Economy is shrinking!

Well, so what, where’s the tragedy? The US GDP is over $13 trillion. There are 300 million people. That’s over $40,000 for every man, woman and child in the country, $160,000 for a family of four.

OK, but a lot of it is probably junk, waste – useless weapons, bureaucracy, etc. How much of it is good stuff consumed inside the country, or something that can be exchanged for good stuff? Let us be conservative and say – about a half. Well, that’s still a lot – $20K per capita, $80K for a family of four, certainly enough to live comfortably. And 2% up or down doesn’t make much difference.

So, the problem is not the size of the economy, but the way the stuff is distributed in this economy. Moreover, I don’t think there would’ve been any shrinkage if it was distributed in a more reasonable fashion. The whole economic theory is based on some sort of chain reaction model – more jobs -> more demand -> more jobs -> etc., or fewer jobs -> less demand ->  fewer jobs -> etc. This is not a good model; just not a good design.

I know, these are, of course, obvious things, stated a million times already; hailed, refuted, hailed again, refuted again. Nevertheless.


  1. bk
    Posted December 12, 2008 at 1:28 am | Permalink

    Arguably…we should be SHRINKING the economy somewhat significantly. Although I honestly don’t believe that if every american (or first world resident) suddenly drives a Prius and has solar panels that the planet will be “saved” Just too many of us, merrily consuming and procreating away. (Love your site, by the way)

  2. Posted December 12, 2008 at 12:03 pm | Permalink

    Thanks, and I agree. More reasonable distribution of what the economy produces would definitely cause the economy to shrink (at least initially), as most of its growth seems to have been going for a few decades into turning millionaires into billionaires.

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