Why does this growth model not accurately describe what happens in the real world? The answer is that the model has nothing to say about whether the distribution of income and wealth result from market-derived exchanges or from monopolistic privilege established in a society's system of socio-political arrangements and institutions. Thus,, per capital GDP, for example, says little about the general standard of well-being of a population. One must look to statistics on the degree of concentration of private accumulation of rent-derived income. Students interested in these issues will learn a great deal by studying the writings to two particular economists: William Vickrey (winner of a nobel prize in the 1990s) and Mason Gaffney (now emeritus professor of economics at the University of California).
As brilliant as he is, he needs a course in statistics. Efficiency cannot be called a "residual" and also be a variable that is highly correlated with capital stock, because it is by his explanation as good a predictor (and no better) as capital stock because of this multicollinearity, this high correlation. There are other variables that are not shown here that can explain the differences in capital growth and productivity (such as between New Zealand and Japan), including culture, institutions, geography, and technology. We could ask if the innate brain power of a country play a part, but no one wants to touch that question.
How relevant is "output per person" when the concentration of income and wealth is accelerating as output increases? Many of the assertions of modern growth theory have little to do with reality. The very definition of capital is worthy of challenge. Is nature really a capital good? Nature is certainly the source of production, the source of capital goods, but nature has a zero cost of production in terms of labor and capital goods. A problem with mainstream economics is its movement away from treatment of nature (i.e., the factor of production referred to as "land") as having very distinct characteristics from goods we produce from nature. There is also the moral issue involved in the distinction between nature and goods produced. Nature is our "common wealth." However, from the time humans began to settle in one place, rules for allocation of control over nature were required. As hierarchical societies displaced the communitarian tribal structure, these rules were codified into formal law, establishing individual property rights to land, to natural resources and to other natural assets with an inelastic supply (e.g., frequencies on the broadcast spectrum or even take off and landing slots at airports). The end result is that every society around the globe is dominated today by rentier privilege traced back centuries. Societies with the lowest levels of capital goods are plagued by high levels of land monopoly (and, more specifically, land rent monopoly).
I am getting a feeling that not enough attention is given to population growth. For example Argentina. Once in 1900 that it was a fast growing economy, many people moved there. This placed a strain on the economy that might have been responsible for stopping the growth. This is the original Malthusian theory. And Malthus is not being employed as often as I would like.
Plenty of countries have military coups w/o severe economic decline. The real reason is demographics. European immigrants, skilled and literate, made Argentina what it was. The booming economy attracted immigrants from elsewhere in South America, Paraguay, Chile, even Peru - only these immigrants were poor, unskilled mestizos and indians. They brought Argentina down to their level. America awaits a similar fate.
I'm from New Zealand, the best countries in the world are those focused on decreasing inequality and managing an effective welfare system, this lecture is misleading at least !
Superb lecture, thank you
If the growth rates are correlated, how can they be estimated? They would be linearly dependent....
Why does this growth model not accurately describe what happens in the real world? The answer is that the model has nothing to say about whether the distribution of income and wealth result from market-derived exchanges or from monopolistic privilege established in a society's system of socio-political arrangements and institutions. Thus,, per capital GDP, for example, says little about the general standard of well-being of a population. One must look to statistics on the degree of concentration of private accumulation of rent-derived income.
Students interested in these issues will learn a great deal by studying the writings to two particular economists: William Vickrey (winner of a nobel prize in the 1990s) and Mason Gaffney (now emeritus professor of economics at the University of California).
As brilliant as he is, he needs a course in statistics. Efficiency cannot be called a "residual" and also be a variable that is highly correlated with capital stock, because it is by his explanation as good a predictor (and no better) as capital stock because of this multicollinearity, this high correlation. There are other variables that are not shown here that can explain the differences in capital growth and productivity (such as between New Zealand and Japan), including culture, institutions, geography, and technology. We could ask if the innate brain power of a country play a part, but no one wants to touch that question.
How relevant is "output per person" when the concentration of income and wealth is accelerating as output increases? Many of the assertions of modern growth theory have little to do with reality.
The very definition of capital is worthy of challenge. Is nature really a capital good? Nature is certainly the source of production, the source of capital goods, but nature has a zero cost of production in terms of labor and capital goods. A problem with mainstream economics is its movement away from treatment of nature (i.e., the factor of production referred to as "land") as having very distinct characteristics from goods we produce from nature.
There is also the moral issue involved in the distinction between nature and goods produced. Nature is our "common wealth." However, from the time humans began to settle in one place, rules for allocation of control over nature were required. As hierarchical societies displaced the communitarian tribal structure, these rules were codified into formal law, establishing individual property rights to land, to natural resources and to other natural assets with an inelastic supply (e.g., frequencies on the broadcast spectrum or even take off and landing slots at airports). The end result is that every society around the globe is dominated today by rentier privilege traced back centuries.
Societies with the lowest levels of capital goods are plagued by high levels of land monopoly (and, more specifically, land rent monopoly).
I am getting a feeling that not enough attention is given to population growth. For example Argentina. Once in 1900 that it was a fast growing economy, many people moved there. This placed a strain on the economy that might have been responsible for stopping the growth. This is the original Malthusian theory. And Malthus is not being employed as often as I would like.
Plenty of countries have military coups w/o severe economic decline. The real reason is demographics. European immigrants, skilled and literate, made Argentina what it was. The booming economy attracted immigrants from elsewhere in South America, Paraguay, Chile, even Peru - only these immigrants were poor, unskilled mestizos and indians. They brought Argentina down to their level. America awaits a similar fate.
If the answer is as simple as that, please provide the best work made by those that show otherwise and explain why they are wrong.
I'm from New Zealand, the best countries in the world are those focused on decreasing inequality and managing an effective welfare system, this lecture is misleading at least !