Measuring Growth...

When we talk about economic growth, we commonly focus on GDP. Implicitly, we think of an economy with rapid GDP growth as doing well, and one with only slow GDP growth is doing poorly. We do so because we associate rapid GDP growth as implying that living standards are improving.

But in a world in which some countries have rapid population growth (India and Brazil), others have very slow population growth (China, Europe) and others have falling populations (Japan, Russia), this may be a poor way of viewing the world. Once we adjust for population growth rates, by focusing on per capita GDP growth, India, Brazil, and Australia look a lot less impressive, while tardy Japan is actually doing just fine. See this link for more.

Rent Seeking... US Style

"Rent Seeking"- using resources to try to influence governments (legally) to pass laws that assist you financially- leads to economic inefficiency, and ultimately lower economic growth. But rent seeking is common, even in high income economies. It also leads to some strange behaviours. For example, fruit and vegetable producers (who do not receive subsidies) lobby the US government to keep subsidies for producers of other crops as it means that fewer producers switch to producing fruit and vegetables, and therefore reduces the competition that they face! It sounds like a win-win for everyone, EXCEPT the consumer- who ends up paying a higher price for non-subsidised crops- and the taxpayer, who finances the subsidies! See this Marginal Revolution link for more.

US Recession...

Here's some excellent analysis on the US business cycle by James Hamilton. The news is bad.....