How We Gonna Grow Our Way out of This Again?
The Keynesians believe that massive government spending will lead to big growth that will simply allow us to grow our way out of debt. The problem is our rate of growth has been declining since the sixties. While it's typically thought that our growth is above 3% annually, in fact it is now closer to 2%. Even if you look at just the good times, they're not rolling like they used to. Even the extended run in the go-go 90's saw under 4% growth. Our run from 1983 to 1990 averaged 4.3% (though it was 7 quarters shorter). Our growth in the boom times from 1961 into 1969 gave us 5% annual growth. The truncated boom last decade featured a pathetic 2.7% rate of growth. The trend of GDP growth shows a clearly declining trend line - at this rate we can expect growth this decade to average under 2%. I doubt we'll be able to climb very far out of debt at that growth rate.
The data are quarterly annualized changes in GDP from bea.gov, "Table 1.1.1. Percent Change From Preceding Period in Real Gross Domestic Product".
The data are quarterly annualized changes in GDP from bea.gov, "Table 1.1.1. Percent Change From Preceding Period in Real Gross Domestic Product".
posted by ziel | 5/23/2010 09:47:00 PM
8 Comments:
Factor in our 1% annual population growth and inflation, and our net growth rate is probably negative.
I wonder how it looks compared to the working age population. I know we've been aging, but we've had a lot of immigrants. Historical census data is surprisingly painful to locate, though.
non de guerre said...
Factor in our 1% annual population growth and inflation, and our net growth rate is probably negative.
The chart is of "real" GDP, thus it accounts for inflation.
I wonder how it looks compared to the working age population.
I could talk about this topic from now until the cows come home, but, very briefly, you can get most of what you need from the Statistical Abstract [and a few similar documents].
Cf. the 2010 Statistical Abstract of the United States, Section 1, Population, PDF page 16, Table 9, "Resident Population by Race, Hispanic Origin, and Age: 2000 and 2008" - there you will see that the Caucasian ["Not Hispanic White alone"] population of the USA has pretty much fallen off a cliff, from roughly 16 million in the age group 45-49, down to only 11 million in the age group 0-4.
And, so far, there is no sign that we have worked our way back to replacement level fertility amongst [non-Hispanic] Caucasians, although fertility rates are SHARPLY divided along socio-political/religious lines, with secular blue state Caucasians experiencing Total Fertility Rates [TFRs] of about 1.47, and religious red state Caucasians experiencing TFRs of about 2.08, for a combined [non-Hispanic] Caucasian TFR of about 1.86 [whereas most demographers believe that replacement rate fertility is about 2.10].
Anyway, Caucasians, with their average IQ [which is pretty much the definition] of 100 are being supplanted in the United States by third-world races [Negro and Central American Aboriginal*] with average IQs [in the mid- to high-70s] which are almost a "standard deviation" below where they would need to be just to support rudimentary literacy & numeracy [the threshold for which begins at roughly IQ 90].
And you can't build a great economic power on the backs of people who not only cannot read & write & do arithmetic, but who are inherently incapable of ever even being taught these skills in the first place.
PS: The American fertility situation for "Asians" [the only other group with average IQs >= 100] is decidedly worse even than the situation for Caucasians.
*PPS: And, increasingly, Muslim Arab & various other Muslim races.
PPPS: If you are curious about the history of this stuff, the American Caucasian TFR plunged into the abyss in the years 1970-1976, from where it has been struggling to rebound ever since:
1970: 2.385
1971: 2.161
1972: 1.907
1973: 1.783
1974: 1.749
1975: 1.686
1976: 1.652
Also, note that Caucasian fertility rates were not separated from "Hispanic" fertility rates until the 1990s, so all of the old [ostensibly] Caucasian fertility rates from the 1980s [after the first great wave of illegal immigration from Central America] are just completely bogus.
You ought to be careful here, particularly if you're trying to argue against Keynesianism. The 1960's boom most certainly had a large Keynesian component; it also accounts for why the '70s were spent mired in stagflation. The '60s boomed iin part because the wrong things got too much money thrown at them (guns and butter, anyone?), and it happened in an environment which tried very hard to insulate American companies from competition and give unskilled manufacturing workers cushy lifetime jobs. The result was unhealthy growth, which dragged us down until Reagan brutally cut the fat in his first term.
We might also point out that the Sixties was the tail-end of the era of the "easy stuff" in economic growth - getting people off the farms and into the factories, which is where (for example) China is now. After that's done, all your growth must come from actually improving how you do things, and from being nimble enough to keep up with changing technology and demands. If you want to know how NOT to do that, look at the average growth rates of Europe over the last twenty years. Any other large developed economy in the world would be ecstatic over a 2.7% growth rate sustained over a decade.
So no, it will never be that easy again, Keynesian fairydust or not. Just be glad you're not in China, where the government has mandated a 10% growth rate for twenty years. Guess how that story's gonna turn out.
Wait... the 1960s were the "tail end" of getting people off the farm?
And here I thought the Industrial Revolution took place in the 1850s.
Anonymous - thanks - the data in the Statistical Abstract is a real pain to work with. I'll have to set that aside for when I'm bored and I can go cut-and-past crazy.
These are the relevant numbers, from roughly the peak of the baby boom, on down to today's babies:
2008, Caucasian, aged 45-49 years: 15.964 million
2008, Caucasian, aged 40-44 years: 14.085 million
2008, Caucasian, aged 35-39 years: 12.981 million
2008, Caucasian, aged 30-34 years: 11.456 million
2008, Caucasian, aged 25-29 years: 12.740 million
2008, Caucasian, aged 20-24 years: 12.949 million
2008, Caucasian, aged 15-19 years: 12.903 million
2008, Caucasian, aged 10-14 years: 11.660 million
2008, Caucasian, aged 05-09 years: 11.222 million
2008, Caucasian, aged 00-04 years: 11.065 million
We've basically seen a collapse of [more than?] 30% in the Caucasian population, from about 16 million per five years, down to about 11 million per five years.
So, as things stand right now [and the situation is most dire in the Blue States], there just aren't enough young Caucasians coming along to lift us up out of this mess.
PS: The situation for Asian-Americans is even WORSE than it is for Caucasian-Americans.
[And, as bad as the Asian numbers are, I fear that they are now being padded by the Muslims.]
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