Flutterby™! : What does economic growth mean

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What does economic growth mean

2015-04-22 16:10:43.716125+00 by Dan Lyke 0 comments

Wall Street Journal: Is Government Debt Too Low? links to Brad DeLong: Things I Probably Will Have Time to Say: Rethinking Macro Policy III Conference, Washington D.C., April 15-16:

... isn’t the point of the market economy to make things that are valuable? And isn’t the debt of reserve-currency issuing sovereigns an extraordinarily valuable thing that is very cheap to make? So shouldn’t we be making more of it?

I got there via Larry Burton asking "Are you saying we can borrow ourselves into prosperity?" who observed that

This actually makes some perverse sense if one is a Keynesian. Money is really cheap right now and a government, unlike a family, has forever to work and pay off this debt so, sure, borrow more money, fix up the infrastructure and then pay off the debt with the inrush of taxes from the new, mo’ better economy.

I'm having trouble commenting on his site (Probably the broken vestiges of OpenID and stale cookies), so I'll comment here:

This makes perfect sense if we're investing in things that have a return. It's not clear to me that automobile infrastructure has that return. Education, social programs to break the cycle of poverty, those things have a return. If we spend wisely.

But the other nagging feeling I have... Essentially, economic growth is the portion of the economy that isn't devoted to food. At a Malthusian subsistence existence, all of our energies are devoted to food. At modern developed nations existence, enough calories per day to survive is low single-digit percent (farms are about 1%, add agriculture related industries were under 5%, we may spend more of our budgets, but much of that is because we fly fresh produce in from Chile in the winter or high markups for cartoon characters on our cereal grains).

Everything else is luxury spending. Even healthcare is essentially "how much longer do we want to live after our reproductive years are over". So do we get diminishing returns as food becomes less? When everything is luxury spending, what does economic growth mean?

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