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.

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.

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

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

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.

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

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.

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.

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

Global Macroeconomic Trends In 2010, the global economy showed signs of brisk recovery. As a result, global GDP grew

share of the Korean economy. ICT, whose average GDP contribution since 2006 stands

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.

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.

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.

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.

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

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

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.

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.

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.

From 1942 until 1947, the Federal Reserve—at the behest of the Treasury Department—actively managed the government’s borrowing costs. Even as spending to fight World War II drove the federal deficit to more than 25 percent of GDP in 1943, interest rates trended lower. That’s because the Fed pegged the T-bill rate at 0.375 percent and held the rate on twenty-five-year bonds at 2.5 percent. As MMT economist L. Randall Wray put it, “the government can ‘borrow’ (issue bonds to the public) at any interest rate the central bank chooses to enforce. It is relatively easy for the central bank to peg the interest rate on short-term government debt instruments by standing ready to purchase it at a fixed price in unlimited quantities. This is precisely what the Fed did in the United States until 1951—providing banks with an interest-earning alternative to excess reserves, but at a very low rate of interest.

A recent survey of private US health care facilities estimated that the support staff of hospital physicians spends nineteen hours a week interacting with insurance providers in prior authorizations, while clerical staff spend thirty-six hours a week filing claims. The cost of interactions between private health care providers and private insurance providers was estimated to be $68,000 per physician per year, totaling a whopping $31 billion per year—equivalent to the GDP of the Dominican Republic in 2005.22 The interaction costs in 1999 for the entire health care system, including private and public, were estimated on the low end to be $31 billion and on the high end to be $294 billion—which is comparable to the present day GDP of Singapore or Chile.

The logic of the market is to encourage self-interest in the belief that the invisible hand will make everything right, on the grounds that economic activity is a good in itself. But the measurements we use for the health of the economy — GDP growth, unemployment rates, stock market capitalisations — are not themselves infused with ethical values, and it’s becoming increasingly clear that they are a poor proxy for tracking societal wellbeing.

The economic theory propounded by John Maynard Keynes in the 1930s dwelled heavily on the role of governments vis-à-vis cycles. Keynesian economics focuses on the role of aggregate demand in determining the level of GDP, in contrast with earlier approaches that emphasized the role of the supply of goods. Keynes said governments should manage the economic cycle by influencing demand. This, in turn, could be accomplished through the use of fiscal tools, including deficits. Keynes urged governments to aid a weak economy by stimulating demand by running deficits. When a government’s outgo—its spending—exceeds its income—primarily from taxes—on balance it puts funds into the economy. This encourages buying and investing. Deficits are stimulative, and thus Keynes considered them helpful in dealing with a weak economy. On the other hand, when economies are strong, Keynes said governments should run surpluses, spending less than they take in. This removes funds from the economy, discouraging spending and investment. Surpluses are contractionary and thus an appropriate response to booms. However, the use of surpluses to cool a thriving economy is little seen these days. No one wants to be a wet blanket when the party is going strong. And spending less than you bring in attracts fewer votes than do generous spending programs. Thus surpluses have become as rare as buggy whips.

In November 2013, Credit Suisse published research confirming this, saying that “US net business investment has rebounded – but, at around 1.5% of GDP, still only stands at the trough levels seen during the past two recessions”.[46] It showed that since the early 1980s, the peaks reached by net business investment as a share of GDP have been declining in each economic recovery. As John Smith writes in Imperialism In The Twenty First Century: “A notable effect of the investment strike is that the age of the capital stock in the US has been on a long-term rising trend since 1980 and started climbing rapidly after the turn of the millennium, reaching record levels several years before the crisis.”[47] Smith points out that in the UK the biggest counterpart to the government’s fiscal deficit (the difference between total revenue and total expenditure) of 8.8% of GDP in 2011 was “a corporate surplus of 5.5% of GDP, unspent cash that sucked huge demand out of the UK economy”.[48] The problem is even worse in Japan, where huge corporate surpluses and low rates of investment have been the norm since the economy entered deflation in the early 1990s. According to Martin Wolf in the FT, “the sum of depreciation and retained earnings of corporate Japan was a staggering 29.5% of GDP in 2011, against just [sic] 16% in the US, which is itself struggling with a corporate financial surplus”.[49]

As of July 2017 public spending per capita had fallen by 3.9%.[58] But this figure obscures the the fact that the government is allocating proportionally less of its budget to public services. Per person, day-to-day spending on public services has been cut to about four-fifths of what it was in 2010.[59] Public sector employment was slashed by 15.5% between September 2009 and April 2017, a reduction of nearly one million jobs, primarily affecting women, who make up around two-thirds of the public sector workforce. Overall, £22bn of the £26bn in ‘savings’ since June 2010 have been shouldered by women.[60] Lone mothers (who represent 92% of lone parents) have experienced an average drop in living standards of 18% (£8,790). Black and Asian households in the lowest fifth of incomes are the most affected, with average drops in living standards of 19.2% and 20.1% – £8,407 and £11,678 – respectively.[61] The Office of Budget Responsibility (OBR) has said that the cumulative scale of cuts to welfare are “unprecedented”, with real per capita welfare cap spending in 2021-22 projected to be around 10% lower than its 2015-16 level.[62] The Conservative-Liberal Democrat coalition government initially aimed to eliminate the deficit – the difference between annual government income and expenditure – by 2015. But weaker-than-expected economic growth forced the government to push the date back to 2025. The government tried to spin this as a generous easing of austerity, but it was merely giving itself several years longer to take on the deficit. In December 2017 the OBR said that GDP per person would be 3.5% smaller in 2021 than was forecast in March 2016. Contradicting the government, the OBR said the deficit would not be eliminated until 2031. The Institute for Fiscal Studies added that national debt – then standing at £1.94 trillion, with an annual servicing cost of £48bn – may not return to pre-crisis levels until the 2060s. Pressure on the public finances, primarily from health and social care, is only going to increase. In all of the OBR’s scenarios, spending grows faster than the economy. With health costs running ahead of inflation, the National Health Service (NHS) – already suffering from a £4.3bn annual shortfall – requires a 4% minimum annual increase in funding to maintain expenditure per capita amid a growing and ageing population.

Research and development conducted by private companies in the United States has grown enormously over the past four decades. We have substantially replaced the publicly funded science that drove our growth after World War II with private research efforts. Such private R&D has shown some impressive results, including high average returns for the corporate sector. However, despite their enormous impact, these private R&D investments are much too small from a broader perspective. This is not a criticism of any individuals; rather, it is simply a feature of the system. Private companies do not capture the spillovers that their R&D efforts create for other corporations, so private sector executives in established firms underinvest in invention. The venture capital industry, which provides admirable support to some start-ups, is focused on fast-impact industries, such as information technology, and not generally on longer-run and capital-intensive investments like clean energy or new cell and gene therapies. Leading entrepreneur-philanthropists get this. In recent years, there have been impressive investments in science funded by publicly minded individuals, including Eric Schmidt, Elon Musk, Paul Allen, Bill and Melinda Gates, Mark Zuckerberg, Michael Bloomberg, Jon Meade Huntsman Sr., Eli and Edythe Broad, David H. Koch, Laurene Powell Jobs, and others (including numerous private foundations). The good news is that these people, with a wide variety of political views on other matters, share the assessment that science—including basic research—is of fundamental importance for the future of the United States. The less good news is that even the wealthiest people on the planet can barely move the needle relative to what the United States previously invested in science. America is, roughly speaking, a $20 trillion economy; 2 percent of our GDP is nearly $400 billion per year. Even the richest person in the world has a total stock of wealth of only around $100 billion—a mark broken in early 2018 by Jeff Bezos of Amazon, with Bill Gates and Warren Buffett in close pursuit. If the richest Americans put much of their wealth immediately into science, it would have some impact for a few years, but over the longer run, this would hardly move the needle. Publicly funded investment in research and development is the only “approach that could potentially return us to the days when technology-led growth lifted all boats. However, we should be careful. Private failure is not enough to justify government intervention. Just because the private sector is underinvesting does not necessarily imply that the government will make the right investments.

But this is not what happens in China. In China, the GDP growth rate is an input into the system. It is set early in the year as the GDP growth target for that year and represents the amount of growth needed to accommodate social and political objectives, among which of course is the desire to keep unemployment low. As such it modifies the standard economic constraints, allowing local governments to generate enough economic activity that, together with the economic activity of the private

Public policies are not ‘interventions’ in the economy, as if markets existed independently of the public institutions and social and environmental conditions in which they are embedded. The role of policy is not one simply of ‘correcting’ the failures of otherwise free markets. It is rather to help create and shape markets to achieve the co-production, and the fair distribution, of economic value. Economic performance cannot be measured simply by the short-term growth of GDP, but requires better indicators of long-term value creation, social well-being, inequality and environment sustainability.

to lend to favored companies to invest in as much infrastructure, manufacturing, and real estate as necessary. Whether the investments are worthwhile is irrelevant. All that matters is that the quantity of spending generates enough reported GDP to meet the central government’s objectives.

Many of these measures are regulatory. Property rights are often ignored, which allows local governments to seize valuable land from Chinese households to sell to developers. Expropriations were encouraged by the central government’s incentive system for local party officials. Those incentives, which often prioritized reported output growth above all else, also encouraged local governments to ignore pollution and environmental degradation to attract business investment. Ordinary Chinese had their wealth and health taken from them to benefit elites. Their living standards grew far less than China’s domestic production. The share of Chinese GDP consumed by Chinese households fell by 15 percentage points between the late 1980s and the bottom in 2010.

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.

Even during troubled economic times that followed the 2008 global banking crisis, soccer clubs continued to sustain rapid revenue growth. In the six years from 2007, the combined economies of the twenty-eight member states of the European Union failed to grow. Gross domestic product (GDP) in 2013 was still 1 percent below the 2007 level. Yet UEFA figures show that between 2007 and 2012 the revenues of top division clubs in Europe grew by 28 percent. Soccer’s position as the major global sport is not only unchallenged, its dominance is growing as new markets in North America and China are absorbed. In

There are, without a doubt, an incredible number of new and improved technologies arriving every day. Self-driving cars, gene editing, low-cost solar panels, more efficient batteries, biofuel, quantum computers, 3-D printing of metals, artificial intelligence, and on and on and on, Any, or all, of these could generate profound changes in how we live and how we produce the goods and services that go into GDP. That said, it isn't obvious that we'll see profound effects on the growth rate of the economy. Many of those innovations make the production of goods more efficient, but that would only accelerate the shift into services. And there may be a larger question about whether we want to adopt or pursue these innovations at all. As Charles Jones suggested in a recent paper, given our current life expectancy and living standards, the risks inherent in any technology - to the environment, society, or our own health - may not be worth pursuing just to add a fraction of a percentage point to the growth rate.

First, Trump and congressional Republicans should abandon Washington's obsession with comprehensive reform. Health is the largest sector of the American economy -- 18 percent of GDP -- and the most complex. Comprehensive legislation that affects one-fifth of our economy would be so complicated no one would understand it, and gaining majority support -- much less bipartisan support -- would be impossible. Instead, health reform needs a slower-paced, transparent, simultaneous, issue-by-issue legislative approach. A series of hearings must be held to gather information and develop specific reforms that will improve health and health care. These hearings would have geographic as well as topical focuses so different citizens in different regions of the country will understand how the bill will affect them personally.

As a share of gross domestic product (GDP), the national debt was at its highest—120 percent—in the period immediately following the Second World War. Yet, this was the same period during which the middle class was built, real median family income soared, and the next generation enjoyed a higher standard of living without the added burden of higher tax rates.

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.

In 2015, World GDP—also known as Gross World Product—was around $80 trillion, and the global economy was growing at around 3 percent per year. If it continued indefinitely at that rate, the global economy would be nearly three times bigger by 2050, over ten times bigger by 2100, and—astonishingly—almost 240 times bigger by 2200.

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.

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.

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 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?

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.

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

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.

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.

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 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.

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.

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.

Housing privatization in China was one of the greatest wealth transfers in history, and it laid the foundations for the extraordinary housing boom of the following decade. Urban households got to buy valuable property for far less than its market value. The difference between what they paid their SOE landlords for this property, and the higher price they were ultimately able to sell it for, represented a transfer of wealth from the state to households. The total value of that wealth transfer was about $540 billion, or one-third of China’s GDP in 2003, the year when housing privatization was largely complete.14

If you made a country out of all the companies founded by Stanford alumni, it would have a GDP of roughly $ 2.7 trillion, putting it in the neighborhood of the tenth largest economy in the world. Companies started by Stanford alumni include Google, Yahoo, Cisco Systems, Sun Microsystems, eBay, Netflix, Electronic Arts, Intuit, Fairchild Semiconductor, LinkedIn, and E* Trade. Many were started by undergraduates and graduate students while still on campus. Like the cast of Saturday Night Live, the greats who have gone on to massive career success are remembered, but everyone still keeps a watchful eye on the newcomers to see who might be the next big thing. With a $ 17 billion endowment, Stanford has the resources to provide students an incredible education inside the classroom, with accomplished scholars ranging from Nobel Prize winners to former secretaries of state teaching undergraduates. The Silicon Valley ecosystem ensures that students have ample opportunity outside the classroom as well. Mark Zuckerberg gives a guest lecture in the introductory computer science class. Twitter and Square founder Jack Dorsey spoke on campus to convince students to join his companies. The guest speaker lineups at the myriad entrepreneurship and technology-related classes each quarter rival those of multithousand-dollar business conferences. Even geographically, Stanford is smack in the middle of Silicon Valley. Facebook sits just north of the school. Apple is a little farther south. Google is to the east. And just west, right next to campus, is Sand Hill Road, the Wall Street of venture capital.

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.

Fortunately, ideas already exist for how to achieve every aspect of deconsumer society that appears in this book. Lifespan labeling can encourage product durability: new tax regimes and regulations can favour repair over disposability, job-sharing programs and shorter work days or work weeks can keep people employed in a slower, smaller economy. Redistribution of wealth can reverse income inequality, or prevent it from worsening in a lower-consuming world. I set out on my thought experiment as an observer, I wanted to see for myself where a world that stops shopping would lead, rather than be guided by others' theories. In the end, both approaches arrive at the same place. Movements for degrowth and a well-being economy-one measured not by GDP but by its ability to improve the quality of life of citizens-have been steadily refining a set of ideas and ways of life that could free us from the need for relentless, and relentlessly damaging, economic expansion. The alternative to consumer capitalism is not a constellation of possibilities, but increasingly a convergence.

Improved government finances are only one part of Vision 2030. The program also seeks to diversify the economy beyond crude oil production, refining and petrochemicals into other sectors where Saudi Arabia has some form of comparative advantage—specifically, mining and tourism. The country holds 7 percent of the world’s phosphate reserves as well as significant deposits of bauxite, gold, copper, and zinc. Yet in 2015, mining contributed only 4 percent of Saudi GDP. Vision 2030 sets out to double that number and create 90,000 jobs in the mining sector.

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.

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.

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.

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.

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.

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.

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?

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.

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 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.

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.

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.

The world economy is today a huge casino. Recent analyses indicate that for every dollar that goes into trade, over one hundred end up in speculative operations completely disconnected from the real economy. As a result of this economic order, over 75 percent of the world population lives in underdevelopment, and extreme poverty has already reached 1.2 billion people in the Third World. So, far from narrowing, the gap is widening. The revenue of the richest nations that in 1960 was thirty-seven times larger than that of the poorest is now seventy-four times larger. The situation has reached such extremes that the assets of the three wealthiest persons in the world amount to the GDP of the forty-eight poorest countries combined.