A message from Jessica the economiss

Last Sunday (26 April 2012), while cooking dinner, I tuned into Rex Murphy's "Cross Country Checkup" on CBC Radio. The show was all about the budget that had recently --- some would say belatedly --- been brought down by The CONservative Government of Canada.

To tell the truth, I'd paid attention to the budget leaks (it's all leaked nowadays) until the point that the Conservative Government had demonstrated that this budget was like all previous budgets by all previous governments.

Budgets are tribalism. Surprise, the Conservatives enact policies and laws which tend to favour those whom they expect to vote for them. Additionally, they advertise their policies as being "good for the economy". The latter argument is often false --- although sometimes temporary accidents of economic fortune will fool those without analytical ability into thinking that the government is more wise than a toss of the coin.

I'm not saying that any other political party behaves any better. And, for the most part, the citizens of Canada behave badly enough to confirm the expectations of political parties. Nevertheless, I must admit that I felt a twinge of sympathy for one caller.

Aggatta phoned in and pointed out that as a single working person none of the parties catered to her interests. Here is a link to the show and you can hear Aggatta starting about minute 21.

OK, I understand why Aggatta is upset. It's tough not to belong to one of the favoured groups... For sure, Aggatta would be much more favoured by the government if she married a nice young man and settled down to popping out state-sponsored babies.

About minute 41 Jessica called in from Toronto. Now Jessica is an economics student and she was phoning in to explain why people like Aggatta shouldn't get a tax break. Jessica had learned at the knee of her economics professor that population growth was good because it would expand GDP. Further, Jessica stated that the population of Canada was declining. For those reasons, Jessica thought that people like Aggata shouldn't get a a tax break "because they weren't contributing to population growth".

It is interesting to find out what they are teaching in schools of economics. First, it's factual nonsense for Jessica to say that the population of Canada is declining. Population is growing --- here are some numbers:
From 1951-1960 Canada's population grew by 3.8 million
From 2001-2010 Canada's population grew by 3.3 million

Interesting that Rex Murphy doesn't know enough to correct such 7-figure errors...

Second, while GDP sometimes can be increased by growing population, it's factual nonsense to say that population growth increases prosperity.

Of course, increasing prosperity and population growth were positively correlated 55 years ago. That was when important new technologies were coming on line and when the worlds resources had not yet been thoroughly thrashed.

Now we have reached the limits for growing prosperity. Increasing population is now at the expense of reduced well being for each person who must compete more and more for ever more limited resources.

Increasing population will still drive up GDP. But GDP measures economic activity --- regardless of whether it is for the good or for the bad. Real prosperity, the sort which improves well being, has reached its limit.

For most of us, increased GDP now means increased illth. For example, driving up the price of real estate greatly drives up GPD. Increased real estate prices does make bankers better off. Not so the rest of us.

Aggatta may understand this, I suspect. Jessica also understands this, but she understands it differently. That is because economists are the well-paid servants of big banks.

Governments are also...

Jessica expresses disgust for Aggatta. I shall now attempt to articulate my opinion of Jessica.

Jessica, you are an even bigger numbskull than Amanda Lang.

Interesting that Rex Murphy had Amanda as one of his invited guests.