posted
I have only taken one economics class during my life, and it was several years ago, and I remember almost nothing from it. And my recent classes and the recent economic extravaganza has left me more than a little bit confused. So I have some questions that some of you can hopefully answer, or at least point me to enlightenment.
First, the background to my fist question: I'm in a Climate Change Controversies Seminar, and some of the predictions for mitigating greenhouse gas emissions are estimating something like a 2% GDP per year commitment. For example, Detlef van Vuuren et al. (I'm not sure if you need an account to get access to this, I'm on campus and can get in fine) estimate that the peak abatement costs for greenhouse gas stabilization would be 0.5%, 1.2%, and 2.0% of GDP for different stabilization levels. (2.0% being the highest, at a final stabilization level of 450 ppm carbon dioxide equivalents)
My first question comes from my lack of economics understanding. How much is 2% GDP? Off the top of my head, that doesn't seem all that high, especially if we could reduce our impacts on climate change, and all the problems that would cause. For comparison, I looked up the current percent of US GDP that goes to military operations, which is around 4%. So, if the world spends (at the most) about half of what the US spends on its current military budget per capita, we'll be able to reach a "very low" stabilization level? Is there some error in my reasoning here, because that seems to me to not be a ridiculous price to pay.
My second, and much more general, question, has do deal with the idea of constantly increasing economic growth. Why is this necessary, or considered necessary? Why can’t we have a zero-growth economy? Why is it such a disaster to have the rate of economic growth to be stable or decreasing?
Posts: 1711 | Registered: Jun 2004
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posted
Well the population is always growing, and people always want more things. Also, technology continually makes things better. But yeah, I agree that too much focus is on growth.
Posts: 3060 | Registered: Nov 2003
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quote: As recently as September, economists, on average, thought the U.S. would see annualized GDP growth of 1.2% in the first three months of this year; now, they see a 4.6% decline. Forecasts for the second quarter, the April-June period, have seen a similar shift, from a 1.9% growth forecast to a 1.5% decline, based on the 52 economists who participated in the Journal's February survey.
The average forecast now sees growth in the third quarter at 0.7%, less than half the rate expected last fall. The fourth-quarter picture has also darkened, but just slightly, to growth of 1.9% from the 2.1% seen in November. Five economists see growth declining through the fourth quarter of 2009; they say the current consensus outlook, which says the recession will end in August as GDP growth returns positive, is far too optimistic.
I can understand why a shrinking GDP is bad (that 4.6% decline), but the "darkened" prediction of fourth-quarter growth of 1.9% down from 2.1% seems negligible. If the GDP is still growing, how come things are falling apart so badly?
Posts: 1711 | Registered: Jun 2004
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