Help me understand economic growth

[mikegg]

Growing companies and growing countries are great - I get that.

But if a company is growing, then another company must be shrinking because we have a finite amount of resources and wealth around the world.

If there's $1 in the entire world, and a company gains 5 cents this year, then another company has to be contracting by 5 cents.

Same with country GDPs. Because we have a finite amount of resources and wealth, then if one country's GDP grows, then another country's GDP must be shrinking.

So why is it so surprising that our GDP and European nations' GDPs are shrinking while China/India's GDPs are rising?

How can we sustain growth for every nation in the world? - which the analysts seem to think should happen. It just seems so natural to me that the our economy is shrinking and we have to adjust as a country to lower standard of living.

 

[zanejohnson]

renewable rescources vs non renewable

 

[OverVolt]

No, you can make wealth. If everything disappeared except you and your family in uncleared forest, you could cut down some trees, and make a house amish-style. Presto, wealth created.

Resources ARE finite and price determines whose use of them generates the most wealth. Or at least its supposed to. Enter entitlements, loss of competitiveness, incentives, yadda yadda. China is building empty cities right now because messing with the economy causes a misallocation of the real resources. China messes with their economy, alot. I think the plan is "build 20 cities a year, for 20 years" to hell with people actually ya know being able to afford to live there.

 

[Gonad the Barbarian]

With fiat money and fractional reserve banking the money supply is always expanding. So even though you can't have infinite growth in a finite world, you can have infinite financial growth. The two monetary choices we face are fixed money supply/no growth or expanding money supply/artificial growth. The former is assuredly the worse option, but what we really need to do is start looking beyond the monetary to practical and sustainable because, yeah, finite resources and an ever growing population, compounded with a decreasing need for human labor, means fun times ahead.

 

[Juror No. 8]

The two monetary choices we face are fixed money supply/no growth or expanding money supply/artificial growth. The former is assuredly the worse option, but what we really need to do is start looking beyond the monetary to practical and sustainable because, yeah, finite resources and an ever growing population, compounded with a decreasing need for human labor, means fun times ahead.

This is nonsense. There is an option between the two you mentioned that involves a money supply that expands in unison with natural economic growth. A government could annually print and spend into the economy an amount of money that corresponds with the natural annual growth rate of the economy. For instance, a healthy economy with an expanding population might grow at 5% to 8% per year. To prevent monetary deflation, the government could then expand the money supply 5% to 8% and spend that amount on providing basic government services (legislation, courts, roads, prisons, defense, etc...).

This would not produce any inflation whatsoever as long as the expansion of the money supply correlates to the amount of the growth in the economy.

 

[Kadarin]

But if a company is growing, then another company must be shrinking because we have a finite amount of resources and wealth around the world.

If there's $1 in the entire world, and a company gains 5 cents this year, then another company has to be contracting by 5 cents.

Same with country GDPs. Because we have a finite amount of resources and wealth, then if one country's GDP grows, then another country's GDP must be shrinking.

Because capitalism is a totally zero sum system, where wealth isn't generated in any way whatsoever. There's no such thing as adding value, creating new markets, and generating new resources.

 

[OverVolt]

Deflation = massive defaults

inflation = loss of global purchasing power

under fractional reserve

 

[Gonad the Barbarian]

Because capitalism is a totally zero sum system, where wealth isn't generated in any way whatsoever. There's no such thing as adding value, creating new markets, and generating new resources.

Your snark is assuming infinite demand.

 

[OverVolt]

My demand sure is infinite as is everyone elses

 

[Gonad the Barbarian]

My demand sure is infinite as is everyone elses

Although I might be happy with say, a 5,000 man army, my own island, and several fleets of ferrari's and various jets to practice flying plus the fuel to run them all.

Unless you have enough salable assets plus available debt to actually buy any of those your "demand" for those things is utterly irrelevant to the market.

 

[OverVolt]

It doesn't matter if it takes $1 to buy all of that or $1,000,000,000, its irrelevant. The demand is still there, but at a price I can afford the market comes up a little short in supply. Particularly the Ferrari's. I know what you are getting at with debt driven demand though.

Man that video is terrible haha its a little too late for meeee as you can tell by the edits. The point was issuing debt to stimulate demand doesn't necessarily generate wealth (the hyperbole example of using debt to hire workers to dig a hole, and then throw money in the hole and burn it to increase the rate of issuing debt) won't exactly make anyone richer in terms of real wealth.

 

[Screech]

Growing companies and growing countries are great - I get that.

But if a company is growing, then another company must be shrinking because we have a finite amount of resources and wealth around the world.

If there's $1 in the entire world, and a company gains 5 cents this year, then another company has to be contracting by 5 cents.

Same with country GDPs. Because we have a finite amount of resources and wealth, then if one country's GDP grows, then another country's GDP must be shrinking.

So why is it so surprising that our GDP and European nations' GDPs are shrinking while China/India's GDPs are rising?

How can we sustain growth for every nation in the world? - which the analysts seem to think should happen. It just seems so natural to me that the our economy is shrinking and we have to adjust as a country to lower standard of living.

Two economies can both be growing although the relative purchasing power of money in either one might not be going in the same direction or at the same speed. But to give an example of a product that created wealth (for the producer of it of course) out of nothing, what previously existing product market did the Ipad replace? Sure, you can say the palm pilot or other PDA devices came first but none of those had close to the $$ that the ipad made. IMHO the ipad is a great example of "cutting down a bunch of trees and making a house" in the tech world, as I still have no idea exactly what task the Ipad is supposed to do that other devices do not already do. Except make you look like a hipster while doing it, I guess...

 

[shortylickens]

Growing companies and growing countries are great - I get that.

But if a company is growing, then another company must be shrinking because we have a finite amount of resources and wealth around the world.

If there's $1 in the entire world, and a company gains 5 cents this year, then another company has to be contracting by 5 cents.

Same with country GDPs. Because we have a finite amount of resources and wealth, then if one country's GDP grows, then another country's GDP must be shrinking.

So why is it so surprising that our GDP and European nations' GDPs are shrinking while China/India's GDPs are rising?

How can we sustain growth for every nation in the world? - which the analysts seem to think should happen. It just seems so natural to me that the our economy is shrinking and we have to adjust as a country to lower standard of living.

MOST resources are not yet exploited. So while it may be finite, its also huge. Plus, wealth is not necessarily finite in the traditional sense. Its the value created when you make new things. As technology improves many more options become available, allowing for the creation of value only limited by your imagination.
Also the greatest resource is human labor, and the most valuable is well-trained, imaginative human labor, which is increasing.


Nope, you really gotta take some economics classes. Theres basic things you havent learned yet.

 

[CPA]

wealth is not finite.

 

[Jaskalas]

wealth is not finite.

Inflation disagrees with that assessment.

 

[Genx87]

Growing companies and growing countries are great - I get that.

But if a company is growing, then another company must be shrinking because we have a finite amount of resources and wealth around the world.

If there's $1 in the entire world, and a company gains 5 cents this year, then another company has to be contracting by 5 cents.

Same with country GDPs. Because we have a finite amount of resources and wealth, then if one country's GDP grows, then another country's GDP must be shrinking.

So why is it so surprising that our GDP and European nations' GDPs are shrinking while China/India's GDPs are rising?

How can we sustain growth for every nation in the world? - which the analysts seem to think should happen. It just seems so natural to me that the our economy is shrinking and we have to adjust as a country to lower standard of living.

Inflation and wealth creation makes the theory that if one is growing the other must be shrinking idea wrong.

 

[cwjerome]

Growing companies and growing countries are great - I get that.

But if a company is growing, then another company must be shrinking because we have a finite amount of resources and wealth around the world.

If there's $1 in the entire world, and a company gains 5 cents this year, then another company has to be contracting by 5 cents.

Same with country GDPs. Because we have a finite amount of resources and wealth, then if one country's GDP grows, then another country's GDP must be shrinking.

So why is it so surprising that our GDP and European nations' GDPs are shrinking while China/India's GDPs are rising?

How can we sustain growth for every nation in the world? - which the analysts seem to think should happen. It just seems so natural to me that the our economy is shrinking and we have to adjust as a country to lower standard of living.

This has to be one of the worst understandings of economics I've seen on here in a long time. The whole reason specialization and trade exists, and why it's so awesome, is because of mutual benefit. People and countries engage in trade because the seller and buyer both benefit. This is why the world GDP has been steadily rising for 2000+ years and the more trade opened up and increased the more dramatically the GDP climbed.

How can a thinking person actually believe wealth is static?

 

[Throckmorton]

This has to be one of the worst understandings of economics I've seen on here in a long time. The whole reason specialization and trade exists, and why it's so awesome, is because of mutual benefit. People and countries engage in trade because the seller and buyer both benefit. This is why the world GDP has been steadily rising for 2000+ years and the more trade opened up and increased the more dramatically the GDP climbed.

How can a thinking person actually believe wealth is static?

Wealth is finite. That's different from it being static.

Can everybody be rich?

 

[Genx87]

Wealth is finite. That's different from it being static.

Can everybody be rich?

What is the total amount of wealth in the United States 100 years ago. What is it today? That that look finite to you?

 

[shortylickens]

What is the total amount of wealth in the United States 100 years ago. What is it today? That that look finite to you?

Yup. Finite.
HUGE!
And increasing.
But ultimately finite, until we start colonizing the galaxy.

 

[jman19]

What is the total amount of wealth in the United States 100 years ago. What is it today? That that look finite to you?

This is terrible logic.

 

[Genx87]

This is terrible logic.

Well you certainly proved it with that response.

 

[cwjerome]

Wealth is finite. That's different from it being static.

Can everybody be rich?

Seems to me you should define rich, because the term is a moving target and most people 100 years ago would consider nearly every American alive today as "rich." The point is, the total amount of wealth is growing and has been since we started trading with each other.

Worrying about "running out of wealth" is like worrying about the sun running out of hydrogen... pointless. There is no reason whatsoever to believe that (unless of a global economic catastrophe unlike any other in history) wealth will stop growing, much less get smaller.

 

[jman19]

Well you certainly proved it with that response.

Why do I need to prove it? I think most people will get it

 

[mikegg]

This has to be one of the worst understandings of economics I've seen on here in a long time. The whole reason specialization and trade exists, and why it's so awesome, is because of mutual benefit. People and countries engage in trade because the seller and buyer both benefit. This is why the world GDP has been steadily rising for 2000+ years and the more trade opened up and increased the more dramatically the GDP climbed.

How can a thinking person actually believe wealth is static?

Wait a minute, so you're saying that we can just magically create GDP by exchanging goods? Let's get this right. Wealth = standard of living. Standard of living = amount of resources you have. The more wealth you have, the higher standard of living you get.

Because we don't live in a planet with infinite amount of trees, fresh water, livestock, no matter how many times you trade, those resources NEVER increase. So if the resources never increase, tell me how your GDP can increase magically through trade? The only way they increase is if we find another habitable planet or we magically convert elements and atoms into anything we want.

Yea, I get that artificial inflation, debt, credit stuff. But at its core, economics is all about how much resources you have. This is why wealth is always static. If one person gets richer, then another must be poorer - unless we find new resources.