had to know mathematics in order to calculate the shell’s trajectory or crack the enemy’s secret code. They needed a reasonable command of electrics, mechanics and medicine in order to operate wireless sets, drive tanks and take care of wounded comrades. When they left the army they were expected to serve the nation as clerks, teachers and engineers, building a modern economy and paying lots of taxes. The same went for the health system. At the end of the nineteenth century countries such as France, Germany and Japan began providing free health care for the masses. They financed vaccinations for infants, balanced diets for children and physical education for teenagers. They drained festering swamps, exterminated mosquitoes and built centralised sewage systems. The aim wasn’t to make people happy, but to make the nation stronger. The country needed sturdy soldiers and workers, healthy women who would give birth to more soldiers and workers, and bureaucrats who came to the office punctually at 8 a.m. instead of lying sick at home. Even the welfare system was originally planned in the interest of the nation rather than of needy individuals. When Otto von Bismarck pioneered state pensions and social security in late nineteenth-century Germany, his chief aim was to ensure the loyalty of the citizens rather than to increase their well-being. You fought for your country when you were eighteen, and paid your taxes when you were forty, because you counted on the state to take care of you when you were seventy.30 In 1776 the Founding Fathers of the United States established the right to the pursuit of happiness as one of three unalienable human rights, alongside the right to life and the right to liberty. It’s important to note, however, that the American Declaration of Independence guaranteed the right to the pursuit of happiness, not the right to happiness itself. Crucially, Thomas Jefferson did not make the state responsible for its citizens’ happiness. Rather, he sought only to limit the power of the state.

Even in recent times, the empirical evidence does not support the claim that trade liberalization or incentive neutrality leads to faster growth. It is true that higher manufacturing growth rates have been typically associated with higher export growth rates (mostly in countries where export and import shares to GDP grew), but there is no statistical relation between either of these growth rates or degree of trade restrictions. Rather, almost all of successful export-oriented growth has come with selective trade and industrialization policies. In this regard, stable exchange rates and national price levels seem to be considerably more important than import policy in producing successful export-oriented growth

Economists had found an almost one-to-one match between PISA scores and a nation's long-term economic growth. Many other things influenced economic growth, of course, but the ability of a workforce to learn, think, and adapt was the ultimate stimulus package. If the United States had Finland's PISA scores, GDP would be increasing at the rate of one to two trillion dollars per year.

David Davis had promised that Britain would be part of a free-trade area ‘almost twice the size of the EU’ within two years of the Brexit vote – a statement outdone in its absurdity only by Mr Davis’ later boast of negotiating a trading area ‘probably ten times the size of the European Union’. Based on GDP, Davis is aiming for something larger than the economies of the entire planet combined.68 So it can’t happen.

The same thing, notes Brynjolfsson, happened 120 years ago, in the Second Industrial Revolution, when electrification—the supernova of its day—was introduced. Old factories did not just have to be electrified to achieve the productivity boosts; they had to be redesigned, along with all business processes. It took thirty years for one generation of managers and workers to retire and for a new generation to emerge to get the full productivity benefits of that new power source. A December 2015 study by the McKinsey Global Institute on American industry found a “considerable gap between the most digitized sectors and the rest of the economy over time and [found] that despite a massive rush of adoption, most sectors have barely closed that gap over the past decade … Because the less digitized sectors are some of the largest in terms of GDP contribution and employment, we [found] that the US economy as a whole is only reaching 18 percent of its digital potential … The United States will need to adapt its institutions and training pathways to help workers acquire relevant skills and navigate this period of transition and churn.” The supernova is a new power source, and it will take some time for society to reconfigure itself to absorb its full potential. As that happens, I believe that Brynjolfsson will be proved right and we will start to see the benefits—a broad range of new discoveries around health, learning, urban planning, transportation, innovation, and commerce—that will drive growth. That debate is for economists, though, and beyond the scope of this book, but I will be eager to see how it plays out. What is absolutely clear right now is that while the supernova may not have made our economies measurably more productive yet, it is clearly making all forms of technology, and therefore individuals, companies, ideas, machines, and groups, more powerful—more able to shape the world around them in unprecedented ways with less effort than ever before. If you want to be a maker, a starter-upper, an inventor, or an innovator, this is your time. By leveraging the supernova you can do so much more now with so little. As Tom Goodwin, senior vice president of strategy and innovation at Havas Media, observed in a March 3, 2015, essay on TechCrunch.com: “Uber, the world’s largest taxi company, owns no vehicles. Facebook, the world’s most popular media owner, creates no content. Alibaba, the most valuable retailer, has no inventory. And Airbnb, the world’s largest accommodation provider, owns no real estate. Something interesting is happening.

Today Hindu revivalists, pious Muslims, Japanese nationalists and Chinese communists may declare their adherence to very different values and goals, but they have all come to believe that economic growth is the key to realising their disparate goals. Thus in 2014 the devout Hindu Narendra Modi was elected prime minister of India thanks largely to his success in boosting economic growth in his home state of Gujarat, and to the widely held view that only he could reinvigorate the sluggish national economy. Analogous views have kept the Islamist Recep Tayyip Erdoğan in power in Turkey since 2003. The name of his party – the Justice and Development Party – highlights its commitment to economic development, and the Erdoğan government has indeed managed to maintain impressive growth rates for more than a decade. Japan’s prime minister, the nationalist Shinzō Abe, came to office in 2012 pledging to jolt the Japanese economy out of two decades of stagnation. His aggressive and somewhat unusual measures to achieve this have been nicknamed Abenomics. Meanwhile in neighbouring China the Communist Party still pays lip service to traditional Marxist–Leninist ideals, but in practice is guided by Deng Xiaoping’s famous maxims that ‘development is the only hard truth’ and that ‘it doesn’t matter if a cat is black or white, so long as it catches mice’. Which means, in plain language: do whatever it takes to promote economic growth, even if Marx and Lenin wouldn’t have been happy with it. In Singapore, as befits that no-nonsense city-state, they pursue this line of thinking even further, and peg ministerial salaries to the national GDP. When the Singaporean economy grows, government ministers get a raise, as if that is what their jobs are all about.2

aggregate statistics like GDP per capita and its derivatives such as factor productivity . . . were designed for a steel-and-wheat economy, not one in which information and data are the most dynamic sector. Many of the new goods and services are expensive to design, but once they work, they can be copied at very low or zero costs. That means they tend to contribute little to measured output even if their impact on consumer welfare is very large.

The gross domestic product (GDP) was created in the 1930s to measure the value of the sum total of economic goods and services generated over a single year. The problem with the index is that it counts negative as well as positive economic activity. If a country invests large sums of money in armaments, builds prisons, expands police security, and has to clean up polluted environments and the like, it’s included in the GDP. Simon Kuznets, an American who invented the GDP measurement tool, pointed out early on that “[t]he welfare of a nation can . . . scarcely be inferred from a measurement of national income.”28 Later in life, Kuznets became even more emphatic about the drawbacks of relying on the GDP as a gauge of economic prosperity. He warned that “[d]istinctions must be kept in mind between quantity and quality of growth . . . . Goals for ‘more’ growth should specify more growth of what and for what.”29

SUSAN’S STORY OF cascading loss and downward mobility has been replicated millions of times across the American landscape due to the financial industry’s actions in the 2000s. While the country’s GDP and employment numbers rebounded before the pandemic struck another blow, the damage at the household level has been permanent. Of families who lost their houses through dire events such as job loss or foreclosure, over two-thirds will probably never own a home again. Because of our globally interconnected economy, the Great Recession altered lives in every country in the world. And all of it was preventable, if only we had paid attention earlier to the financial fires burning through Black and brown communities across the nation. Instead, the predatory practices were allowed to continue until the disaster had engulfed white communities, too—and only then, far too late, was it recognized as an emergency. There is no question that the financial crisis hurt people of color first and worst. And yet the majority of the people it damaged were white. This is the dynamic we’ve seen over and over again throughout our country’s history,

Two decades after its first democratic election, South Africa ranks as the most unequal country on Earth.1 A host of policy tools could patch each of South Africa’s ills in piecemeal fashion, yet one force would unquestionably improve them all: economic growth.2 Diminished growth lowers living standards. With 5 percent annual growth, it takes just fourteen years to double a country’s GDP; with 3 percent growth, it takes twenty-four years. In general, emerging economies with a low asset base need to grow faster and accumulate a stock of assets more quickly than more developed economies in which basic living standards are already largely met. Meaningfully increasing per capita income is a critical way to lift people’s living standards and take them out of poverty, thereby truly changing the developmental trajectory of the country. South Africa has managed to push growth above a mere 3 percent only four times since the transition from apartheid, and it has remained all but stalled under 5 percent since 2008. And the forecast for growth in years to come hovers around a paltry 1 percent. Because South Africa’s population has been growing around 1.5 percent per year since 2008, the country’s per capita income has been stagnant over the period.

In North America, there is no nostalgia for the postwar period, quite simply because the Trente Glorieuses never existed there: per capita output grew at roughly the same rate of 1.5–2 percent per year throughout the period 1820–2012. To be sure, growth slowed a bit between 1930 and 1950 to just over 1.5 percent, then increased again to just over 2 percent between 1950 and 1970, and then slowed to less than 1.5 percent between 1990 and 2012. In Western Europe, which suffered much more from the two world wars, the variations are considerably greater: per capita output stagnated between 1913 and 1950 (with a growth rate of just over 0.5 percent) and then leapt ahead to more than 4 percent from 1950 to 1970, before falling sharply to just slightly above US levels (a little more than 2 percent) in the period 1970–1990 and to barely 1.5 percent between 1990 and 2012. Western Europe experienced a golden age of growth between 1950 and 1970, only to see its growth rate diminish to one-half or even one-third of its peak level during the decades that followed. [...] If we looked only at continental Europe, we would find an average per capita output growth rate of 5 percent between 1950 and 1970—a level well beyond that achieved in other advanced countries over the past two centuries. These very different collective experiences of growth in the twentieth century largely explain why public opinion in different countries varies so widely in regard to commercial and financial globalization and indeed to capitalism in general. In continental Europe and especially France, people quite naturally continue to look on the first three postwar decades—a period of strong state intervention in the economy—as a period blessed with rapid growth, and many regard the liberalization of the economy that began around 1980 as the cause of a slowdown. In Great Britain and the United States, postwar history is interpreted quite differently. Between 1950 and 1980, the gap between the English-speaking countries and the countries that had lost the war closed rapidly. By the late 1970s, US magazine covers often denounced the decline of the United States and the success of German and Japanese industry. In Britain, GDP per capita fell below the level of Germany, France, Japan, and even Italy. It may even be the case that this sense of being rivaled (or even overtaken in the case of Britain) played an important part in the “conservative revolution.” Margaret Thatcher in Britain and Ronald Reagan in the United States promised to “roll back the welfare state” that had allegedly sapped the animal spirits of Anglo-Saxon entrepreneurs and thus to return to pure nineteenth-century capitalism, which would allow the United States and Britain to regain the upper hand. Even today, many people in both countries believe that the conservative revolution was remarkably successful, because their growth rates once again matched continental European and Japanese levels. In fact, neither the economic liberalization that began around 1980 nor the state interventionism that began in 1945 deserves such praise or blame. France, Germany, and Japan would very likely have caught up with Britain and the United States following their collapse of 1914–1945 regardless of what policies they had adopted (I say this with only slight exaggeration). The most one can say is that state intervention did no harm. Similarly, once these countries had attained the global technological frontier, it is hardly surprising that they ceased to grow more rapidly than Britain and the United States or that growth rates in all of these wealthy countries more or less equalized [...] Broadly speaking, the US and British policies of economic liberalization appear to have had little effect on this simple reality, since they neither increased growth nor decreased it.

In early 2014, the global economy’s top five companies’ gross cash holdings—those of Apple, Google, Microsoft, as well as the US telecom giant Verizon and the Korean electronics conglomerate Samsung—came to $387 billion, the equivalent of the 2013 GDP of the United Arab Emirates.78 This capital imbalance puts the fate of the world economy in the hands of the few cash hoarders like Apple and Google, whose profits are mostly kept offshore to avoid paying US tax. “Apple, Google and Facebook are latter-day scrooges,” worries the Financial Times columnist John Plender about a corporate miserliness that is undermining the growth of the world economy.79 “So what does it all mean?” Michael Moritz rhetorically asks about a data factory economy that is immensely profitable for a tiny handful of Silicon Valley companies. What does the personal revolution mean for everyone else, to those who aren’t part of what he calls the “extreme minority” inside the Silicon Valley bubble? “It means that life is very tough for almost everyone in America,” the chairman of Sequoia Capital, whom even Tom Perkins couldn’t accuse of being a progressive radical, says. “It means life is very tough if you’re poor. It means life is very tough if you’re middle class. It means you have to have the right education to go and work at Google or Apple.

Economics today creates appetites instead of solutions. The western world swells with obesity while others starve. The rich wander about like gods in their own nightmares. Or go skiing in the desert. You don’t even have to be particularly rich to do that. Those who once were starving now have access to chips, Coca-Cola, trans fats and refined sugars, but they are still disenfranchized. It is said that when Mahatma Gandhi was asked what he thought about western civilization, he answered that yes, it would be a good idea. The bank man’s bonuses and the oligarch’s billions are natural phenomena. Someone has to pull away from the masses – or else we’ll all become poorer. After the crash Icelandic banks lost 100 billion dollars. The country’s GDP had only ever amounted to thirteen billion dollars in total. An island with chronic inflation, a small currency and no natural resources to speak of: fish and warm water. Its economy was a third of Luxembourg’s. Well, they should be grateful they were allowed to take part in the financial party. Just like ugly girls should be grateful. Enjoy, swallow and don’t complain when it’s over. Economists can pull the same explanations from their hats every time. Dream worlds of total social exclusion and endless consumerism grow where they can be left in peace, at a safe distance from the poverty and environmental destruction they spread around themselves. Alternative universes for privileged human life forms. The stock market rises and the stock market falls. Countries devalue and currencies ripple. The market’s movements are monitored minute by minute. Some people always walk in threadbare shoes. And you arrange your preferences to avoid meeting them. It’s no longer possible to see further into the future than one desire at a time. History has ended and individual freedom has taken over. There is no alternative.

By the end of the 1970s, a clear majority of the employed population of Britain, Germany, France, the Benelux countries, Scandinavia and the Alpine countries worked in the service sector—communications, transport, banking, public administration and the like. Italy, Spain and Ireland were very close behind. In Communist Eastern Europe, by contrast, the overwhelming majority of former peasants were directed into labour-intensive and technologically retarded mining and industrial manufacture; in Czechoslovakia, employment in the tertiary, service sector actually declined during the course of the 1950s. Just as the output of coal and iron-ore was tailing off in mid-1950s Belgium, France, West Germany and the UK, so it continued to increase in Poland, Czechoslovakia and the GDR. The Communists’ dogmatic emphasis on raw material extraction and primary goods production did generate rapid initial growth in gross output and per capita GDP. In the short run the industrial emphasis of the Communist command economies thus appeared impressive (not least to many Western observers). But it boded ill for the region’s future.

Yet just eighty years ago it still seemed an impossible mission when U.S. President Herbert Hoover was tasked with beating back the Great Depression with only a mixed bag of numbers, ranging from share values to the price of iron to the volume of road transport. Even his most important metric – the “blast-furnace index” – was little more than an unwieldy construct that attempted to pin down production levels in the steel industry. If you had asked Hoover how “the economy” was doing, he would have given you a puzzled look. Not only because this wasn’t among the numbers in his bag, but because he would have had no notion of our modern understanding of the word “economy.” “Economy” isn’t really a thing, after all – it’s an idea, and that idea had yet to be invented. In 1931, Congress called together the country’s leading statisticians and found them unable to answer even the most basic questions about the state of the nation. That something was fundamentally wrong seemed evident, but their last reliable figures dated from 1929. It was obvious that the homeless population was growing and that companies were going bankrupt left and right, but as to the actual extent of the problem, nobody knew. A few months earlier, President Hoover had dispatched a number of Commerce Department employees around the country to report on the situation. They returned with mainly anecdotal evidence that aligned with Hoover’s own belief that economic recovery was just around the bend. Congress wasn’t reassured, however. In 1932, it appointed a brilliant young Russian professor by the name of Simon Kuznets to answer a simple question: How much stuff can we make? Over the next few years, Kuznets laid the foundations of what would later become the GDP. His

Almost all official statistics and policy documents on wages, income, gross domestic product (GDP), crime, unemployment rates, innovation rates, cost of living indices, morbidity and mortality rates, and poverty rates are compiled by governmental agencies and international bodies worldwide in terms of both total aggregate and per capita metrics. Furthermore, well-known composite indices of urban performance and the quality of life, such as those assembled by the World Economic Forum and magazines like Fortune, Forbes, and The Economist, primarily rely on naive linear combinations of such measures.6 Because we have quantitative scaling curves for many of these urban characteristics and a theoretical framework for their underlying dynamics we can do much better in devising a scientific basis for assessing performance and ranking cities. The ubiquitous use of per capita indicators for ranking and comparing cities is particularly egregious because it implicitly assumes that the baseline, or null hypothesis, for any urban characteristic is that it scales linearly with population size. In other words, it presumes that an idealized city is just the linear sum of the activities of all of its citizens, thereby ignoring its most essential feature and the very point of its existence, namely, that it is a collective emergent agglomeration resulting from nonlinear social and organizational interactions. Cities are quintessentially complex adaptive systems and, as such, are significantly more than just the simple linear sum of their individual components and constituents, whether buildings, roads, people, or money. This is expressed by the superlinear scaling laws whose exponents are 1.15 rather than 1.00. This approximately 15 percent increase in all socioeconomic activity with every doubling of the population size happens almost independently of administrators, politicians, planners, history, geographical location, and culture.

One of our nation’s biggest challenges is the upliftment of the 270 million people who are below the poverty line. They need housing, food, healthcare, and they need education and employment, which will enable them to lead a good life. Our GDP is oscillating between 4-6 per cent per annum, whereas economists suggest that to uplift the people living below the poverty line, our economy has to grow at the rate of 10 per cent per annum consistently for over a decade.

Economic historians have shown that, as late as 1800, China accounted for about one-third of world GDP, had market-based systems of domestic manufacturing and trade at least as sophisticated as those in Europe, and dominated global trade in premodern manufactures such as silk textiles and ceramics.

Why does this happen even though India has a good economic foundation? It is because we have an economic system which is vulnerable to the fluctuations of the world economy and our economic growth is not sustainable, as witnessed from the 5 per cent GDP growth in the 1990s to 9 per cent for around four years till 2009 and, finally, the present 5.5 per cent. This is mainly due to our prevailing economic policies which are stifling the growth of agriculture and food processing, the manufacturing sector and the service sector. If we bring a marked change in our socio-political and economic policies with a focus on inclusiveness, then I am confident that we as a nation will be able to overcome the economic crisis and progress to new heights.

Oil-futures trading has risen by a factor of one hundred in some three decades, from 10 percent of oil output in 1984 to ten times oil output in 2015. Derivatives on real estate are now nine times global GDP. That’s not capitalism, that’s hypertrophy of finance.

Put simply, the growth model assumed that the overall wellbeing of a society was approximately proportional to the size of its economy, because more money or higher Gross Domestic Product (GDP) meant that more individual and social desires could be satisfied via market transactions. No matter how rich a society became, growing the economy was thought to be the only effective way to eliminate poverty, reduce inequality and unemployment, properly fund schools, hospitals, the arts, scientific research, environmental protection programs, and so on. In other words, the underlying social problem (even within the richest nations) was believed to be a lack of money.

South Korea had a population of 50 million people, the 27th-largest country in the world but with an economy that was the 11th-largest and a GDP of $1.5 trillion, the same as Russia’s.

While we are happy that our economy is in an ascending phase and our GDP has been growing at as high as 9 per cent per annum, it is evident that the economic growth is not fully reflected in the quality of life of a large number of people, particularly in rural areas and even in urban areas. Hence, we have evolved what is called a National Prosperity Index (NPI), which is a summation of (a) annual growth rate of GDP; (b) improvement in quality of life of the people, particularly those living below the poverty line; and (c) the adoption of a value system derived from our civilizational heritage in every walk of life which is unique to India. That is NPI=a+b+c.

There is an even starker contrast between the two groups of countries when one compares their contributions to growth in global debt versus growth in global GDP. Emerging markets contribute far more to growth in global GDP than to the growth in global public debt. These economies accounted for 14 percent of the increase in global debt levels from 2007 to 2012. In contrast, their contribution to the increase in global GDP over this period was 70 percent. The numbers are equally stark when one examines forecasts for the subsequent five years. From 2012 to 2017, emerging markets are expected to account for about three-fifths of global GDP growth but less than one-fifth of global public debt accumulation. In other words, emerging markets are adding substantially to global GDP, whereas advanced economies are mainly adding to global public debt (see Figure A-3 in the Appendix for details). The U.S. and Japan are certainly heavy hitters when it comes to debt accumulation. These two economies are making a far greater contribution to the rise in global debt than to the rise in global GDP. The U.S. contributed 38 percent of the increase in global debt from 2007 to 2012 and is expected to account for nearly half of the anticipated increase from 2012 to 2017. Its contributions to the increases in global GDP over those two periods are 12 percent and 23 percent, respectively. Japan accounted for 25 percent of the increase in debt from 2007 to 2012 and is expected to add 9 percent from 2012 to 2017, whereas its contributions to the increase in global GDP are far more modest. One

Some people believe labor-saving technological change is bad for the workers because it throws them out of work. This is the Luddite fallacy, one of the silliest ideas to ever come along in the long tradition of silly ideas in economics. Seeing why it's silly is a good way to illustrate further Solow's logic. The original Luddites were hosiery and lace workers in Nottingham, England, in 1811. They smashed knitting machines that embodied new labor-saving technology as a protest against unemployment (theirs), publicizing their actions in circulars mysteriously signed "King Ludd." Smashing machines was understandable protection of self-interest for the hosiery workers. They had skills specific to the old technology and knew their skills would not be worth much with the new technology. English government officials, after careful study, addressed the Luddites' concern by hanging fourteen of them in January 1813. The intellectual silliness came later, when some thinkers generalized the Luddites' plight into the Luddite fallacy: that an economy-wide technical breakthrough enabling production of the same amount of goods with fewer workers will result in an economy with - fewer workers. Somehow it never occurs to believers in Luddism that there's another alternative: produce more goods with the same number of workers. Labor-saving technology is another term for output-per-worker-increasing technology. All of the incentives of a market economy point toward increasing investment and output rather than decreasing employment; otherwise some extremely dumb factory owners are foregoing profit opportunities. With more output for the same number of workers, there is more income for each worker. Of course, there could very well be some unemployment of workers who know only the old technology - like the original Luddites - and this unemployment will be excruciating to its victims. But workers as a whole are better off with more powerful output-producing technology available to them. Luddites confuse the shift of employment from old to new technologies with an overall decline in employment. The former happens; the latter doesn't. Economies experiencing technical progress, like Germany, the United Kingdom, and the United States, do not show any long-run trend toward increasing unemployment; they do show a long-run trend toward increasing income per worker. Solow's logic had made clear that labor-saving technical advance was the only way that output per worker could keep increasing in the long run. The neo-Luddites, with unintentional irony, denigrate the only way that workers' incomes can keep increasing in the long-run: labor-saving technological progress. The Luddite fallacy is very much alive today. Just check out such a respectable document as the annual Human Development Report of the United Nations Development Program. The 1996 Human Development Report frets about "jobless growth" in many countries. The authors say "jobless growth" happens whenever the rate of employment growth is not as high as the rate of output growth, which leads to "very low incomes" for millions of workers. The 1993 Human Development Report expressed the same concern about this "problem" of jobless growth, which was especially severe in developing countries between 1960 and 1973: "GDP growth rates were fairly high, but employment growth rates were less than half this." Similarly, a study of Vietnam in 2000 lamented the slow growth of manufacturing employment relative to manufacturing output. The authors of all these reports forget that having GDP rise faster than employment is called growth of income per worker, which happens to be the only way that workers "very low incomes" can increase.

Why does it take a war to produce jobs; [why does it take a war to produce] the resources to get an economy moving?

the traditionally used ratios of deficit to GDP and total debt to GDP, as computed using the official numbers, grossly overstate how much more debt China can incur to jump-start its economy.

Prior to the opening up of the economy in 1980, the government relied on the artificially protected profits of SOEs to pad its budget. When economic reforms were introduced, SOE profits plummeted and government’s revenues fell precipitously to around 10 percent of GDP until the major fiscal reform in 1994 which introduced new valued-added and consumption taxes. The restructured fiscal system has steadily increased government revenue, which is currently around 22 percent of GDP, but it has also created an imbalance between the central and local governments. While the local governments were left responsible for funding more than 70 percent of government expenditures, they only collect about half of the tax revenue.24

If you could even find Marx outside of university classrooms (where he was increasingly presented as a humanist philosopher instead of a revolutionary firebrand), it was on Wall Street, where cheeky traders put down Sun Tzu and heralded the long-dead German as a prophet of globalization. Capitalism had certainly yielded immense progress in countries such as China and India. In 1991, when Indian finance minister Manmohan Singh announced plans to liberalize India’s economy, he quoted Victor Hugo: “No power on Earth can stop an idea whose time has come.” Over the next twenty-five years, India’s GDP grew by almost 1,000 percent. An even more impressive process unfolded in China, where Deng Xiaoping upturned Mao-era policies to deliver what he called “socialism with Chinese characteristics” and what the rest of the world recognized as state-managed liberalization. China is now as radically unequal as Latin America, but over five hundred million Chinese have been lifted out of extreme poverty during the past thirty years.1

6The report showed that while ‘intangible assets’ were growing on US and UK company balance sheets at nearly three times the rate of tangible assets, the actual size of the digital sector in the GDP figures had remained static. So something is broken in the logic we use to value the most important thing in the modern economy. However, by any measure, it is clear that the mix of inputs has altered. An airliner looks like old technology. But from the atomic structure of the fan blades, to the compressed design cycle, to the stream of data it is firing back to its fleet HQ, it is ‘alive’ with information.

A WORLD OF SLOWER GROWTH AND HIGHER INFLATION If triple-digit oil prices are the true culprit behind the recent recession, what happens if oil prices recover to triple-digit levels or even close to them when the economy recovers? Does the economy slip right back into recession again? Everything else being equal—or ceteris paribus, as they say in the economics textbooks—that’s probably as good a forecast as any. Every oil shock has produced a global recession, and the record price increase of the past few years may produce the biggest one of all. But recessions, no matter how severe, are finite events. Ultimately, we face a far more challenging economic verdict from oil. Any way you cut it, a return to triple-digit oil prices means a much slower-growing world economy than before. And not just for a couple of quarters of recession. That’s because virtually every dollar of world GDP requires energy to produce. Not all of that energy, of course, comes from oil, but far too much does for world GDP not to be affected by oil’s growing scarcity. And there is nothing at the end of the day that we can do about depletion. Big tax cuts and big spending increases can mitigate triple-digit oil’s bite, but the deficits they inevitably produce ultimately lead to tax hikes and spending cuts that just make the suffering all the more painful down the road. Taking out a loan to pay your mortgage might defer your problems for a month or so, but in the end, it often makes your difficulties more acute. Borrowing from the future just turns today’s problems into tomorrow’s, and by the time tomorrow comes, they’ve become a lot bigger than if we had dealt with them today. Trillion-dollar-plus deficits, just like a near-zero percent federal funds rate, can mask the impact of high energy prices for a while, but ultimately they can’t protect economies that still run on oil from the impact of higher energy prices and the toll that they take.

Because they have zero price, these services are virtually invisible in the official statistics. They add value to the economy, but not dollars to GDP. And because our productivity data are, in turn, based on GDP metrics, the burgeoning availability of free goods does not move the productivity dial. There’s little doubt, however, that they have real value. When a girl clicks on a YouTube video instead of going to the movies, she’s saying that she gets more net value from YouTube than traditional cinema. When her brother downloads a free gaming app on his iPad instead of buying a new video game, he’s making a similar statement.

After all, less than 1% of new businesses started each year in the U.S. receive venture funding, and total VC investment accounts for less than 0.2% of GDP. But the results of those investments disproportionately propel the entire economy. Venture-backed companies create 11% of all private sector jobs. They generate annual revenues equivalent to an astounding 21% of GDP. Indeed, the dozen largest tech companies were all venture-backed. Together those 12 companies are worth more than $2 trillion, more than all other tech companies combined.

Seventh, be agnostic about growth. One diagram in economic theory is so dangerous that it is never actually drawn: the long-term path of GDP growth. Mainstream economics views endless economic growth as a must, but nothing in nature grows forever, and the attempt to buck that trend is raising tough questions in high-income but low-growth countries. It may not be hard to give up having GDP growth as an economic goal, but it is going to be far harder to overcome our addiction to it. Today we have economies that need to grow, whether or not they make us thrive; what we need are economies that make us thrive, whether or not they grow. That radical flip in perspective invites us to become agnostic about growth and to explore how economies that are currently financially, politically and socially addicted to growth could learn to live with or without it.

The Japanese experience, since the early 1990s, is worrying in this respect. After the bubble economy collapsed and the private sector went into deleveraging mode, low interest rates have prevailed. During Japan’s two lost decades, returns on equity have been persistently lower than in Europe or the US–they currently average around 8 per cent compared to 12 per cent and 15 per cent respectively, albeit with lower gearing. Despite Japan introducing the world to ZIRP (the zero-interest rate policy), the country’s nominal GDP per capita remains below the 1991 level. Rather like the current Western experience, the decline in private sector leverage has been replaced by rising public sector debt–which is now over 200 per cent of GDP, up from around 50 per cent in the early 1990s. Total debt, both public and private, is greater today, relative to Japan’s economy, than in 1990. In short, Japan’s long experiment with low rates has hardly been a positive one, with respect to either corporate profitability or the country’s ability to outgrow its debt burden.

In 1955, government spending accounted for roughly 22 percent of the economy, and it stayed that way for years. But during the last quarter of the twentieth century, public investments began to decline. By 2021, government spending on all public goods—including national defense, transportation, health expenditures, and programs to ease the pain of poverty—made up just 17.6 percent of GDP. Meanwhile, personal consumption grew from about 60 percent of GDP to 69 percent over that same period.[

In 1955, government spending accounted for roughly 22 percent of the economy, and it stayed that way for years. But during the last quarter of the twentieth century, public investments began to decline. By 2021, government spending on all public goods—including national defense, transportation, health expenditures, and programs to ease the pain of poverty—made up just 17.6 percent of GDP.

Piketty would impose a progressive annual tax on capital. By a static analysis, such a tax might reduce the yield of capital to the rate of GDP expansion and thus eliminate the bias toward top-heavy accumulation by elites. Upholding the secular stagnation theory of permanent growth slowdown, he naturally focuses on depressing the return to capital. Taking money from the rich and giving it to government might seem to address “inequality.” But by putting capital into the hands of the least productive users of it—politicians—he would aggravate the very stagnation he warns against.

Byron Wien, for decades one of the most influential voices on Wall Street, taught Israel how to understand macroeconomic questions like the difference between gross national product and gross domestic product. The government had switched the leading economic indicator from GNP to GDP, Wien explained to Israel, as a way to make it seem that the economy was growing faster—official sleight of hand understood by very few.

The growth in asset management income accounts for roughly 35 percent of the growth of the financial sector as a percent of GDP, driven by the opaque fee structures, especially when it comes to alternative investment vehicles.36 But in spite of their high fees, there is little evidence of any advantages, for instance in better long-run performance, when it comes to higher management fees.37 Other key sources of financial profits have come from their privileged position in running the economy’s payments system: ATM and sundry other fees levied on normal saving and checking accounts.

Indeed, the idea of the economy as a machine, regulated by appropriate policy levers, took firm hold.

We think of GDP as a measure of the wealth that a country generates each year. But from a thermodynamic point of view, it is more a measure of the temporary energy value embedded in the goods or services produced at the expense of the diminution of the available energy reserves and an accumulation of entropic waste. Since

Hibbs's: the average rate of unemployment over the entire postwar era has been almost a full percentage point lower under Democratic presidents than under Republicans, while the average rate of real per capita GDP growth has been more than a full percentage point higher.

More typical, however, are tail-chasing proclamations like this one, which can be found on the website of the MIT Innovation Initiative: “The MIT Innovation Initiative is an Institute-wide, multi-year agenda to transform the Institute’s innovation ecosystem—internally, around the globe and with its partners—for accelerated impact well into the 21st century.”20 This sounds distinctly like bullshit, but if MIT wants to think of itself in such a way, that’s their business. The problem arises when we enshrine innovation as a public philosophy—when we look to it as the solution to our economic ills and understand it as the guide for how economies ought to parcel out rewards. To put it bluntly, it is not clear that cheering for innovation in the bombastic way we see in the blue states actually improves the economic well-being of average citizens. For example, the last fifteen years have been a golden age of financial and software innovation, but they have been feeble in terms of GDP growth. In ideological terms, however, innovation definitely works: as a way of excusing soaring inequality and explaining the exalted status of the rich, it is the best we’ve got.

On the other hand, there are a number of cases where economic growth did not produce better governance, but where, to the contrary, it was good governance that was responsible for growth. Consider South Korea and Nigeria. In 1954, following the Korean War, South Korea’s per capita GDP was lower than that of Nigeria, which was to win its independence from Britain in 1960. Over the following fifty years, Nigeria took in more than $300 billion in oil revenues, and yet its per capita income declined in the years between 1975 and 1995. In contrast, South Korea grew at rates ranging from 7 to 9 percent per year over this same period, to the point that it became the world’s twelfth-largest economy by the time of the Asian financial crisis in 1997. The reason for this difference in performance is almost entirely attributable to the far superior government that presided over South Korea compared to Nigeria.

Today, banking assets (that is, loans) in the world’s major economies are equivalent to around 150 per cent of those countries’ combined GDP.

Indeed, the kinds of minimal or no-government societies envisioned by dreamers of the Left and Right are not fantasies; they actually exist in the contemporary developing world. Many parts of sub-Saharan Africa are a libertarian’s paradise. The region as a whole is a low-tax utopia, with governments often unable to collect more than about 10 percent of GDP in taxes, compared to more than 30 percent in the United States and 50 percent in parts of Europe. Rather than unleashing entrepreneurship, this low rate of taxation means that basic public services like health, education, and pothole filling are starved of funding. The physical infrastructure on which a modern economy rests, like roads, court systems, and police, are missing. In Somalia, where a strong central government has not existed since the late 1980s, ordinary individuals may own not just assault rifles but also rocket-propelled grenades, antiaircraft missiles, and tanks. People are free to protect their own families,

less than 1% of new businesses started each year in the U.S. receive venture funding, and total VC investment accounts for less than 0.2% of GDP. But the results of those investments disproportionately propel the entire economy. Venture-backed companies create 11% of all private sector jobs.

Brazil fell into recession in the first half of the year, according to official data which showed the economy shrinking by 0.6% in the second quarter and 0.2% in the first. The main reason was another big drop in investment. The government had said that it expects GDP to grow by 1.8% this year, but that now seems unlikely.

seemed to be turning Egypt from a poor and lethargic economy into an exemplary developmental case study. The country's economy grew at an average rate of 9 per cent per annum for almost a decade. The extent of cultivated land increased by almost a third (an achievement that had eluded Egyptians for more than a millennium); the contribution of manufacturing to GDP rose from around 14 per cent in the late 1940s to 35 per cent by the early 1970s.

Agriculture is twenty percent of GDP. The most important crop is wheat. We are almost self-sufficient, overall almost eighty percent self-sufficient, in food.” In addition, he says, the country’s external debt of $7 billion is only ten percent of GDP, a proportion Greece, Spain, and Italy could envy. With foreign reserves of $17 billion, the country, in his view, could go on importing for another ten months. Syria is receiving assistance from Russia, Iran, and Iraq, which helps further to ease the burden. In any case, as in Iraq from 1990 to 2003, the sanctions are affecting the populace more than the regime. Further harming the people and the economy is the endemic corruption of some within the regime, who have treated the state as their personal business enterprise to be looted at will.

And indeed today as it struggles with its financial crisis, the central issue in Greek politics remains resentment of the influence of Brussels, Germany, the International Monetary Fund, and other external actors, which are seen as pulling strings behind the back of a weak Greek government. Although there is considerable distrust of government in American political culture, by contrast, the basic legitimacy of democratic institutions runs very deep. Distrust of government is related to the Greek inability to collect taxes. Americans loudly proclaim their dislike of taxes, but when Congress mandates a tax, the government is energetic in enforcement. Moreover, international surveys suggest that levels of tax compliance are reasonably high in the United States; higher, certainly, than most European countries on the Mediterranean. Tax evasion in Greece is widespread, with restaurants requiring cash payments, doctors declaring poverty-line salaries, and unreported swimming pools owned by asset-hiding citizens dotting the Athenian landscape. By one account, Greece’s shadow economy—unreported income hidden from the tax authorities—constitutes 29.6 percent of total GDP.24 A second factor has to do with the late arrival of capitalism in Greece. The United States was an early industrializer; the private sector and entrepreneurship remained the main occupations of most Americans. Greece urbanized and took on other trappings of a modern society early on, but it failed to build a strong base of industrial employment. In the absence of entrepreneurial opportunities, Greeks sought jobs in the state sector, and politicians seeking to mobilize votes were happy to oblige. Moreover, the Greek pattern of urbanization in which whole villages moved from the countryside preserved intact rural patronage networks, networks that industry-based development tended to dissolve.

Greece is no longer a private-sector problem. In 2010 the private sector owned most of its debt. Today, 70-ish percent of that debt is held by the [European Central Bank], Greek banks, and then there's the IMF, which has a huge loan outstanding to Greece. If you think about what's transpired in the last five years, we've had a transformation. How do you see that shift? What does it change for the Greeks? Greece, in my mind, is part of the international grid. If you want to remain in the grid, you're going to have to ultimately conform. If they don't conform, they're going to become Argentina; they did things the global economies said were wrong, and now they have no access to capital from outside. If Greece walked away today, its banks would be bankrupt. Greece experienced a 26 percent decline in GDP from 2008 to now. If they walked away, I think they would fall another ungodly amount.

What's your economic forecast for 2015? The world's improving. The U.S. economy is going to grow a little faster than last year, though probably a little weaker in the first quarter. Europe's going to be incrementally better, because they've fixed their banking crisis. They've benefited from a very weakened euro. And then you have economies like India, which was stagnating at around 5-ish percent GDP growth a year ago, and now they're going to receive the benefit of lower oil prices. That's going to add at least 1 percent to India's GDP. Prime Minister Narendra Modi's reforms will probably add 1 or 2 percent more growth to overcome all the weakness in China.

Some defenders of FDR, such as economist Paul Krugman, blame the 1937–38 collapse on a reduction in government spending. In typical Keynesian fashion, they claim that the economy tanked that year because the president, after nearly doubling federal spending in his first term, caved to GOP demands to rein in expenditures. But in real terms, the reduction was puny — less than 1 percent of GDP. Even by Keynesian standards, this blip could hardly have produced the ensuing one-third decline in industrial production.

The Greek GDP spiked 25% when statisticians dove into the country’s black market in 2006, for instance, thereby enabling the government to take out several hefty loans shortly before the European debt crisis broke out. Italy started including its black market back in 1987, which swelled its economy by 20% overnight. “A wave of euphoria swept over Italians,” reported the New York Times, “after economists recalibrated their statistics taking into account for the first time the country’s formidable underground economy of tax evaders and illegal workers.”4 And that’s to say nothing of all the unpaid labor that doesn’t even qualify as part of the black market, from volunteering to childcare to cooking, which together represents more than half of all our work. Of course, we can hire cleaners or nannies to do some of these chores, in which case they count toward the GDP, but we still do most ourselves. Adding all this unpaid work would expand the economy by anywhere from 37% (in Hungary) to 74% (in the UK).5 However, as the economist Diane Coyle notes, “generally official statistical agencies have never bothered – perhaps because it has been carried out mainly by women.”6 While we’re on the subject, only Denmark has ever attempted to quantify the value of breastfeeding in its GDP. And it’s no paltry sum: In the U.S., the potential contribution of breast milk has been estimated at an incredible $110 billion a year7 – about the size of China’s military budget.

Whether you consider yourself an economic veteran or novice, now is the time to uncover the economic graffiti that lingers in all of our minds and, if you don’t like what you find, scrub it out; or, better still, paint it over with new images that far better serve our needs and times. The rest of this book proposes seven ways to think like a twenty-first-century economist, revealing for each of those seven ways the spurious image that has occupied our minds, how it came to be so powerful, and the damaging influence it has had. But the time for mere critique is past, which is why the focus here is on creating new images that capture the essential principles to guide us now. The diagrams in this book aim to summarise that leap from old to new economic thinking. Taken together they set out – quite literally – a new big picture for the twenty-first-century economist. So here is a whirlwind tour of the ideas and images at the heart of Doughnut Economics. First, change the goal. For over 70 years economics has been fixated on GDP, or national output, as its primary measure of progress. That fixation has been used to justify extreme inequalities of income and wealth coupled with unprecedented destruction of the living world. For the twenty-first century a far bigger goal is needed: meeting the human rights of every person within the means of our life-giving planet. And that goal is encapsulated in the concept of the Doughnut. The challenge now is to create economies – local to global – that help to bring all of humanity into the Doughnut’s safe and just space. Instead of pursuing ever-increasing GDP, it is time to discover how to thrive in balance.

Back in Ancient Greece when Xenophon first posed the economic question, ‘How should a household best manage its resources?’ he was literally thinking about a single household. Towards the end of his life he turned his attention to the next level up, the economics of the city state, and proposed a set of trade, tax and public investment policies for his home town of Athens. Jump forward almost two thousand years to Scotland, where Adam Smith decisively raised the focus of economics to the next level up again, the nation state, asking why some nations’ economies thrived while others stagnated. Smith’s nation-state economic lens has gripped policy attention for over two hundred and fifty years, and is entrenched by those yearly statistical comparisons of national GDP. But now faced with a globally connected economy, it is time for this generation of thinkers to take the inevitable next step. Ours is the era of the planetary household – and the art of household management is needed more than ever for our common home. Can

As Erik Brynjolfsson and Andrew McAfee point out in their book, the four key measures of an economy’s health (per capita GDP, labor productivity, the number of jobs, and median household income) all rose together for most of the Cold War years. “For more than three decades after World War II, all four went up steadily and in almost perfect lockstep,” Brynjolfsson noted in a June 2015 interview with the Harvard Business Review. “Job growth and wage growth, in other words, kept pace with gains in output and productivity. American workers not only created more wealth but also captured a proportional share of the gains.” In

Before the invention of the GDP, economists were rarely quoted by the press, but in the years after World War II they became a fixture in the papers. They had mastered a trick no one else could do: managing reality and predicting the future. Increasingly, the economy was regarded as a machine with levers that politicians could pull to promote “growth.” In 1949, the inventor and economist Bill Phillips even constructed a real machine from plastic containers and pipes to represent the economy, with water pumping around to represent federal revenue flows. As one historian explains, “The first thing you do in 1950s and ’60s if you’re a new nation is you open a national airline, you create a national army, and you start measuring GDP.

Summers also claimed that technology was reducing the demand for capital. Digital businesses, such as Facebook and Google, had established dominant global franchises with relatively little invested capital and small workforces. In his book The Zero Marginal Cost Society (2014), the social theorist Jeremy Rifkin heralded the passing of traditional capitalism.16 If the Old Economy was marked by scarcity and declining marginal returns, Rikfin argued that the New Economy was characterized by zero marginal costs, increasing returns to scale and capital-lite ‘sharing’ apps (such as Uber, Lyft, Airbnb, etc.). The demand for capital and interest rates, he said, were set to fall in this ‘economy of abundance’. There was some evidence to support Rifkin’s claims. The balance sheets of US companies showed they were using fewer fixed assets (factories, plant, equipment, etc.) and reporting more ‘intangibles’ – namely, assets derived from patents, intellectual property and merger premiums. In much of the rest of the world, however, the demand for old-fashioned capital remained as strong as ever. After the turn of the century, the developing world exhibited a voracious appetite for industrial commodities that required massive mining investment. China embarked on what was probably the greatest investment boom in history. Before and after 2008, global energy consumption rose steadily. The world’s total investment (relative to GDP) remained in line with its historical average.17 Rifkin’s ‘economy of abundance’ remained a tantalizing speculation.

take experience and evidence and shape our expectations, which warps our perception and acts as a forcing function for interpretation—and that is how you feel (in the most simplistic sense possible). That feeds back into discourse and discussion, which also influences vibes and thus feelings. How you feel compounds into how everyone feels, and that is consumer sentiment. Of course, consumer sentiment is everything because consumer spending is such an important component of GDP growth.

Oil is not merely the heart of the Iraqi economy. In economic terms, Iraq is oil, which makes up over 90 percent of government revenues, over 99 percent of exports, and almost 60 percent of GDP. The World Bank describes Iraq as “the world leader in terms of dependence on oil.

Vision 2030 itself, launched in 2007, which laid out the overall strategy. The message was that the country needed to diversify its revenue base, upgrade skills, create jobs, and increase the participation of women in the economy. The results have come faster than might have been expected. Two decades ago, almost all of GDP was oil-based. Today, about 60 percent of GDP is non-oil-related. Non-oil exports have risen from just 13 percent of total exports in 2010 to 57 percent in 2018.

Some have called for “degrowth”, a movement that embraces zero or even negative GDP growth that is gaining some traction (at least in the richest countries). As the critique of economic growth moves to centre stage, consumerism’s financial and cultural dominance in public and private life will be overhauled.[42] This is made obvious in consumer-driven degrowth activism in some niche segments – like advocating for less meat or fewer flights. By triggering a period of enforced degrowth, the pandemic has spurred renewed interest in this movement that wants to reverse the pace of economic growth, leading more than 1,100 experts from around the world to release a manifesto in May 2020 putting forward a degrowth strategy to tackle the economic and human crisis caused by COVID-19.[43] Their open letter calls for the adoption of a democratically “planned yet adaptive, sustainable, and equitable downscaling of the economy, leading to a future where we can live better with less”. However, beware of the pursuit of degrowth proving as directionless as the pursuit of growth! The most forward-looking countries and their governments will instead prioritize a more inclusive and sustainable approach to managing and measuring their economies, one that also drives job growth, improvements in living standards and safeguards the planet. The technology to do more with less already exists.[44] There is no fundamental trade-off between economic, social and environmental factors if we adopt this more holistic and longer-term approach to defining progress and incentivizing investment in green and social frontier markets.

one of the things we’re concerned about is the quest for infinite growth (an unavoidable feature of capitalism) on a finite planet. With that imperative, the biosphere is now subsumed under the economy. This has to be reversed. That is, the biosphere is now seen in strictly utilitarian terms to be simply a storehouse of resources, and/or a receptacle for waste. Also under capitalist compulsion, people now serve the economy, rather than the other way around. Development should be about people, not about objects. Development, often seen as synonymous with progress, is equated with growth, measured as GNP or GDP, sometimes per capita. This must be challenged, and we need differential criteria and different metrics for what constitutes development and progress. Right now these are equated. Development doesn’t necessarily require growth, development has no limits, growth has limits or should. And this is clearly referring back to the growth/de-growth debate that we read about. All of this is underlain by issues of what constitutes happiness, satisfaction, and quality of life. What do these actually essential elements of life actually depend on? At the moment, under our current capitalist system, and its associated common sense, these aspects are measured by the acquisition of more and more things. But we don’t go readily into this mindset, we have to actually be induced or seduced. Global advertising spending in 2014 was $488.48 billion and is projected to grow to $757.44 billion by 2021. So, think about the enormous effort, the enormous, strenuous, and continuous effort to persuade people that things that they merely want are really things that they must have, that they need. And this is the business of marketing and advertising. And as Noam pointed out previously, this completely distorts the notion of the so-called free market in which rational people make rational choices based on real needs.

Based on data from the Institute of International Finance, global debt—private and public—by the end of 2021 was well over 350 percent of global GDP, and it has been climbing fast for decades (from 220 percent of GDP in 1999) and spiking after the COVID-19 crisis. 4 The ratio has never before come close to this level in advanced economies or emerging markets. US debt is right on pace with the global average. Current US private and public debt-to-GDP ratio is much higher than the peak debt during the Great Depression, and more than twice the level when the United States emerged from World War II and entered a period of robust growth.

over the past couple of centuries, just as Rostow spelled out, capitalist economies have restructured their laws, institutions, policies and values so that they are geared to expect, demand and depend upon continual GDP growth.

Attempting to sustain GDP growth in an economy that may actually be close to maturing can drive governments to take desperate and destructive measures. They deregulate—or rather reregulate—finance in the hope of unleashing new productive investment, but end up unleashing speculative bubbles, house price hikes and debt crises instead. They promise business that they will ‘cut red tape’, but end up dismantling legislation that was put in place to protect workers’ rights, community resources and the living world. They privatise public services—from hospitals to railways—turning public wealth into private revenue streams. They add the living world into the national accounts as ‘ecosystem services’ and ‘natural capital’, assigning it a value that looks dangerously like a price. And, despite committing to keep global warming ‘well below 2°C’, many such governments chase after the ‘cheap’ energy of tar sands and shale gas, while neglecting the transformational public investments needed for a clean-energy revolution. These policy choices are akin to throwing precious cargo off a plane that is running out of fuel, rather than admitting that it may soon be time to touch down.

Peter Victor, can we ‘go slower by design, not disaster’? Or even—in the name of agnosticism —what would it take to design an economy that can handle GDP growth without hankering after it, deal with it without depending upon it, embrace it without exacting it?

It took $185 trillion of debt to produce about $46 trillion of GDP growth over the last twenty years. The growth rate would likely have been negative without all of that stimulus. How much so is impossible to tell. Asset prices would be far lower as well. (For all the Keynesians reading this, please refrain from jumping to any conclusion yet.) So what comes next? The majority of the deflation is still in front of us—driven by technology advancing at an exponential rate. If we are doubling our rate of progress on technology every eighteen months or so, and that technology is deflationary, then it is also logical to expect if it “only” took $185 trillion of debt over the last twenty years to fight the deflation and drive growth, then it might take that number again, but this time over the next thirty-six or so months. And eighteen months after that, a further $370 trillion. Remember, the world of 2018 has approximately $250 trillion in debt to run an $80 trillion world economy. That debt in itself is a massive drag on future growth because of interest payments on it. What about when we add another $555 trillion?

1935 tax bill, then popularly called the “Soak the Rich Tax,” the top marginal income tax rate for individuals rose to 75 percent (versus as low as 25 percent in 1930). By 1941, the top personal tax rate was 81 percent, and the top corporate tax rate was 31 percent, having started at 12 percent in 1930. Roosevelt also imposed a number of other taxes. Despite all of these taxes and the pickup in the economy that helped raise tax revenue, budget deficits increased from around 1 percent of GDP to about 4 percent of GDP because the spending increases were so large.5 From 1933 until the end of 1936 the stock market returned over 200 percent, and the economy grew at a blistering average real rate of about 9 percent. In 1936, the Federal Reserve tightened money and credit to fight inflation and slow an overheating economy, which caused the fragile US economy to fall back into recession and the other major economies to weaken with it, further raising tensions within and between countries.

India’s aggregate fiscal deficit (state plus Centre) is still close to 6.5 per cent of GDP, higher than almost any in the G-20

As China was increasing its GDP fortyfold between 1980 and 2010, it did so by making historically unprecedented improvements in limiting the amount of energy used. The energy intensity of China’s economy was reduced by two-thirds between 1980 and 2009.8 Today, the oil intensity of China’s economy is only 26 percent of what it was in the year 2000.

The thing about growth is that it sounds so good. It’s a powerful metaphor that’s rooted deeply in our understanding of natural processes: children grow, crops grow … and so too the economy should grow. But this framing plays on a false analogy. The natural process of growth is always finite. We want our children to grow, but not to the point of becoming 9 feet tall, and we certainly don’t want them to grow on an endless exponential curve; rather, we want them to grow to a point of maturity, and then to maintain a healthy balance. We want our crops to grow, but only until they are ripe, at which point we harvest them and plant afresh. This is how growth works in the living world. It levels off. The capitalist economy looks nothing like this. Under capital’s growth imperative, there is no horizon – no future point at which economists and politicians say we will have enough money or enough stuff. There is no end, in the double sense of the term: no maturity and no purpose. The unquestioned assumption is that growth can and should carry on for ever, for its own sake. It is astonishing, when you think about it, that the dominant belief in economics holds that no matter how rich a country has become, their GDP should keep rising, year after year, with no identifiable end point. It is the definition of absurdity. We do see this pattern playing out in nature, sometimes, but only with devastating consequences: cancer cells are programmed to replicate for the sake of replicating, but the result is deadly to living systems.

Peruvian economist and anti-poverty campaigner Hernando de Soto estimates that the amount of “dead capital,” the pool of untitled property around the world, is worth about $20 trillion. If poor people could use that capital as collateral, he says, the multiplier effect from all that credit flowing through the global economy could create growth rates in excess of 10 percent in developing countries, which account for more than half of world GDP. And it’s not just land. This technology has kindled interest in how to help the poor prove ownership of a much wider array of assets, such as small business equipment and vehicles, as well as reliably show their personal good standing on questions such as creditworthiness and make sure their votes are counted.

The handover from efficiency to adaptivity comes with sweeping changes in the economy and society including the shift from productivity to regenerativity, growth to flourishing, ownership to access, seller-buyer markets to provider-user networks, linear processes to cybernetic processes, vertically integrated economies of scale to laterally integrated economies of scale, centralized value chains to distributed value chains, corporate conglomerates to agile, high-tech small- and medium-sized cooperatives blockchained in fluid commons, intellectual property rights to open-source sharing of knowledge, zero-sum games to network effects, globalization to glocalization, consumerism to eco-stewardship, gross domestic product (GDP) to quality-of-life indicators (QLI), negative externalities to circularity, and geopolitics to biosphere politics.

The sharing economy is also growing, in which the culture of ownership —with every household equipped with its own washing machine and car—is giving way to a culture of access, with households sharing laundry facilities and renting cars by the hour from a local car club. Rather than go shopping for new clothes, books and children’s toys, a growing number of people are swapping—or ‘swishing’—them with friends and neighbours.41 In such an economy, plenty of economic value will still be generated through the products and services that people enjoy, but far less of that total value will flow through market transactions. The implication of these various trends for GDP growth? ‘The steady decline of GDP in the coming years,’ concludes Rifkin, ‘is going to be increasingly attributable to the change-over to a vibrant new economic paradigm that measures economic value in totally new ways.

With sufficient international support, these countries can seize the opportunity to leapfrog the wasteful and polluting technologies of the past. And if they channel GDP growth into creating economies that are distributive and regenerative by design, they will start bringing all of their inhabitants above the Doughnut’s social foundation without overshooting its ecological ceiling.

By agnostic, I do not mean simply not caring whether GDP growth is coming or not, nor do I mean refusing to measure whether it is happening or not. I mean agnostic in the sense of designing an economy that promotes human prosperity whether GDP is going up, down, or holding steady.