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Page added on January 20, 2018
When Economic Growth Indicates Failure
Nothing can be duller than listening to an economist or other policy expert pontificate endlessly on such metrics as gross domestic product, stock market prices, employment, and consumer confidence. Most of all they talk about GDP: Rising GDP is good; falling GDP is bad. But as a measure of economic activity, GDP is what it says it is: a gross number. It doesn’t measure how money and wealth circulates through a system, what use it is put to, how the rewards of its use are distributed. It just counts how much comes out of the spigot at the end of the pipe. This completely avoids taking into account what may be the most important indicator of economic health: equality.
Epidemiological studies demonstrate that equality is essential to a host of physical, mental, and social health outcomes. Societies that are more equal have lower rates of infant mortality, homicide, imprisonment, teenage motherhood, and other indicators of economic dysfunction. People in those countries also have higher life expectancies, levels of literacy, math proficiency, social trust, social mobility, and other positive signs of a healthy society.
This research suggests that for most countries economic performance on equality is far more important to the well-being of their citizens than GDP growth. Indeed, in our currently overstressed world, in which humans are consuming at a rate 1.7 times what Earth can sustain, our real need is for less consumption and more equity. For the well-being of most everyone—including the rich—equality is more important than growth.
So how is the global economy doing on equality? An international team of over 100 economists from more than 70 countries recently issued the 2018 World Inequality Report on global income and wealth distribution from 1980 to 2016.
The overall distribution and trends are alarming.
Only 9 percent of total global income in 2016 went to those who need it most—the poorest 50 percent of the world’s population, composed of 3.8 billion people. Their share of the total growth in income was just half the increase enjoyed by the richest 1 percent. And among the 1 percent, half of their total increase was concentrated in the richest tenth of that elite tier.
In other words, the more you had, the more you got. Between 1980 and 2016, the global average rate of individual income growth was 60 percent. But that average includes the fact that the richest 10 percent of the world’s people gleaned an average 70 percent increase, and the top 1 percent saw their income grow by an average of 101 percent. But even that significantly overstates the income growth experienced by the “lower” end of those 1 percenters, because it includes the gains of the top 0.1 percent, who saw their incomes grow by 133 percent, the top 0.01 percent (185 percent increase), and the top 0.001 percent, whose incomes increased a whopping 235 percent.
Comparing average increases in income obscures the implications of these numbers for inequality. If you are among the poorest of the poor living on an income of a dollar a day, a 60 percent increase gets you an extra 60 cents a day, but a hedge fund CEO with an annual pay, including bonuses of $100 million, would get an extra $60 million per year. If everyone got the same percentage increase each year (and they do not), inequality’s ills only grow. Given current income gaps and the actual rates of salary increases, which skew toward the richest of the rich, inequality is growing at a blinding rate.
As long as GDP grows faster than population, total income also rises. In a pure market economy, if production rises, it is only in response to the demand of those who get the extra income. Without action by government, there will be no response to the needs for food, housing, medical care, transportation, and other needs of those whose incomes languish. Contrary to popular belief, without strong and effective government intervention to assure an equitable distribution of income and wealth, growing GDP will only exacerbate the ravages of poverty.
Using GDP growth as society’s defining economic goal must rank among the stupidest policy choices human societies have ever made. Economic growth is increasing the power of a tiny oligarchy to game the system to make themselves even richer as they destroy the middle class and confine ever more of the world’s people to lives of desperation and servitude.
Our economic priority at this point in human history must be to organize ourselves to meet the essential material needs of all people in ways that fulfill us spiritually and heal the Earth. To make the appropriate policy choices we must understand the sources of our current dysfunction and redirect our economies to achieve an equitable sharing of income and wealth.
29 Comments on "When Economic Growth Indicates Failure"
Boat on Sat, 20th Jan 2018 2:19 pm
If that 1.7 number is right that is fantastic news. Now we need to cut world population in half to be sustainable instead of asking 6+ billion to step off the planet. Lets start with the poor, uneducated non worker and work from there. Once we get to 3.5 billion we can decide how to tax the survivors
onlooker on Sat, 20th Jan 2018 5:42 pm
Boat you are right overpopulation is a fundamental reason for our predicament. But the rich countries are also contributing to degrading the planets life accommodating properties via harmful technologies and ways of living
Duncan Idaho on Sat, 20th Jan 2018 6:10 pm
I would say 1 billion, probably a lot less with the rape and scrape that is going on.
400 million have a 50% chance of survival, IMHO.
MASTERMIND on Sat, 20th Jan 2018 6:16 pm
Boat
Why would you want to cull yourself and all your friends and family..The top 19 states with the most government welfare are all republican..
Outcast_Searcher on Sat, 20th Jan 2018 6:23 pm
Mastermind: Where’s your source? Based on what? Absolute magnitude or per capita? How do you define Welfare? (When you try to Google this, you get various answers with various definitions).
Without definitions and sources it’s just lies, damned lies, and statistics.
MASTERMIND on Sat, 20th Jan 2018 6:34 pm
The World Bank believes the biggest risk comes in financial markets, where share price valuations are at levels not seen before except in 2000 and in 1929 – the dotcom bubble and the Wall Street Crash
https://imgur.com/a/JeURO#wQeyqh0
Financial markets at risk from bubble, IMF warns
http://www.telegraph.co.uk/business/2018/01/15/financial-markets-risk-bubble-imf-warns/
Crash fears escalate as markets hit highs not seen since Black Tuesday and dotcom disaster
http://www.telegraph.co.uk/business/2017/11/05/markets-lookout-shock-crash-us-stocks-record-highs/
Markets are ignoring ‘major risk’ of rising interest rates and end of QE, warns Citigroup
http://www.telegraph.co.uk/business/2018/01/08/markets-ignore-danger-central-banks-reverse-qe-warns-citigroup/
Global economic growth has peaked, says World Bank
https://www.ft.com/content/4b9e6190-f55e-11e7-88f7-5465a6ce1a00
Global Economic Growth GDP Per Capita (1.3%)
https://data.worldbank.org/indicator/NY.GDP.PCAP.KD.ZG
World Governments Gross Debt to GDP (330%)
https://imgur.com/a/3usX7
Global economy set for decade of gloom as World Bank predicts recovery will fizzle out
http://www.telegraph.co.uk/business/2018/01/09/global-economy-set-decade-gloom-world-bank-predicts-recovery/
US companies spent $4T buying back their own stock since 08
https://nypost.com/2017/08/19/us-companies-spent-4t-buying-back-their-own-stock/
‘WORSE THAN 2007’: Top Central Banker warns of looming wave of worldwide bankruptcies
http://www.telegraph.co.uk/finance/financetopics/davos/12108569/World-faces-wave-of-epic-debt-defaults-fears-central-bank-veteran.html
The world is drowning in debt, warns Goldman Sachs
http://www.telegraph.co.uk/finance/economics/11625406/The-world-is-drowning-in-debt-warns-Goldman-Sachs.html
A Nation of Broke People Are Killing Retail More Than Amazon: Top Expert
https://www.thestreet.com/story/14277483/1/a-nation-of-broke-people-are-killing-retail-more-than-amazon-peter-schiff-says.html
50 Percent of all Malls in America will be out of business in the next five years
https://www.theguardian.com/us-news/2017/jul/22/mall-of-america-minnesota-retail-anniversary
Our Broken Economy, in One Simple Chart
https://www.nytimes.com/interactive/2017/08/07/opinion/leonhardt-income-inequality.html?smid=fb-share
MASTERMIND on Sat, 20th Jan 2018 6:38 pm
Outcast
Look up top federal spending…And just look at how poor and what bad credit republican states have..
https://imgur.com/a/KtaGS
Its because they are all so uneducated and they have been imbreading (cousin marriages) so much it has created major genetic defects that have lowered their IQ’S…Same thing as in the Muslim countries as well.
MASTERMIND on Sat, 20th Jan 2018 6:40 pm
Here are five peer reviewed scientific studies authored by top experts that prove beyond any reasonable doubt that global civilization will collapse within the next decade. Simple really….when the World Economy Collapses everything shuts down…the end… We’re talking about grids down all over the world and 7.5B people dropping like f*** flies in short order. The collapse will be absolutely horrible..There is no collapse or horror movie ever produced that has even come close to imagining what the collapse of BAU might look like. I’m talking about every corporation and every social program going bankrupt at once.I’m talking about people eating people. I’m talking about the Worst Catastrophe to ever happen in the history of mankind. Nothing has ever, or will ever come close….
http://www.sciencedirect.com/science/article/pii/S0921800914000615
http://www.sciencedirect.com/science/article/pii/S0959652617304225?via%3Dihub
https://www.ncbi.nlm.nih.gov/pmc/articles/PMC3574335/
http://sustainable.unimelb.edu.au/sites/default/files/docs/MSSI-ResearchPaper-4_Turner_2014.pdf
http://www.feasta.org/2012/06/17/trade-off-financial-system-supply-chain-cross-contagion-a-study-in-global-systemic-collapse/
Cloggie on Sat, 20th Jan 2018 9:16 pm
“Its because they are all so uneducated and they have been imbreading (cousin marriages) so much it has created major genetic defects that have lowered their IQ’S…Same thing as in the Muslim countries as well.”
Where do your ancestors come from, millimind?
Eastern Europe? Romania, Bulgaria, Ukraine? It would explain your doomerdom.
MASTERMIND on Sat, 20th Jan 2018 10:29 pm
Clogg
My ancestors are from Scotland “Birthplace of the enlightenment”
Cloggie on Sun, 21st Jan 2018 12:36 am
Scottish, eh? I love that kind of information.
While it is true that Scottish thinkers played an enormous important role in that period called the Enlightenment, it is not true to see it as the birthplace. That’s France.
https://en.wikipedia.org/wiki/Age_of_Enlightenment
https://en.wikipedia.org/wiki/Scottish_Enlightenment
Wolfie52 on Sun, 21st Jan 2018 9:24 am
Same guys living in mom’s basement #sad
Really, do you guys EVER read or do anything but post here?
MASTERMIND on Sun, 21st Jan 2018 9:34 am
Clogg
We are all Africans…
-Richard Dawkins
Antius on Sun, 21st Jan 2018 10:24 am
“Using GDP growth as society’s defining economic goal must rank among the stupidest policy choices human societies have ever made
Economic growth is increasing the power of a tiny oligarchy to game the system to make themselves even richer as they destroy the middle class and confine ever more of the world’s people to lives of desperation and servitude.”
Another moronic simple-minded socialist rant. These people will hasten the coming decline and make life worse for everyone, by sucking money out of the hands of those with the ability to invest in a new way forward.
They appeal to some of the worst aspects of human nature – envy, jealousy, resentment and spite. They are never really interested in helping the weak, they wish to punish the strong. They vent their spite and frustration on anyone that manages to do even moderately well.
In times of social stress it is always popular to scapegoat those that still have money. The poor are never particularly interested in why things are going wrong, or how they can be put right. They want to punish the successful, far more than they want to improve their lot. It is no accident that socialist leaning political views usually go hand in hand with mental illness.
MASTERMIND on Sun, 21st Jan 2018 10:41 am
Antius
Now that GDP isn’t growing you dont think it should matter? LOL you obviously never went to college…If you dont like GDP then go move to Pakistan..GDP is how you create capital.And creating the most capital is the name of the game in capitalism..But you trump voters are anti capitalism….That is why Trump destroyed the TPP..Thats called big government interfering on the free market.
Antius on Sun, 21st Jan 2018 11:23 am
Mastermind wrote: “I don’t worry about the world running out of fossil fuels either. I worry about the world running short which will make growing GDP impossible and cause a global economic collapse. And that is coming soon! The global economy can’t even handle 60 dollar oil let alone 140 again.”
You don’t worry about it at all. You relish the thought of millions of corpses, especially if they happen to be Caucasian corpses.
Mastermind wrote: “Trump is an elitist pig..Who has lied over 2k times. And spent more time golfing and tax payer dollars than any president in history….And he passed a tax cut that majority benefits him and his rich friends.”
Maybe he is wise enough to know that you don’t help the poor by stealing from the rich. Most of their income is reinvested in projects that will benefit people across the board.
Take that money away and give it to those that don’t have that ability, and GDP will be lower next year. Give a rich man $100 and he will come back with 200. Give it to a poor man and he will come back drunk. That may not be palatable to you and millions of other resentful socialist types, but it is a fact of life. There are plenty of reasons why people end up poor. Those reasons won’t go away if you hand them money on a plate.
Mastermind wrote: “And he has destroyed the value of the dollar by scaring away investors.”
I’m sure that the $20trillion of debt, most of which added under Obama, has nothing to do with it.
Mastermind wrote: “You must an ignorant racist because that is the only reason anyone could like such a pig.”
I don’t believe in racial equality. It is one thing that Cloggie and I actually do agree on. I didn’t get that way by being ignorant. I took a hard look at places where different ethnicities lived in close proximity and the violence and hatred that naturally results when people with nothing in common find themselves at odds. This has been attempted in places like Miami, Chicago, Israel, Rome and Ancient Babylon. The results are always the same. When the same thing happens enough times, intelligent people conclude that it isn’t a good idea to keep pushing the same thing over and over again. It is nature’s way of telling you that this isn’t a sensible thing to keep doing. You can keep plugging away, blaming anyone that doesn’t agree with you and venting spite against them, or you can take the hint and do something different. Call me what you want, but I won’t advocate something that has a proven history of leading to war, just to please you and your socialist libtard buddies.
Davy on Sun, 21st Jan 2018 3:18 pm
“200 Million Investors May Have Lost Everything In Largest Ponzi Scheme In China’s History”
https://tinyurl.com/y9eogdut
“Unfortunately for up to 200 millions ordinary Chinese, dreams of overnight riches became a nightmare when the founder of the site, Zhang Xiaolei, was placed in police custody after turning himself in just before the start of the new year. Zhang Xiaolei, founder of Qbao.com, the online platform also known as Qianbao He has been accused of illegally raising 70 billion yuan or some $11 billion, according to sources close to the Chinese authorities and reported in the mainland media. If those allegations are true, this would be the largest online investment fraud in China’s history.”
“The authorities believe investors may have become the victims of a giant Ponzi-type scam, where new clients ended up paying inflated returns to established customers without their knowledge. Before the internet investment company was closed down, it was attracting nearly two million users every day in late 2017 from its headquarters in Shanghai. “Police are calling on Qbao investors in all regions to report to local public security authorities and cooperate in investigations after the company owner, Zhang Xiaolei, was [held] in custody for suspicion of an illegal fundraising crime,” the company said in a statement.”
“Of course, investor denial will eventually turn to acceptance, but first comes the anger stage, and if indeed 200 million Chinese may have lost a substantial portion, if not all, of their net worth, the anger will be tangible and could prove to be a true black swan for a country which – as we have profiled since early 2016 – has been teetering on the verge of social unrest.”
MASTERMIND on Sun, 21st Jan 2018 4:23 pm
Antius
You are as dumb as they come…And no sources to back up any of your claims…All bullshit..the rich re invest their money! LOL
I bet you are a god believer am I right?
MASTERMIND on Sun, 21st Jan 2018 4:25 pm
Antius
Look what republicans have done to the south and midwest! Pure shit holes!
https://imgur.com/a/KGh8E
Just admit it you are a mean racist person because you are an economic loser! Just trust the rich with all the money I am sure they will share it with everyone!
MASTERMIND on Sun, 21st Jan 2018 4:28 pm
Antius
If you put little kids together they don’t understand what racism even is..Which proves its not natural its taught and conditioned! From uneducated ignorant losers like you!
And it was a brother who invented the guitar!
MASTERMIND on Sun, 21st Jan 2018 4:29 pm
Antius
Hate has caused a lot of problems in this world and it hasn’t solved one yet…
-Mayo Angelo
MASTERMIND on Sun, 21st Jan 2018 4:30 pm
Antius
No human being is illegal…And immigration improves our GDP which helps everyone…
MASTERMIND on Sun, 21st Jan 2018 4:33 pm
Antius and Clogg
I had always hoped that this land might become a safe and agreeable asylum to the virtuous and persecuted part of mankind, to whatever nation they might belong.
-George Washington
Antius on Sun, 21st Jan 2018 4:45 pm
MM. You are clearly a lunatic. Believe what you want, you will anyway.
MASTERMIND on Sun, 21st Jan 2018 4:48 pm
Antius
Did your daddy not love you or did mommy not hold you enough? Is that why you became a Nazi? Dont worry you will get everything when you die in heaven! LOL
MASTERMIND on Sun, 21st Jan 2018 4:50 pm
Antius
Keep sucking ass of the 1 percent! I am sure it will trickle down one day for you!
In Jebus name!
Antius on Sun, 21st Jan 2018 4:52 pm
Isn’t it amazing how mental illness and far-left extremism seem to go hand in hand?
MASTERMIND on Sun, 21st Jan 2018 5:02 pm
Antius
Here is a nice pic of your people!
https://imgur.com/a/Sl2R3
To many centuries of imbreading in the south and rural america have created people like this!
Antius on Sun, 21st Jan 2018 5:06 pm
Keep going MM. You almost have me convinced!
How the hell can you accuse anyone else of being a lunatic?