Will the world economy collapse if the third world modernizes?
The world economy might collapse, but for reasons other than alterations in trade deficits. Increases in population, scarcity of natural resources, increases in pollution and environmental destruction, accelerated global warming, increases in competition for those scarce resources, tensions resulting in more global conflict, use of atomic weapons, a nuclear winter - that's all she wrote folks.
Is GDP a good measure of economic growth? Why or why not?
GDP is the final value of goods and services produced in a country. To measure its effectiveness as a measure to describe an economy's indicator, one must look both at its advantages and disadvantages and also the possible alternatives.Advantages:Using GDP as a measure of a nation's economy makes sense because it's essentially a measure of how much buying power a nation has over a given time period. GDP is also used as an indicator of a nation's overall standard of living because, generally, a nation's standard of living increases as GDP increases.Disadvantages:1. It doesn't count unpaid volunteer work.2. Wartime disaster increase the GDP of the country.3. It doesn't show the distribution of income among different people.4. It doesn't show whether people belonging to a country having high GDP are happy or not.5. It does not account for quality of goods.If you measure India's GDP, it is the 10th richest country but this measure also does not take into account the purchasing power of people. By measuring GDP with respect to purchasing power parity, India becomes the 3rd richest in the world.But then again, this measure has its drawbacks. One can't say for sure what all goods should be included to calculate it.Human Development Index that can be used to measure economic progress. It uses statistics like life expectancy, education and income levels to measure a country's progress but then again it has its drawbacks like failure to include any ecological considerations, lack of consideration of technological development or contributions to the human civilization, focusing exclusively on national performance and ranking, lack of attention to development from a global perspective, measurement error of the underlying statistics, and on the UNDP's changes in formula which can lead to severe misclassification in the categorisation of 'low', 'medium', 'high' or 'very high' human development countries.Bhutan uses yet another measure as an indicator. It is the Gross happiness Index which measures the happiness level of people in an economy. As cheesy as it might sound, it is very difficult to calculate something as qualitative as happiness.That leaves us with just one measure i.e GDP.Even though we are all well aware of its shortcomings, we don't really have a choice simply because it is the only thing that can be precisely calculated and can be used as a measure to compare economic progress of various countries.
Do you support the idea of a Universal Unearned Income, paid by the state to every citizen, as a way of eliminating poverty?
No, not for a second!People who are paid for doing nothing, …will do nothing. The requirement for initiative is diminished. For those who do decide to work, motivation is muted, production is reduced, and mediocrity becomes acceptable.Here’s a hypothetical test:Step #1 Tell the teenager next door you will pay him $10 EVERY TIME HE WASHES YOUR CAR. Watch and See how clean your car is during the course of a month, and how much it costs you.Step #2 Tell the teenager next door you will pay him $50 ON THE FIRST DAY OF EVERY MONTH. HIS ONLY JOB IS TO WASH YOUR CAR EVERY TIME IT NEEDS WASHING. Observe the difference in frequency, amount of detail, and thoroughness of his cleaning visits.Nothing different would happen if instead of a teenage boy, you were paying a factory worker, fast food, motel/hotel employee, bank teller or somebody in the construction, plumbing, or welding trades.When you take away the incentive for people to try harder, do better, work longer, or produce more, they don’t bother to do it. When a person sees an advantage, financial or otherwise, to giving, doing, being, or trying more, and competing, or going the extra mile, then they improvise, adapt, take classes, apprentice, intern, volunteer, prepare, learn and advance.There has been a “Dumbing down” of America for decades. Trophies for everyone! …Whatever you do is good enough! ..Nobody has the right to make you do what you don’t want to do! Little Johnny isn’t good at Math, so he signed up for Band. Now you want to “PAY” people for doing NOTHING?!The world isn’t getting less complex, easier, and less competitive. On the contrary, the “Predators” ...those who are willing to get up, get started, get involved, compete, innovate, adapt, overcome adversity, and maintain momentum, are the people who will succeed.The “easily offended, unmotivated, non-competitive, Liberal, core math educated, spoiled American ( who, at 40 years old still lives in mama’s basement ) plays video games for a living, and draws a fat government check … “so he’s not poor” … won’t stand a snowball’s chance. He’ll be eaten alive by citizens of every other country in the world…people who intend to actually make something of themselves, do something with their lives, and not surrender to ROUGH, (Retirement On Unearned Government Handouts).
Why is unemployment an economic problem?
I'm completely unqualified to answer this question . . . so let's get started!First, I'm not sure there is any such thing as an “economic” problem . . . am inclined to think there are personal problems and political problems . . . but economic?A person who is unemployed is likely to experience personal and financial problems . . . can no longer pay to keep a roof overhead or food on the table. Finances can exacerbate relationship issues.An unemployed person here or there is easy to ignore. Widespread unemployment in a relatively democratic society will create problems for politicians who want to be reelected, so have to produce solutions and explanations and blame the situation on their opponents.People who are unemployed are unable to pay taxes to support governmental programs and may instead become programs themselves, in need of support by the still employed who would rather spend their money in more fun ways. Diverting money/resources either forcibly or voluntarily from xy&z to ab&c will probably annoy some individuals and delight others, but I'm not sure it qualifies as an “economic” problem.Definition of ECONOMICOkay, that was totally unenlightening.Can you define the term “economic problem” for me?
Can digging holes and re-filling them lead to an economic recovery?
First, work is not the same as energy spent. Second, economics is about utility and value.Building a pyramid, if done as a tourist attraction, is considered an economic activity. Because, it provides value for someone - the people who come to watch get entertained and pay for it. Digging a hole and refilling them has no economic utility at all. Since it doesn't add value the time spent on it is just a drain on the economy. Here is a simple way to think of this. Any outcome for which people would pay money is termed an economic activity. Would you normally pay me money for digging a hole and refilling it? No. Thus, it is not an economic activity and it is wasteful. Anyone who is suggesting it is useful for the economy is a fool - as there are way better economic recovery projects that could be done.On a related note, I will leave you with one fundamental economic equation: M = PQ/VM=Money in the economy. P= Price Index. Q= Total products and services produced in the economy. V = Velocity of people's spending.V is completely dependent on people's habits. You can usually think of it as a constant. That means, when you have to increase Money in the system [to pay for these projects] by simple linear algebra, either you increase P [termed an inflation] or you have to increase Q [increase in production/value]. This is why governments are so cautious about money supply. If they increase M faster than Q [production] they would cause inflation and would be thrown out of power. I'm not against government spending. But against government wastage. For instance, during a recession government could spend new roads, new ports, power plants and these would cause far better recovery than empty digging. Once the economy recovered sell these projects to the private and reduce the debt.All the empty digging would force governments to print more money without increasing Quantity of value, leading to greater inflation, greater pain and misery.