Putting The Financial Crisis In Perspective: It's Tough To Keep Economic Growth Down
from the 140-year-view dept
If you're at all interested in economics in general, you should read David Warsh's Economic Principals column, which is always interesting (and you should absolutely read his fantastic book Knowlege and the Wealth of Nations, which is highly relevant to many of the discussions we have around here). Anyway, his latest column shows a nice little chart of per capita GDP in the US over the past 140 years or so, which effectively shows a pretty consistent upward trajectory, where even recessions and the Great Depression -- which is noticeable -- are hard pressed to stop the eventual economic growth. The message is pretty clear: it's hard to keep economic growth down. In the midst of a great contraction and massive deleveraging, that message seems to get lost pretty quickly -- but it's worth remembering.
Thank you for reading this Techdirt post. With so many things competing for everyone’s attention these days, we really appreciate you giving us your time. We work hard every day to put quality content out there for our community.
Techdirt is one of the few remaining truly independent media outlets. We do not have a giant corporation behind us, and we rely heavily on our community to support us, in an age when advertisers are increasingly uninterested in sponsoring small, independent sites — especially a site like ours that is unwilling to pull punches in its reporting and analysis.
While other websites have resorted to paywalls, registration requirements, and increasingly annoying/intrusive advertising, we have always kept Techdirt open and available to anyone. But in order to continue doing so, we need your support. We offer a variety of ways for our readers to support us, from direct donations to special subscriptions and cool merchandise — and every little bit helps. Thank you.
–The Techdirt Team
Filed Under: economic growth, financial crisis
Reader Comments
Subscribe: RSS
View by: Time | Thread
Disclaimer
[ link to this | view in chronology ]
Re: Disclaimer
ChurchHatesTucker proclaimed:
Can you offer any evidence for that?
[ link to this | view in chronology ]
Re: Re: Disclaimer
[ link to this | view in chronology ]
GDP?
[ link to this | view in chronology ]
Re: GDP?
the fact that GDP in the 50's was much lower than in is today doesn't say anything.
what did a dollar buy in the 50s what does a dollar buy today
[ link to this | view in chronology ]
Re: Re: GDP?
In 1950, a dollar would buy about half of one bit of memory. Today, a dollar will buy about 100 Megabytes of memory.
--
www.chl-tx.com
[ link to this | view in chronology ]
Re: GDP?
[ link to this | view in chronology ]
Re: GDP?
I believe its real GDP, so inflation is taken into account.
[ link to this | view in chronology ]
Re: GDP?
[ link to this | view in chronology ]
Have we progressed at all or just profited off other nations turmoil ?
[ link to this | view in chronology ]
We started discussing economics and the great depression. She lived through it and is most discussed.
Trying to reassure her I said that her stock would recover. Her stock has lost 50% of it value about $300,000.
Her response was I will not see it. That she had worked all her life and managed to save a bit and for the second time Wall Street was stealing her hard work, not money, but work.
Baffled I look at her with a questioning eye but did not say anything.
She then up and says that the government was doing the same thing that the government, under Hoover, did in 1929 and that the incoming administration was going to be just like the Roosevelt one implying that recovery is at least 10 maybe 15 in the future and that she would not live to see it.
What does one say? I of course could not disagree with her she had lived through the Great Depression. I had not. After all she is 102 and in good health.
Which leads to the central economic question. What does one do with their wealth at 65 to make sure that they are able to live comfortable to 102 and still have their wealth?
[ link to this | view in chronology ]
Re:
[ link to this | view in chronology ]
Financial growth
[ link to this | view in chronology ]
It's tough to keep economic growth down...
...but I'm sure Barack Hussein Obama, the Chicago Machine Politician with the blank resume, can change that.
--
www.chl-tx.com
[ link to this | view in chronology ]
Re: It's tough to keep economic growth down...
[ link to this | view in chronology ]
I've Heard That Story Before
Then I traveled to the heyday of the United Kingdom, and found that an advisor to the King of England, Sir David Welsch of Oxford University's Macroeconomics Department had presented a similar statistical analysis.
I think we are better off putting our faith in organized religion and prayer and throwing virgins into volcanoes than to put our trust in a statistical chart regarding an economic system that is built on a structure no more sound than a deck of cards.
[ link to this | view in chronology ]
Re: I've Heard That Story Before
[ link to this | view in chronology ]
Change has been needed for decades.
This comment is just common sense, but you'd never know it as the media continues adding fear to viewers with every new economic "update".
In fact, in looking at economic growth history, we should expect to see a tremendous boost after this recession, as history has shown once the money starts flowing again.
The issue for most businesses now is finding capital. Lenders are being stingy, so it's going to take a bit more time to find capital for startups.
Of course, it doesn't help when the government is bailing out industries which should have died in order to "save the economy". I'm sure there were plenty of investors willing to take over the role of US auto manufacturer should the Big 3 have fallen, but now, we'll never know while we're still driving our pieces of crap.
(Personal note: How the hell does GM expect the American people to take them seriously about better cars when their Volt is $40k? Americans who need this technology won't be able to afford it.)
Most of you have known my motto over all this and I wish it had come true. Now, I'll just sit back and wait, as it's the only thing I, and many, can do.
I'm more afraid of the future than I am of this recession. Especially when history also shows a trend of stupidity amongst Wall Street investors who continue to find that high yielding quick return of investment while the SEC does nothing while it happens.
[ link to this | view in chronology ]
[ link to this | view in chronology ]
Re:
I am her neighbor not her financial adviser but from previous conversations she (1) enjoyed dabbling in stock from the time she was 60 or so until she was in her early 90,
(2) she was quite good at it, (3) most of her stock holdings were in electrical power companies and oil companies bought at prices where she has at least a 100%, some times 500% current return on her investment and (4) she was living better off the dividends than she would have off bond interest.
Her investment psychology which rivals Buffet although not nearly as profitable was why I went to see her and was not something I would question since she is sharper mentally than I am and I am quite normal with an IQ of 120, thank you.
No what I got from the discussion revolves around the question of where dose one store financial wealth without considerable work as in property management or suffering the ravishing of inflation from the ownership of bonds and get a return on investment that one can live on for the long term say 40 years or so?
Once in here life time money literally meant gold and silver. Now all it means is a number in a computer or a piece of paper at best with no intrinsic value. This is great in the aggregate for the short run, if by short one means 5 to 10 years or so , with proper control management but as in so many things involving economics when one moves to the micro and the long run meaning one’s life-time it is not so great as one is able to do highly profitable productive work in one’s middle age and has a high upkeep need in their old age. If paper money, and associated instruments, have a inflation induced declining value and one is not physical able to manage a business for continuous revolving wealth maintenance there are very limited opportunities for wealth preservation.
One can thus conclude that as long as one has health physically and mental one can maintain wealth but with the loss of either one wealth deteriorate sharply and this does not even begin to account for increased personal cost due to medical needs.
[ link to this | view in chronology ]
Re:
This is the saddest point of all and no one seems to make it. She obviously shouldnt have been in the stock market, I would also point out that much of her portfolio was inflated by a phony real-estate bubble, so much of what she lost was pretend anyway. People want say the stock market "stole" half thier money in the crash, but they never seem to realize that before the crash, half thier money was just "pretend".
[ link to this | view in chronology ]
Oil production peaked in the 1970's and has been going down ever since. Natural gas is peaking now. A continual growth economy can't function without oil, which is not only a fuel source, but is also converted into plastics, microchips, and more. What we should have had is a steady-state economy free of the artificial ups and downs of the continual growth model. But if the peak oil models are true, then it's almost certainly too late or almost so, because as oil reserves run out and production falls, the economy falls with it. A certain amount of up and down fluctuation in oil prices is expected within those models, the wobbly plataeu that goes on for a little while before the final, irrevocable plunge.
Without oil, we have no energy to create electricity, which means no refrigeration, no flushing toilets, no heaters, no air conditioning, no internet, no working technology at all. Without oil, the trucks will stop bringing food and products to the stores, which means no more food and clothing except what we already may have saved up. Most food we eat is made over a thousand miles from where we live, did you know that? What happens when that distribution network collapses because it no longer has the gas to power it? We starve, or at least a great many of us do. How well could you live off the grid, if you had to? We may need to figure that out sooner that we ever imagined. I hope not, but it's possible.
[ link to this | view in chronology ]
log scale and stupid policy
The 1930s tells us that bad government policy can turn an ordinary business cycle downturn into an economic disaster.
The government is right to provide liquidity to the banking system but wrong to have done so without addressing the risks that the derivatives markets present to the financial system (an outright ban on CDSs would have been a good place to start.)
On the other hand, the idea that government stimulus can take us back to the height of the bubble in stocks, bonds, housing, employment, income and consumption is just plain stupid.
[ link to this | view in chronology ]
Good Times Coming
If you have lost your job, it's hard to stay positive. I wish you all the best and hope this year brings good news for you. But I really believe that things will get better much sooner than many think. We have seen this before.
[ link to this | view in chronology ]
[ link to this | view in chronology ]
straw man
[ link to this | view in chronology ]
[ link to this | view in chronology ]
financial crisis tips
[ link to this | view in chronology ]
anon2 has it right
[ link to this | view in chronology ]