Deficits, the National Debt, and Economic Growth: What many politicians don't want you to know.
Debt is the wrong enemy.  Growth is our forgotten friend.
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"Unlike most forms of geometric expansion, there is no reason to believe that the expansion of knowledge has any inherent limits."
--Nathan Rosenberg

Until recently, economics deserved the label it had earned: "The Dismal Science."

Happily, growth economics has rendered that label obsolete.

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Throw Away the Prozac

Growth economics is fun, stimulating, and optimistic. Let's compare and contrast the old, dismal ideas with the new, growth ideas…


The old, dismal ideas of the "Economics of Scarcity"

Resources 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 central fact."

So 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 hoped for.

Here 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 Economics… (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 greedy corporations.

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.

Pretty depressing, huh? Cheer up; here come the antidotes…

The new, optimistic ideas of the "Economics of Growth and Abundance"

The 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."

It 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 devices." )

Innovators -- 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.

Here are the innovators' antidotes to the depressing ideas of the dismal-science crowd:

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.

Energy: 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.

Cancer & 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.

Sucking sound: 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.

Immigration: 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.

Income 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 scientists.

Snapshot 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 better?

If 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.

Our 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.

Throw away the Prozac. Then go out and get the books I've recommended. Then read them.


"Humans are, on net balance, builders rather than destroyers."
--Julian Simon

"Environmentalists changed the word jungle to rain forest, because no one would give them money to save a jungle. Same with swamps and wetlands."
--George Carlin

End of this article
Last update of this page: June 24, 2001
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