Major regions of the world, including the Byzantine Empire and Europe before the Industrial Revolution, have gone through phases stretching hundreds of years with virtually no growth.
When a country like Japan, China, or India puts together a decade of strong growth, analysts should be looking not for reasons the streak will continue but for the moment when the cycle will turn
In general, however, if a country focuses on growth, development will follow.
In the United States, one of few countries where most lending is done through bonds and other credit market products rather than through banks, the credit markets started sending distress signals well before the onset of the last three recessions, in 1990, 2001, and 2007. The credit markets also send false signals on occasion, but for the most part they have been a fairly reliable bellwether.
Investment typically represents a much smaller share of the economy than consumption, often around 20 percent, but it is the most important indicator of change, because booms and busts in investment typically drive recessions and recoveries. In the United States, for example, investment is six times more volatile than consumption, and during the typical recession it contracts by more than 10 percent; while consumption doesn’t actually contract, its growth rate merely slows to about 1 percent.
Population growth is proportional to economic growth - Labor
Increase the retirement age - It is no longer valid
The essential question to ask about the impact of politics on the prospects for any economy is this one: Is the nation ready to back a reformer? To answer it, the first step is to figure out which position the nation occupies on the circle of life. Nations are most likely to change for the better when they are struggling to recover from a crisis.
The second step is to figure out whether the country has a political leader capable of rallying the popular will behind reform. In a crisis, the nation often demands a change in leadership, so look for the promising reformers among the newcomers: The crisis is likely to give them a strong mandate for change.
The European Commission president Jean-Claude Juncker captured the lament of technocrats everywhere when he remarked, “We all know what to do, we just don’t know how to get re-elected after we’ve done it.
To check the popular impression of the increasingly stagnant and dominant elite, I did a quick scan of the 2010 billionaire list and found that the top ten Indian tycoons controlled wealth equal to 12 percent of GDP—compared to only 1 percent in China. Moreover, nine of India’s top ten were holdovers from 2006 compared to zero in China, and this stagnation was relatively new; on India’s 2006 list, only five billionaires had been holdovers from 2001. A cover story I wrote for Newsweek International in September 2010 argued that the rise of crony capitalism was “India’s fatal flaw,” and it was greeted with great skepticism in Delhi’s political circles. Top officials told me that corruption is normal when a young economy is taking off, citing the robber barons who ruled America in the nineteenth century. But as economic growth fell by almost half in the years that followed, many of the same officials came to acknowledge that an abnormally high level of corruption and inequality † was one of the main factors in the slowdown.
When a country like Japan, China, or India puts together a decade of strong growth, analysts should be looking not for reasons the streak will continue but for the moment when the cycle will turn
In general, however, if a country focuses on growth, development will follow.
In the United States, one of few countries where most lending is done through bonds and other credit market products rather than through banks, the credit markets started sending distress signals well before the onset of the last three recessions, in 1990, 2001, and 2007. The credit markets also send false signals on occasion, but for the most part they have been a fairly reliable bellwether.
Investment typically represents a much smaller share of the economy than consumption, often around 20 percent, but it is the most important indicator of change, because booms and busts in investment typically drive recessions and recoveries. In the United States, for example, investment is six times more volatile than consumption, and during the typical recession it contracts by more than 10 percent; while consumption doesn’t actually contract, its growth rate merely slows to about 1 percent.
Population growth is proportional to economic growth - Labor
Increase the retirement age - It is no longer valid
The essential question to ask about the impact of politics on the prospects for any economy is this one: Is the nation ready to back a reformer? To answer it, the first step is to figure out which position the nation occupies on the circle of life. Nations are most likely to change for the better when they are struggling to recover from a crisis.
The second step is to figure out whether the country has a political leader capable of rallying the popular will behind reform. In a crisis, the nation often demands a change in leadership, so look for the promising reformers among the newcomers: The crisis is likely to give them a strong mandate for change.
The European Commission president Jean-Claude Juncker captured the lament of technocrats everywhere when he remarked, “We all know what to do, we just don’t know how to get re-elected after we’ve done it.
To check the popular impression of the increasingly stagnant and dominant elite, I did a quick scan of the 2010 billionaire list and found that the top ten Indian tycoons controlled wealth equal to 12 percent of GDP—compared to only 1 percent in China. Moreover, nine of India’s top ten were holdovers from 2006 compared to zero in China, and this stagnation was relatively new; on India’s 2006 list, only five billionaires had been holdovers from 2001. A cover story I wrote for Newsweek International in September 2010 argued that the rise of crony capitalism was “India’s fatal flaw,” and it was greeted with great skepticism in Delhi’s political circles. Top officials told me that corruption is normal when a young economy is taking off, citing the robber barons who ruled America in the nineteenth century. But as economic growth fell by almost half in the years that followed, many of the same officials came to acknowledge that an abnormally high level of corruption and inequality † was one of the main factors in the slowdown.
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