Monday, August 08, 2011

The Big Picture

Dani Rodrik looks anew at the relationship between GDP per capita and democracy at the country level and finds interesting patterns and unanswered questions (clue: the latter involve China).

Meanwhile, at an even bigger scale, University of California physics professor Tom Murphy considers the possbilities for ongoing economic growth in the context of tapering energy growth. It's a neutral, Club of Rome-style analysis that nevertheless has some (intentionally?) amusing bits.

This would mean that an increasingly small fraction of economic activity would depend heavily on energy, so that food production, manufacturing, transportation, etc. would be relegated to economic insignificance. Activities like selling and buying existing houses, financial transactions, innovations (including new ways to move money around), fashion, and psychotherapy will be effectively all that’s left. Consequently, the price of food, energy, and manufacturing would drop to negligible levels relative to the fluffy stuff. And is this realistic—that a vital resource at its physical limit gets arbitrarily cheap? Bizarre.

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