the National Debt, and Economic Growth: What many politicians don't
want you to know.
economics is fun, stimulating, and optimistic. Let's compare and
contrast the old, dismal ideas with the new, growth ideas
old, dismal ideas of the "Economics of Scarcity"
are scarce (i.e., limited and finite). It is an undeniable truth
that there are not enough resources to produce all the goods that
people want to consume. "All of economics flows from this
says Paul Samuelson, the grandson-and-grandfather of scarcity
economics; the author of the most widely-used college textbook
on the dismal science; and in my estimation, the best free promoter
that the makers of Prozac, the antidepressant, could ever have
are some recognizable, depressing ideas that flow from the so-called
"central fact" of resource-scarcity; ideas that justify
the "dismal science" label that has been slapped on
(don't get your Prozac out just yet, though, because
there's an antidote to each one of these coming up shortly afterwards):
Mass starvation and famine will halt population growth, because
the world will inevitably run out of capacity to produce food.
We must stop the madness of uncontrolled population growth.
The USA is a
nation of energy gluttons, responsible for almost half of all
the greenhouse gases spewed into the atmosphere annually by Homo
sapiens. We're killing the planet. We must stop this madness and
reduce our energy consumption.
In 1900, cancer
and heart disease killed one-third of us. After a century of so-called
growth and progress, they now kill eighty percent of us. Another
example of greedy, heartless corporations getting rich by ripping
us off, killing us off, and raping the environment. We must stop
this madness by slapping tough controls on the robber barons.
Free trade creates
a giant sucking sound of jobs leaving our country. It's those
greedy corporations again, exporting jobs to slave-wage third-worlders.
Those heartless robber barons continue to get richer by throwing
their own loyal workers into the unemployment lines. We must stop
this madness and protect our jobs by limiting the power of those
We need to shut
down the border; we simply cannot afford to support any more immigrants
on our welfare rolls. If we have to dig a thousand-mile trench
and guard it with troops, so be it. Enough is enough. We must
stop this madness.
The income gap
between rich and poor in this country is too great. The rich are
getting richer, and the poor are getting poorer. We must stop
this madness by taxing those who don't need all that income, and
redistributing it to those who do need it.
When we examine
the snapshot of our current socio-economic situation, the problem
becomes obvious: We need a better way of allocating the wealth
we produce today, and a better way of protecting the workers who
produce today's goods and services.
depressing, huh? Cheer up; here come the antidotes
The new, optimistic ideas of the "Economics of Growth and
ultimate resource is in the mind of Homo sapiens. It is knowledge,
and it is the most important factor of production -- even though
it has essentially been ignored by the dismal scientists. New
knowledge renders old physical resources obsolete, while at the
same time defining brand new ones. There is no limit to this resource;
it can continue increasing exponentially. It is precisely the
opposite of "scarce."
is knowledge that has converted an eons-long useless commodity
-- sand -- into one of today's most important resources. (Silicon,
and glass fibers, come from sand). In turn, it is knowledge that
will soon remove sand from the top of the important-resource list
-- by replacing it with soot, soon to become our most important
resource. (Nanotubes will be manufactured from soot. "With
carbon nanotubes, the flow of electricity can be ballistic, meaning
that it can flow without collision," says Phaedon Avouris,
a research scientist at IBM's Thomas J. Watson Research Center,
in Yorktown Heights, New York. "We believe that they can
be used as field-effect transistors or on/off switches in computing
-- those who uncover new knowledge, and turn it into better ways
of life for the masses -- change the way the world works. They
don't have time to fuss and fret over the imperfections in the
"snapshot," because they are too busy directing movies.
Innovators must relegate the fussing and fretting over current
conditions to the dismal scientists, because innovators are too
busy trying to render current conditions obsolete. They are busy
risking their personal wealth trying to change the way the world
works -- for the better -- because if they don't make life better
for the masses, they will fail. That is, they will lose their
personal wealth -- because the masses will vote with their dollars
for somebody else who did succeed in making their lives better.
are the innovators' antidotes to the depressing ideas of the dismal-science
Famine: We will find new ways to produce more food, at
a lower price, on less land, with fewer people. (In 1997, we know
how to feed many times the world's population on less land than
is now being farmed, at food prices below those of any previous
time.) We must continue innovating, to make it even less costly
to feed more people.
The USA is a nation of wealth-producers, responsible for almost
half of the goods and services produced by the entire world --
and consumes less energy per unit of wealth output, and spews
out less greenhouse gas per unit of wealth output, than any other
country in the world. This wealth production, by definition, is
making life better for Homo sapiens, we are living longer and
healthier than ever before because of it. (We could do even better,
though, if we could somehow overcome the false fear of the word
"nuclear" -- an irrational fear which rejects the idea
of disposing of nuclear waste in stable geologic formations, choosing
by default the disposal of fossil fuel wastes inside our own lungs.)
We must continue innovating, to make wealth-production even more
energy efficient and pollution-free than it has become today.
Heart disease: In 1900, smallpox, tuberculosis, influenza,
pneumonia, gastritis, duodenitis, enteritis, and colitis killed
almost half of us. But in the twentieth century, innovators have
eradicated most of those diseases, and we are consequently living
longer lives than ever before -- long enough to contract the two
diseases that have not yet been conquered: cancer and heart disease.
We must continue innovating, to eradicate the remaining diseases,
and continue increasing our life expectancy.
Free trade reduces the prices of today's products, thereby freeing
up funds for buying more of today's products, and, more importantly,
for developing tomorrow's products. Old work will be displaced
by new work, as we "export" obsolete jobs while "creating"
new and different jobs. Innovators must step in and shift our
economy to new, different, better products. Successful change
and innovation will, as usual, leave us better off than we would
have been had we rejected change and innovation by "protecting"
the old ways of doing things. We must continue innovating, to
make future generations better off than their predecessors.
We need to open the border to economically productive individuals
desiring entry. We simply cannot continue making the xenophobic
assumption that every immigrant is a mouth, not a mind; a welfare
recipient, not a taxpayer or innovator; a job-taker, not a job-creator.
Continued productivity and growth requires that we backfill the
retiring baby-boom generation with a combination of higher productivity
per worker, and more workers. We must continue innovation and
immigration, in order to continue our growing prosperity.
distribution: The income gap between social classes is the
snapshot. The change in income across a lifetime, or across generations,
is the movie. The movie reveals several facts missed by the snapshot.
For example, the movie reveals that many of yesterday's rich become
today's middle class or poor; also that many of yesterday's poor
and middle class become today's rich. The movie also reveals that,
compared to previous generations, all classes are getting richer;
most are living longer lives; most are getting healthier; most
are better-educated; most are better-fed; most have more living
space; all are better-entertained; all have more high-quality
material possessions. In the aggregate, all are getting wealthier.
We must continue innovating, in order to continue getting wealthier
in the aggregate -- and leave the snapshot debate to the dismal
fallacy: When we look past the snapshot of our current socio-economic
situation, and examine the movie instead -- the problem becomes
obvious. We need a better way of creating the wealth we could
be producing tomorrow, and a better way of attracting and redeploying
the workers who will produce tomorrow's goods and services. How
best to create new wealth and work is the problem of growth.
Two completely different ways of looking at the same seven issues,
wouldn't you agree? The first way is the dismal-science, economics-of-scarcity
viewpoint; the second is the growth and abundance viewpoint.
Which one do you like
you're like me, you prefer the second viewpoint. The economics
of growth and abundance is stimulating, optimistic, and hopeful.
I discovered it in 1994. I wish I had discovered it twenty years
sooner than that.
past hasn't been as bad as the doomsayers have described. Nor
is our present as bad as they describe. Nor will our future be
the disaster they predict. The doomsayers are missing the best
movie ever made, still in progress: the movie of economic growth.
Come to think of
it, if Samuelson was correct that "all of economics"
flows from the central assertion (not fact) that there are not
enough resources to go around -- then I'm afraid that doom is
in fact just around the corner. What is doomed is the axiom he
teaches in his Economics textbook. The dismal economics of scarcity.
away the Prozac. Then go out and get the books I've recommended.
Then read them.
are, on net balance, builders rather than destroyers."
changed the word jungle to rain forest, because no one
would give them money to save a jungle. Same with swamps
of this article
update of this page: June 24, 2001