'"If the economy's growing, why does it feel so bad?" The joy of...' blog discussion

This is the discussion to link on the back of Martin's blog. Please read the blog first, as this discussion follows it.

Please click 'post reply' to discuss below.

Comments

  • BOBS
    BOBS Posts: 2,871 Forumite
    Thank you for a great explanation. All a little clearer now for me ..
    [FONT=verdana,arial,helvetica][/FONT]
  • I like the driving analogy . . . makes perfect sense to me now :cool:
    mmmm, still seeking something witty to be my auto-signature . . . so this will have to suffice for now ;)
  • Wow 0.8% growth.
    We're all going to be rich.
    Let's see now 0.8% of b*gger all = ermmmmmmmmmmm b*gger all.
  • The economy is growing because of the measures taken by Gordon Brown before he came second in the general election. The effects of the Condems (ant and dec) will not be felt for a year or so.

    GG
    There are 10 types of people in this world. Those who understand binary and those that don't.
  • glossyhair wrote: »
    I like the driving analogy . . . makes perfect sense to me now :cool:

    If only the country was driving somewhere that we wanted to go to.

    GG
    There are 10 types of people in this world. Those who understand binary and those that don't.
  • tgroom57
    tgroom57 Posts: 1,431 Forumite
    First Anniversary Name Dropper First Post
    I've lost count of the number of times this has been asked (on Linkedin.com, mainly) people want to know why, having lost everything including the shirt off their back, they are still feeling the cold? The economic situation may not get any worse, but it's not over.
  • I would like to know why everyone was so pleased with the latest figures (0.8% growth in the quarter) when the previous quarter was so much better.

    Could it be because the commentators realised that it was the first quarter which was influenced by the policies of the coalition government, and couldn't face comparing it with the last figures influenced by the previous government?
  • Zent
    Zent Posts: 10 Forumite
    Is GDP a meaningful measure? I would like to know how GDP is measured. How can "Output" be measured, especially in relation to services? Can it really be measured to 0.1% accuracy? Seems to me it is only a device to divert some tax-payers contributions to a few jobsworthies. If someone set up a factory to produce £10Billion of plastic garden gnomes each year, that would presumably increase the GDP, but I doubt we would all feel much better off. How is the black economy taken into account? If the cost of, say televisions, or computers, or cars goes down, does this mean the GDP will automatically be reduced? If exports go down, and imports go up, how does this affect GDP, compared to how it affects our consumption and sense of well-being?
  • rogerj
    rogerj Posts: 39 Forumite
    The lower the cost of labour, the cheaper the costs of production, the higher the profits.
    So WOW we have economic growth!
    Yes- for the ruling class; but not for the millions of unhappy employees, who must be squeezed ever harder.

    So what is really happening?
    A redistribution of wealth away from the working class;
    in the form of downsized pay structures, student fees, poorer education, less for the elderly ...and later retirement for everyone else.
    Your money is being sucked into the bankers multi-trillion black hole. This is the class that are laughing all the way to......

    Sorry if this sounds like a Marxist analysis -but its an economic model that works. And yes we do have growth. So work harder, longer ...and keep on smiling.

    roger j
  • Richard_Grenville
    Richard_Grenville Posts: 1 Newbie
    edited 13 March 2011 at 11:44PM
    Growth is increase in GDP. GDP includes all money received for all goods produced, all services provided, all income received from foreign investments provided in/by the UK.

    All goods includes essential goods and non-essential goods.
    Essential goods include goods for export and goods reducing imports of essential goods.

    The same can be said of all services.

    A country gains Real Wealth when money received for exports (goods + services + income in) exceeds money expended on imports (goods + services + income out). There's no other legal way.

    You can have Growth without gaining Real Wealth. E.g. provision of extra non-essential services that are of no use to foreigners; production of non-essential goods that foreigners don't want.

    Imports have been exceeding Exports in the UK for decades, this is negative Balance of Payments; i.e. the UK has been losing Real Wealth, the Treasury has been losing the tax on that lost wealth; in order to replace that lost tax is one reason why taxation has kept trending upwards for decades.

    But you can increase Real Wealth whilst having declining GDP! That may be happening right now; increase in Exports whilst decline in non-essentials.

    So, whether or not we have Growth, whether or not the UK is gaining Real Wealth, it feels bad because the UK is up to its neck in debt which it needs to repay. The National Debt will get worse before the Balance of Payments is great enough to reverse the trend.

    For many years to come, increased Real Wealth will be via reduced National Debt.

    It seems ironical, but it is perfectly possible to increase Real Wealth whilst officially being in Recession.

    Balance of Payments of an economy is THE key indicator; not Growth.
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