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September 22, 2005
Silly Rabbit, Growth is for Kids!
To extend on this bit of Germany vs. India idiocy; rapid economic growth is quite a bit easier in very poor countries than in highly developed nations. Think of it in terms of human growth: a baby grows faster than you do, as does a tot, a child, and a teen. But they don't keep growing faster than you. At a point, easy growth gets tapped out and continued enlargement becomes markedly harder. In nations like India and China, where hundreds of millions live in abject poverty and the technologies that improve productivity have barely penetrated, there are a lot of easy gains to be made -- the poor work for cheap and improving their output is trivial. But once India or China or Singapore or Ireland hit Germany's standard of living, growth will slow to more earthbound rates. That's not to say Germany couldn't grow quicker, but it is to say that comparing it to India or China is like raging at your five year old for having more momentum on the height-chart than you.
September 22, 2005 in Economics | Permalink
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I don't think China and India will ever achieve Germany's standard of living. Growth needs energy, and the cheap, easy energy of the Industrial Revolution is fast becoming a memory. I expect growth to slow dramatically in the next few years in these countries and then shift into reverse.
Posted by: Anonymous | Sep 22, 2005 11:10:40 PM
Granted, Ezra, but in Germany's case, "earthbound" growth rates are actually negative, or close to it. We have a higher standard of living than Germany, yet we still manage to grow 3% or 4% per year. There is more going on than just the relative stage of development.
As far as "cheap, easy energy" goes, just wait for nanotech to turn out ultra-efficient solar panels and the like. Within fifty years at the latest, we'll have more energy than we will know what to do with.
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