BeyondPonziEconomics
From Etpedia
Why we need to think about an economy not addicted to growth?
If your don't agree with Tom please tell us why at #Why we don't have a Ponzi Economy or why it doesn't matter.
Otherwise you agree that growth addiction is a bad thing and go to the next step. A sketch of coping with higher productivity avoiding growth and more unemployment.
You want to contribute? Have a look at bge:HowToContribute.
A dynamic system without growth and negative feedback
There are dynamic but nevertheless stable systems in nature which are working already for billions of years as long as bounding paramters don't change too much. As an example take the Lotka-Volterra equations of a plain vanilla predator-prey system: Lotka-Volterra equation.
So such a thing is for real. Aren't the relations between Employer/Employee or Company/Household somehow similar to Predator/Prey?
Some opinions on the necessitiy of Growth
The mainstream paradigm is that without growth economy would collapse because of increasing productivity.
Addicts
- IMF Head Dominique Strauss-Kahn:
"Wer für ein verlangsamtes Wachstum plädiert, muss auch darauf hinweisen, dass dies weltweit zu höherer Arbeitslosigkeit führen wird."
(Slow growth will cause more unemployment.) - "Der Kult ums BIP" in "Der Spiegel":
"Welche Konsequenzen drohten, bliebe das Wachstum auf Dauer aus: Dann würden sehr bald alle überlebenswichtigen Funktionen des Gemeinwesens ihren Geist aufgeben. Deutschland ist quasi zum Wachstum verdammt."
(Without growth the community can't survive. Germany is condemned to grow)
Whistle-Blowers (Nestbeschmutzer :-)
- Paul Krugman: LSE Videos
Some videos: "The Return of the Depression Economic 1-3". June 2009.
Sceptics
- Professor Hans Ruh, "Anders, aber besser", P.67:
"Wir können mit sehr viel weniger Arbeitskräften sehr viel mehr produzieren. Wir haben sehr viel mehr Zeit, eben die freie Zeit der Arbeitslosen, Aber haben wir das nicht eigentlich gewollt? Liegt das nicht ganz schlicht auf der Linie des Programmes der Rationalisierung? Warum denn klagen, wenn genau das eintrifft, was wir programmiert haben?"
(Being more productive we need a smaller workforce. We have the free time of the unemployed. Why complain if we get, what we wanted?) - Albrecht Müller, http://www.nachdenkseiten.de
Some interesting ideas can be found in "Die Reformlüge, 40 Denkfehler, Mythen und Legenden, mit denen Politik und Wirtschaft Deutschland ruinieren." - Meinhard Miegel, http://www.denkwerkzukunft.de
"Exit, Wohlstand ohne Wachstum" (Prosperity without growth)
How to cope with Productivity Growth
Productivity growth will raise unemployment because less workers are needed for a fixed production. So what can be done.
by working less
A simple idea is to compensate for a raising productivity by working less. I don't think it's convincing to just say this in prose. So I try to help with some equations. More on this simple model on bpe:CopeWithProductivityGrowth. Assume
- consumption = income = production.
- hourlyProduction = hourlyWage
- production = hourlyProduction * workers * workerHours
Now with productivity1 > productivity0.
- workerHours1 = workerHours0 / productivity1
- hourlyProductione1 = hourlyProduction0 * productivity1
- => production1 = production0
So we see that a higher productivity could result in higher wages and lesser work for the same output. Isn't this a good result?
These formulas can be illustrated using a math program. Also they should be compatible with a complete economic system which I sketched below.
This doesn't work because ...
- Please add here and sign with ~~~~ (Harnoes 09:58, 6 October 2009 (UTC))
by raising wages and producing additional goods
Sounds good. Will increase standard of living as long as the additional goods are useful. For now also more on this model on bpe:CopeWithProductivityGrowth
This doesn't work because ...
- Please add here and sign with Harnoes 17:35, 28 October 2009 (UTC)
SteerMonyFlow
A reason for economic problems could be that too much of the productivity gain is going to employers who save the additional money instead of consuming it. So it would be interesting to model income as a employer and employee part with different savings quota. Also whether changing the parameters can show the way out of a crisis. bge:SteerMoneyFlow
Government to the Rescue
Now let's see what politics could do to create growth or stop shrinkage caused by financial greed in an instable system.
- This means production isn't fixed any more. Perhaps add a stock of goods produced but not sold yet.
- Try to lower taxes for companies with lesser working hours per employee.
- The government can juggle with unemployment pay and unemployment insurance.
- Employers will have a better margin with more people working less.
- Employees will get higher net wages per hour by sinking unemployment insurance to make up for lesser hours.
- Will this be a win/win situation for companies and households? Stay tuned!
- Formulas and model: TBD on bge:LessWorkByTaxes.
Also an interesting point will be how coping with productivitiy and steering money flow can be provided by laws and taxes which will reward employers so their actions not only are godd for their companies but also for the economy an the whole people. bge:GovernmentRescue
On Models
For seeing an interesting example what working with a model means you can read "QED, The Strange Theory of Light and Matter" by Richard P. Feynman. Sorry, oldfashioned paper stuff.
QED means "quantum electrodynamics". He is starting with a simple model explaining reflection of light and in the end he is more sophisticated and has particles moving backward in time :-)
Building a Model
Let's start with the economic actors and some questions the model should be able to answer. I didn't find a diagram with most of the models I read about. But from software engineering I'm used to have an overview of the system with it's subsystems and interdependencies.
The Economic Actors
Original diagram
Some economic questions
- Let's assume that productivity is increasing. Is it possible to avoid growing unemployment? Perhaps by reducing working hours?
- Can the multiplicator effect be illustrated using these actors?
- Can a Keynesian spending program or tax cuts restore growth?
- What are the effects of a basic income scheme?
- Where does growth come from? Perhaps we are choking it with some market mechanisms?
Further Reading
On Economic Models
I don't have NIH-syndrome. So if something to recycle exists ...
- http://en.wikipedia.org/wiki/Economic_models
- Atlas of Economic Models
- The Bank of England Quarterly Model
On Economic Problems
Discussions
Diary: Krugman on the future of economy
Why we don't have a Ponzi Economy or why it doesn't matter
If you think Tom Flynn is wrong please tell us here.
- ... Please sign with ~~~~.
