Wednesday, June 20, 2018

QUORA: What does it mean in economics when there is growth in a state’s economy? Why should the economy always be growing?

QUORA *: What does it mean in economics when there is growth in a state’s economy? Why should the economy always be growing?

Here is my answer:

What we call “the economy” is the cumulative sum of all individuals engaged in productive work and trade under a common political system. Economic growth essentially equates to a general rise in the productivity of that productive work, which over time results in a rise in the general standard of living. If a rising general economic quality of life is the standard, then we should want a growing economy, with its consequence of more and better business, entrepreneurial, and job opportunities; more and better consumer products; more and better savings and investment opportunities; etc. Of course, a substantial level of individual intellectual, political, and economic freedom is essential to achieving a growing economy.

Measuring economic growth has proven to be problematic. The Bureau of Economic Analysis, a division of the United States Department of Commerce, reports on the economy in two ways. Gross Domestic Product (GDP) measures “final output”--that is, finished goods and services. Gross Output (GO) measures total economic activity in the production of new goods and services, which includes all of the economic activity that goes into producing the finished goods and services. GDP is the more commonly reported statistic, even though GO is considered a more comprehensive and much more accurate measure of the economy. But neither is perfect.

Related Reading:

New, Revolutionary Way To Measure The Economy Is Coming -- Believe Me, This Is A Big Deal--Steve Forbes

This Labor Day, Celebrate Intellectual Labor

The Job Creators: Santa Claus Government or Private Business?

The "Hoarding" By the Rich Fosters Widespread Prosperity

Mazzucato’s Fantasy: The “Courageous, Entrepreneurial State”

* [Quora is a social media website founded by two former Facebook employees. According to Wikipedia:

[Quora is a question-and-answer website where questions are created, answered, edited and organized by its community of users. The company was founded in June 2009, and the website was made available to the public on June 21, 2010.[3]Quora aggregates questions and answers to topics. Users can collaborate by editing questions and suggesting edits to other users' answers.[4]

[You can also reply to other users’ answers.]

1 comment:

Mike Kevitt said...

In a static or even a declining population (up to a point) there can and should be economic growth in a free country, since nearly everybody will still want an ever improving standard of living. Even if GDP shrinks a little, everybody's per capita(sp?) output can, on average, grow, as measured in dollars, not to mention new and better quality output, thru technology.