EconomicGrowth

>Historically, the driving forces behind the United States’s economic growth have been fourfold: natural resources, scientific and technological creativity, labor immigration, and the immigration of ideas with entrepreneurs. Up until 1950 the U.S. had a unique combination of all four of these as a powerful wind at its back. Since 1945 the resources of the U.S. have no longer been anything special, but the others have been a powerful wind at its back.
<cite>-- <a hfref="https://braddelong.substack.com/p/theses-on-china-e-us-political-economic">Brad Delong</a></cite>

This is a good overview of several problems facing America. Can people agree on these things?

Tim Oreilley

Shaping the stories that rule our economy

The economy we want to build must recognize increasing the value to and for
humans as the goal. that government by definition is outside "the production
boundary" (that is, does not create any value but simply redistributes it or
consumes it);

"Until the mid-19th century," Mazzucato writes, "almost all economists assumed
that in order to understand the prices of goods and services, it was first
necessary to have an objective theory of value, a theory tied to the conditions
in which those goods and services were produced, including the time needed to
produce them and the quality of the labor employed; Part and parcel of this
modern theory of value is the idea that value creators are entitled to whatever
they can extract from the rest of society. The wizards of Wall Street who
brought us the 2008 financial crisis were, by this new definition, creating
value even when knowingly selling defective mortgage securities, as long as
they were able to find willing buyers for their goods. It was only in 1993 that
the System of National Accounts, which controls how countries calculate their
GDP, began to count financial activity as value added, rather than simply as a
cost to businesses. Mazzucato notes, "This turned what had previously been
viewed as a deadweight cost into a source of value added overnight." Yet,
because of our distorted theory of value, government gets no credit, and
companies that have brought relatively little to the table reap outsized
returns. She makes the case that mission-driven government investment
has created many of the marvels of the modern world, and it is only the
oddity of our beliefs about value that keeps government from reaping the
benefit on behalf of the public that footed the bill. While there are
those who argue the government gets its return via future tax receipts
and downstream economic spillovers, I agree with Mazzucato that any
story in which losses belong to the government, but any gains belong to
the private sector "value creators" is one of those self-serving stories
Plato advised those in power to tell.

Mazzucato's point, though, is not to "try to argue for one correct theory of
value," but "to bring back value theory as a hotly debated area." The modern
idea that rents are simply an "imperfection", a barrier that can be competed
away, has replaced the classical economic idea of rent as unearned
income—that is, income received from unproductive activities is treated as
equivalent to that derived from the production of real value.

In each of the past debates about value, more and more human activity came to
be understood as value creating not just because economists persuaded us of the
new idea, but because of changes in society itself. Of course, as she notes in
the book, government is currently doing a poor job of maintaining a market free
of rents, precisely because our current definition of "value" allows
rent-seekers free rein.

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