Perhaps that economic growth out of fashion

  So what will happen to the growth?

This is a question that apparently published on the very front of the British and the new

policy agenda this week with the next GDP figures on Thursday. But like so many seemingly

simple question of economy, it is difficult to give a satisfactory answer. Part of the reason

is that there are two problems in a.

The first relates to how we emerge from the recession more quickly and efficiently, which

dominates much of the current debate. The second is the longer-term, ie, whether the United

Kingdom and other developed countries, quite apart from the impact of the downturn, suffered a

structural decline in our growth potential. The two questions are linked, that the recession

has damaged the prospects in the longer term, if only because of the debt burden of dealing

with the former. But at some point we will return to our previous high point of production,

because we are already at work, and what happens then? Finally, the structural issue should be

more important than cyclical.

There are, as usual, two points of view. The first, at least, was until recently the public,

is that there should be no compelling reason for the future growth lower than the growth in

the past.

The underlying idea is that human ingenuity will go on providing increased productivity, as it

has for the last 200 years. The factors behind these increases will change. For example, in a

manufacturing process economy was mainly developments such as mobile production of Henry Ford,

while our economy especially in the service sector, it will increase the use of new

communication technologies. It is true that we live longer, we will put more resources into

health care and retire later, but that should not affect the growth of GDP per capita, it's

just a different kind of growth.

It was a lot of work on it, for example by the OECD, and is supported by the argument of

reason, that if an upward trend in productivity has for over two centuries, it was founded

must be pretty grim think it has changed now.

The argument against is that a combination of factors to reduce the growth. These include

pressure on the environment, the aging of the population (you can not appropriately increase

the retirement age in proportion to the increase in longevity), the practical difficulties in

increasing the productivity in some services (eg, primary school) and the possibility that do

many people in the West 't really want economic growth.

This last point - that the West has lost its mojo - was raised by Lord Heseltine few weeks ago

and it was discussed last year in the book How much is enough? written by Keynes biographer

Lord Skidelsky, with his son Edward. He argued that "capitalist civilization, the greed of its

traditional moral restraint triggered" and we must now focus less on growth and more on "the

good life".

This is a strong argument that will appeal to many people, but it begs the replica that, when

you are a famous and wealthy member of the House of Lords, but not so that you have

difficulties, a family in the modern UK. I also think we should pressure the view that the

lack of growth is put on the financing of public services. But it is undeniable that if the

people in the UK and Europe a kind of collective decision that they do not want economic

growth, then they will not get. This is certainly a very interesting question that deserves to

be asked.


An academic spat

Call it an academic spat, but it was a massive political consequences. In 2010 published two

prominent American economists Carmen Reinhart and Kenneth Rogoff, This time it's different -

Eight centuries of Financial Folly. He shot to the top of the bestseller list, surprisingly so

given that it is essentially an academic statistical study of the public finances. The big

news, derived from a work is that when a government public debt of more than 90 percent of GDP

increased, it inhibits economic growth.

This has now been challenged by three economists from the University of Massachusetts (Thomas

Herndon, Michael Ash and Robert Pollin), which looks at the data and found an error in the

code. If you correct that, according to them more club performance was 90 percent for not so

different than countries with lower debt. Accordingly, the case has been affected by austerity

measures.

What should the rest of us think? Well, it was actually an error in the code to recognize as

Reinhart and Rogoff. States that this figure of 90 percent has always felt a little strict.

But while the general relationship between excessive borrowing and poor performance probably

does not stop, the question is in which direction the working relationship. Debts are high,

the cause of slow growth or a result - or a bit of both? Or are both simply the result of

mismanagement, the book tells a beautiful collection?