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Here’s a weekend thought. Please answer for yourself the following two questions:

(1) Do you think the world’s richest countries (roughly the OECD countries) can grow at a rate of 1% per year over the next century? (I mean real, per-capita, growth). Note that this is less than half of their growth rate during the past century.

(2) Do you think that the world’s poorest countries (including China and India) can grow at a rate of 3% per year over the next century?

I have no stake in what your answer is, but … if you answered yes to each question, then in 100 years’ time, world income will have increased by a factor of … TEN. In other words, world GDP will have grown from $60 trillion to well over $600 trillion (I said per-capita growth of ten times). In other words, the “average” world citizen would have an income equivalent to about $85,000 today (and able to consume whatever awesome things are around 100 years from now).

This figure is obviously sensitive to your answers above, just wanted to put it all in perspective. ┬áHere’s another fun fact: if you think the US can grow at 3% per year for the next century, then the average American living in 2111 will have an income of $915,000.

4 Responses to “Future Economic Growth”

  1. Harry says:

    I assume you use an index to adjust for dollar inflation.

    Although I am not a member of the economic fraternity, I have read enough to know there are many pundits who worry about overheating economies, and to them the idea of anything beyond 3% growth without inflation is impossible. Robert Bartley called them The Three Percenters.

    I have always been skeptical of the precision and value of numbers, issued not just by the government, but also by banks, brokers, etc. These figures may be useful — otherwise, how much time have we wasted studying them?

    How in the world do we know whether China is growing, and at what rate? Back in the 60’s Samuelson and others thought the USSR was growing.

    Or, even better, what does the Federal Reserve know about what is going on in Southeastern Pennsylvania, beyond what they see looking out the windows of their cars?

    I think the prospects for economic growth are great, assuming we do not get a bad World War III. As you say, Mike, even one percent growth for one century would not be bad, compared to everything that happened from, say, Ur to to John Stuart Mill.

  2. Rod says:

    My biggest fear is that World War III, mentioned by Harry, above, will be made likely when the socialist and authoritarian governments around the world fail to produce enough to supply the basic necessities of life for their expanding populations and choose to take the wealth created by the relatively few prosperous capitalist nations.

    Now, I’m not saying that is inevitable through some form of dialectical materialism. I don’t believe there is a “process of history” that communists swear allegiance to, either. I just think that politicians do what they do naturally.

    On the other hand, I don’t think this country will go into smithereens before the people rebel against totalitarian government. The tea party, which is so fragmented it ought not be a proper noun, gives me hope. I believe that very many people know it’s insane to run $1.5 trillion deficits for the next ten years. Just look at how many people are buying gold and stashing away canned food and survival equipment.

    Harry’s also right about China. Nobody knows what is going on in China. There may be the appearance of capitalism in certain cities of China, but it gets very rural once you go a few miles down the road. Many Chinese live in the stone age. Many, indeed, are slaves of the state. The Yuan is a fiat currency, like ours, but what can the Yuan buy except for goods and services ordered to exist by the state? The Russians kept the failure of Soviet communism a secret for decades. You will bury us, Mr. Kruschev? Ha!

    A hundred years. Just today I heard an advertisement on the radio FIVE TIMES proclaiming that gas trapped in shale below Pennsylvanians’ feet will provide abundant energy for a hundred years. Now, there’s an optimistic statement, as long as Luddites like Al Gore don’t intimidate dissenters from manmade global cooling/warming theory. I saw Al Gore on TV last week using the bleeped out bull manure word in describing his critics! I could swear that he’s growing horns. I could not tell whether he had a tail under his size-80 suit.

    I, too, would think one percent growth overall, in constant dollars that are not inflated into smithereens, would be great. Being 66 years old, I would settle for another ten or twenty years of Reaganomics for everyone.

  3. Rod says:

    I used “smithereens” twice in my earlier post. Sorry for the needless repetition. I get this way when I worry about inflation. Which reminds me: time to buy some more gold, cigarettes and ammo. My son tells me the price of AK-47 ammo is low these days, perhaps because of greater production of bullets and diminished demand from overseas. He likes my idea of putting a hole in the nickel so it can be used as a flat washer.

  4. Steve says:

    Short sell anything that depends on high gold prices and sales of weapons and ammo, or sell the ammo you already accumulated. Growth over the next century will be well above 1 percent. I invoke the spirit of Julian Simon to back my optimism.

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