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A cheerful prognosis from a dismal scientist

Writing in Forbes, Alexander Tabarrok has written a cheerful essay on the long term outlook for world economic growth.

New ideas mean more growth, and even small changes in economic growth rates produce large economic and social benefits. At current income levels, with an inflation-adjusted growth rate of 3% per year, America’s real per capita gross domestic product would exceed $1 million per year in just over 100 years, more than 22 times higher than it is today. Growth like that could solve many problems.

It is good to see a whole-hearted, open and positive outlook for humanity. Much of the media’s reportage accentuates the negative, as bad news always sells. Even here at Samizdata.net, we spend much of our time chronicling the follies and evils of governments and handing out (well deserved) brickbats. But there is also plenty of reason to be cheerful too.

I would just add one caveat to Professor Tabarrok’s optimism. Long term economic growth requires a stable framework of liberty, peace and a consistently applied rule of law. The trend of events by governments in the last decade have not been positive on these metrics, and governments who think that they can erode the rights and liberties of their citizens without it having an economic impact in the long term are kidding themselves.

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7 comments to A cheerful prognosis from a dismal scientist

  • Lee Kelly

    I was thinking this just yesterday. Things are not actually so bad. A recent report by a libertarian organisation concluded that worldwide, liberty is in about as good condition in 2007 as in 2006.

    This place can be a tad pessimistic and depressing sometimes.

  • eoin

    “At current income levels, with an inflation-adjusted growth rate of 3% per year”

    that would have to be inflation adjusted per-capita income growth, not just growth in the economy ( a lot of which is population growth, and not all of which is handed to workers anyway) . In real terms income has, by and large, stagnated since 1970 while the economy has powered ahead. So it is a rather optimistic extrapolation.

    Economists are dismal scientists all right, not just unhappy, but crap.

  • And to think, when I was studying GSCE science, a guest teacher came to the school and taught us how growth meant resource usage doubled every n years and how we would have to move away from a “growth economy”.

    Something seemed wrong about that to me even then.

  • Ian B

    liberty is in about as good condition in 2007 as in 2006.

    I’m pretty much the same as I was in 2006 as well. That doesn’t alter the fact that I’m steadily approaching infirmity, senescence and death.

    Not to be a tad pessimistic or depressing or anything.

  • I recently read Bjorn Lomborg’s Cool It, in which he states that according to UN data average GDP per capita per year in third world countries will be $100,000 by 2100. To me, this is even more exciting than the projections of wealth within developed nations.

  • Predicting the year 2100 may be fun, but is worthless. We cannot predict 5 or 10 years ahead, let alone 100.
    Could anyone have guessed in 1900 what will happen in the 20tieth century, and how we lived in 2000 ?
    So, it’s all idle words, but it’s ok, nothing wrong with it.

  • Paul Marks

    Scott your last paragraph refutes the rest.

    Yes it is true that people have ideas that would improve output.

    However, ever more government spending and regulations (and the government dependent credit-money bubble financial system) undermines this.