Posts Tagged ‘GDP

08
Feb
10

Have we learned anything from the recession?

In my last post I talked about the trade-off between committing personal and national financial resources to education of the up-and-coming generation versus the end-of-life expenses of the Baby Boom generation. When we Boomers entered the world after WWII it cost US society a lot to expand educational and other systems across the country to accommodate the Baby Boom. But it may cost even more to pay for the exit of this generation at the prices that the last years of life cost through Medicare and family supplements.

I quoted from $123,000,000,000,000*, a recent article by economist Robert Fogel in Foreign Policy. Fogel was drawing attention to the huge commitment to education that China is making. He estimates that as a result of education and other things, the country’s economy will soar to $123 trillion by 2040. The inference is that this will reduce the US and Europe to much lesser financial powers in the world; an outcome that is undesirable if not something to be feared. The implied message is that the US needs to make a similar commitment to education and other economic steps to enable it to compete and grow in the next three decades.

Fogel seems to be in awe of China’s coming achievement, and the article’s subtitle is: “China’s estimated economy by the year 2040. Be warned.” By contrast, Fogel seems rather contemptuous of Europe’s social situation: falling population and low economic libido. He states:

One-hundred fifty years ago, it was considered a sin to enjoy sex, the only legitimate purpose for which was procreation. But today, young [European] women believe that sex is mainly a recreational activity. Behind the fertility trend is a vast cultural shift from the generation that fought in World War II, which married early and produced the great baby boom of 1945 to 1965. The easy availability of birth control and the rise of sex as recreation mean that populations are likely to shrink in many European countries. […]

In another way, Europe’s culture confounds economists. Citizens of Europe’s wealthy countries are not working longer hours to make higher salaries and accumulate more goods. Rather, European culture continues to prize long vacations, early retirements, and shorter work weeks over acquiring more stuff, at least in comparison to many other developed countries, such as the United States. In my observation, those living in most Western European countries appear to be more content than Americans with the kind of commodities they already have, for example, not aspiring to own more TVs per household. Set aside whether that’s virtuous. A promenade in the Jardin du Luxembourg, as opposed to a trip to Walmart for a flat-screen TV, won’t help the European Union’s GDP growth.

Perhaps Fogel is being tongue-in-cheek in this implied criticism, but the inference is that poor Europe is a slacker culture that doesn’t want the benefits of ingesting more goods and boosting its GDP. Shame on them for not wanting a flat-screen in every room!

Let’s see: smaller population, lots of recreational sex, and a population that values taking time for life experiences rather than expending it to have more “stuff,” as Fogel puts it. Future Europe sounds to me like a great place to live. When I imagine 2040 China with  ~1.5 billion people on hamster wheel’s generating $123 trillion worth of “stuff” and activity annually, I can hardly imagine a less appealing place to live. Is an economy of that scale  supposed to be some form of Nirvana, a “worker’s paradise” perhaps?

As I recall, over the last 18 months the media have been telling stories about people in the US  who have learned that it isn’t the end of the world if they can’t afford a 50″ TV, or the latest pair of Nike collectible basketball shoes. When you remodel the kitchen is it really vital to your happiness to have granite counter tops and a professional gas range?Reportedly, some folks have even learned that a simple, less consumption-driven life could be happier than one haunted by debts to get stuff that provides thrills that expire much sooner than the bills.

I suspect that Fogel is tweaking our noses to make his point about China’s imminent ascendency. I’m with him that a nation’s wellbeing is deeply connected to it’s intellectual capital (i.e., ideas and well-educated citizens), but gross GDP is not, to my way of thinking, the best measure.

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