Another "simple" economics question

[bluesbassman]

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What causes economic growth (in the long-term)?

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I believe it's increasing per capita production.

[tomdemaine]

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What causes economic growth (in the long-term)?

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exogenous increases in A [img]/images/graemlins/grin.gif[/img]

[mrgold]

not if the market sets that price in response to irrational demand created by our whorrish poppish commercial culture. What if there was no designer clothes, no adds for designer clothes, and no social pressure to wear designer clothes, would we really be missing out?

[vulturesrow]

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not if the market sets that price in response to irrational demand created by our whorrish poppish commercial culture. What if there was no designer clothes, no adds for designer clothes, and no social pressure to wear designer clothes, would we really be missing out?

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First off, I dont believe that the economy is demand driven. That said, define irrational demand? It seems like your criteria is things I could live without. That clearly applies to a wide variety of products, many of which are arguably necessities. If there is a market for it, than it is some people's self interest to buy these 200$ underwear.

[mrgold]

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If there is a market for it, than it is some people's self interest to buy these 200$ underwear.

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Assuming people are perfectly rational consumers, yes.

[SheetWise]

If the process did not exist, would anyone miss it? Yes. The people who design and create all of those ads I don't understand. As well as the garment makers who can transform a $2 product into a $20 product. So, if a supplier wants to spend $50 to sell a pair of $20 undies for $200 -- who cares? It's a simple transfer of wealth (and much more efficient than taxes and welfare).

[lehighguy]

I didn't get to read all of these rediculous responses, but there were some crazy ones.

Productivity increases are the only way to sustain per capita GDP growth. If you can turn one sheet of aluminum into a single piece of aluminum siding in year 1 and turn it into two pieces in year two because of some technological breakthrough then you've increased productivity.

Simple Macroeconomics.

[mrgold]

If I break your window and you pay me to make a new one that is also a transfer of wealth and I don't mind it one bit. Fufilling irrational demand that is created by advertisment (this doesnt represent all of the demand for brand name clothes but I suspect it does for a large part of it) is certianly different and less morally objectionable but it results in the same type of growth that doesn't take into account the hiddne economic losses of what else I might have bought or what else the glass blower/clothes maker might have made.

[SheetWise]

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I didn't get to read all of these rediculous responses, but there were some crazy ones.

Productivity increases are the only way to sustain per capita GDP growth. If you can turn one sheet of aluminum into a single piece of aluminum siding in year 1 and turn it into two pieces in year two because of some technological breakthrough then you've increased productivity. Simple Macroeconomics.

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But the question was "What causes economic growth ..."

If I can sell one sheet of aluminum in year 2 for 5x the price of one sheet in year 1 because of some marketing breakthrough, have I contributed to growth?

How about if I turn sand into processors? (Some people may simply discount it as a change of use).

[SheetWise]

You have missed the point of the article you've referred to twice now -- Google: "Walter Williams' Window Glazier Tailor

Irrational demand caused by advertisement is simply a transfer of wealth -- no commodity (as a part of the excess value) has exchanged hands. Nothing was lost or destroyed.