Economic Growth vs. Economic Progress Economic Growth vs. Economic Progress: A World in Debt
by Addison Wiggin
The Rude Awakening
Wall Street, New York
Thursday, February 23, 2006 Addison Wiggin discusses Economic Growth and Economic Progress, and why the former is not necessarily the latter. ------------------------- - Varying estimates of the Social Security and Medicare
burden – any way you look at it, it's staggering,
- Is the economy "growing" towards bankruptcy and are
you following them?
- A new look "and the markets..." chart for all those
who like shiny things.
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http://www.stansberryonline.com/redirects/ESCFG216.html ------------------------------ From time to time I get emails asking what is on our
editor's reading list. Where do they get their ideas? What
is their food for thought? When I started hunting around
for recommended reading, one book kept on popping up again
and again: Empire of Debt: The Rise of an Epic Financial
Crisis. "Now perhaps someone will finally listen!" exclaims Jim
Rogers, author of the classic Investment Biker, of the book
that shot up the New York Times Bestseller list. Doug Casey, chairman of Casey Research, LLC, implores, "If
you value your financial health, you will read it from
cover to cover. Now!" Myself? I think it's quite an alarming read...and I'm not
even an American! In honor of Barnes and Nobel offering Empire of Debt at 40%
off for a limited time, I have included an excerpt below.
If you feel that the issues that face Social Security and
Medicare also affect you, have a gander at this tasty
snippet. Let me know your own thoughts on this
controversial and much-debated issue by penning me at
aussiejoel@the-rude-awakening.com If you are interested in taking advantage of this 40% off
special, please click here for further information: Empire of Debt: The Rise of an Epic Financial Crisis
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A World In Debt
by Addison Wiggin
In his bestseller, Running on Empty, former Republican
operative Pete Peterson attempted to gauge the difficulty
of even determining the burden we've now placed on future
generations. "Estimates vary," Peterson points out,
"depending on methodology, but the numbers are all vast." The future obligations of the Social Security and Medicare
trust fund alone are staggering. In 2003, the American
Enterprise Institute projected a $45 trillion shortfall;
$47 trillion countered the International Monetary Fund in
2004; the National Center for Policy Analysis and the
Brookings Institution came up with $50 trillion and $60
trillion respectively in their own research reports
published in 2003. Those are all incomprehensibly large numbers, of course,
but the biggest of the projections came in 2004 from Social
Security and Medicare trustees themselves. They estimated
the unfunded benefit liabilities to have a current value of
$74 trillion dollars. As an empire matures, the imperial
citizens believe more and more extravagant things. By the opening of the twenty-first century, Americans were
already spending more than they earned. Each day brought
more new debt than real new wealth. Yet, between 2002 and
2005, every quarter showed growth in GDP. Americans mistook
this growth for progress. They knew they had the world's
best economy, its best system of government, and its finest
culture. They could not imagine that they were growing
poorer. Economic Growth vs. Economic Progress: Growth Almost Halted But here we turn again to the living and the dead for
elucidation. Supply-sider Jude Wanniski admits that real
growth has come almost to a halt: "In the United States, my own work shows that between 1945
and 1971, when the dollar was fixed to gold at $35 oz under
the 1944 Bretton Woods arrangement, the real economy in the
US grew by 4 percent per year. From 1971 when the dollar
was floated to 2004, real growth of the US economy has only
a pitiful 0.3 percent per year." The growth, such as it is, in the American economy, has
come about by virtue of increased emphasis on the present
tense. Americans came to despise the past and neglect the
future. The lessons of the dead and the desires of the
unborn were both ignored. Instead, all that seemed to
matter was consumption in the here and now. A dead man, F. A. Hayek, explains the consequences: "The economy in its entirety must continue to decline so
long as more is being consumed than produced, and some part
of consumption therefore takes place at the expense of the
existing capital stock." Without a theory, F. A. Hayek might have said, the facts
are as mute. But by now, both facts and theories had become
blabbermouths. The trouble is that the facts had been
corrupted so they no longer told the truth. And the old
theories that might have been used to interpret the facts
had been abandoned in favor of new, more convenient
delusions. Americans could now run up as much debt as they
wanted, said the new theorists. The American economy may or may not have "grown" in 2005.
But if traditional, time-tested theories about how wealth
and poverty are correct, thank God it is not growing more.
Every step it takes, it moves deeper into debt and closer
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