GDP growth! Huh!

Good god y’all.
What is it good for?
Absolutely nothing.
Say it again.

Or wait. Its good for something.

Maybe we economists should learn from those environmentalists and reframe the debate. GDP isn’t a measure of the amount of “stuff” we consume. This invokes a terrible image of an overweight American, driving their SUVs, stuffing the second pound of McDonald’s french fries down their throats (e.g. me circa six years ago).

Instead, GDP is a measure of our interconnectedness. A hundred years ago most families produced everything they consumed — food, clothes, entertainment, etc. Now most families buy those things in markets, growing measured GDP. We are all much more interdependent. As GDP grows, our community grows.

Best of all the interconnectedness has the neat side effect of making it possible for us to specialize. We each get to produce what we’re best at and most likely this means we specialize in producing those things we enjoy producing. Because each of us specializes, we each get more efficient and in the end we all create much more or much better goods and services.

Also, most of GDP growth is in services.

Source: BEA

Growth isn’t the production of more and more stuff, its increasing reliance of people on each other.

6 thoughts on “GDP growth! Huh!”

  1. “Services” is the residual, these days. Each time there’s a new product or service that doesn’t fit any of the existing categories, it gets labeled as “services”.

    Maybe the national accounts need a complete overhaul.

  2. Doesn’t hyperspecialization carry risks as well? Its foundations are cheap, reliable communication and cheap, reliable transportation. When either of those pillars is compromised, does a highly specialized society have more trouble adapting? Or does the greater wealth (hard and soft) generated by a highly specialized society make it easier and faster to adapt?

    Also – isn’t a hyperspecialized worker more vulnerable when their industry changes? My field craves specialists, and I’ve been declined jobs because I didn’t have enough experience with very specific platforms or pieces of software. You can talk about being fluent in “high level concepts and theory,” but employers really seem to want someone who has dedicated their career to a particular tool. I’ve always considered it stupid to invest time specializing in something that will be obsolete in four years.

  3. Well, I think a network with lots of links is more robust to communication failures along a few of the links. Its an empirically question really. Is our network dense enough? I bet there’s some ratio of local network density (e.g. being very close to self-sufficient) to total network density where specializing starts to make more sense than generalizing.

    This is actually an interesting question. I think attributes of the communication/transportation technology determine how you’d define local density and how many connections a single node would be able to have. As local becomes less local and as people can have more and more connections, I would think the network would get more and more robust to attack.

    You can say, “well what if all the internet goes down” or something, but with more and more connects, more and more backbones, the internet, as a whole, becomes harder and harder to “take down”.

    RE: “Also…” Well employers are being silly, or you’re experienced with silly employers, if they insist on 20 years experience in tool x. This limits their market to just a few people. Moreover, I’d question the quality of those few people given they specialized in tools that probably weren’t and won’t be in much demand. What does this say about them? Also, a good business realizes things change too fast to wed yourself to very particular technologies.

  4. I’m thinking of systemic failures rather than spot failures. Maybe the Storm Worm cluster is directed against root DNS servers, causing substantial internet outages over the course of a month. Maybe a major solar storm permanently cripples most of GPS and the satellite telecommunications network, leaving us with months of downtime. Peak oil comes and goes without any technological substitutes for oil that are quite as good as the real thing, meaning much higher transportation and electricity prices.

    Naturally, there are sharp limits imposed by generalization. Farmers can brag all they want about self sufficiency, but I doubt that your average farm is capable of digging up iron and making tractors.

    Side story: I bought a space heater online the other day. I thought about driving down to the store to buy it, but decided to comparison shop online. Shipping was only $5, so I said “My time is worth more than that” and just clicked “buy.”

    I started to feel slightly bad about the energy use incurred by shipping, when I saw that it was being sourced from a plant in Ohio. Then I thought about it:

    The materials and parts probably came a lot further than that in the first place.
    If the thing was built in Ohio, it would have been shipped here anyway, with me merely “carrying it the last 5 yards.”
    A delivery truck probably makes rounds through my neighborhood every day.
    Shipping was five fricking dollars. A trip to the store would easily burn more gas and time.

    Side note: All bets are off when rapid prototyping gets better.

  5. “Shipping was five fricking dollars. A trip to the store would easily burn more gas and time.”

    Crazy. I was literally typing a response about how it hadn’t arrived yet when there was a knock at the door. Quoth the UPS man: “…” as he hustled back to his truck, having deposited said package on my porch.

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