Some (very uneducated) thoughts on what the economy is. One day I'll really need to read an econ textbook.read more
We've got a collection of people who simultaneously produce and consume goods and services. So what does it mean to have 5% economic growth? Well, we've got some goods that aren't consumed immediately, the have an expiration date, like cars. Some have a much shorter one, like food. And others don't even have to have an expiration date, like houses. The ones that have an expiration date, we'll continue having to produce no matter what. But, we may not always have to produce more buildings (we will have to maintain them which will be work); we could hit a limit. what happens after we hit this limit (assuming it exists)? I don't know. But, I have a feeling it would be infrastructure changes.
Some of the workforce is dedicated to supporting the rest: shelter, food,
Putting energy into to system allows it to deform: at some time, a threshold of work and technology was met that allowed for the sale of food by middlemen (not directly from the farmer). This allowed for the system to change: people were able to live far away from any farm, and still get food. This could have only happened if more work was done (whether by machine or humans). This is an amenity; a standard of living increase. People could follow their preferences. The fact is, the energy was always there, we just couldn't harness it before. There's one way way of using food to do work, and that's by making more people. People convert food into work. A certain amount of work is dedicated to essentials, the rest are amenities.
Sports are an amenity (people pay for a memory that does not sustain shelter or food) that would not have arisen if not for an excess of work. that's an example of a completely unbalanced expenditure (input = some amount, output contributing to food, shelter = 0). An example of a partially unbalanced expenditure is lobster: (input = some amount, output toward food = some, but unnecessary, you could have just had some rice and saved your money).
I feel like "bubbles bursting" are caused by people realizing that they don't need what they thought they did (an inflated demand existed).
Is the 5% increase because the population increased and we wanted to give that extra population the same amenities we have? Or is it because we're consistently increasing our standard or living? Or a combination of both?
Ultimately, what we're dealing with is human effort.
Let's limit the domain to America.