OBR – Of Hamster Metaphors and Men
(GIP)—I do disagree with the appropriate solutions. I read only the introduction and conclusions in order to derive a general sense of the report and its purpose. The remainder appears to consist of data and statistics to support its conclusions on the limits of resources within the planet Earth. Since I didn’t read it let alone analyze it, I will generally try to refrain disputing the data itself.
The thrust of the report is that the fact the Earth consists of finite resources (hardly a controversial topic) posits itself in diametric opposition to the standard economic hypothesis that an economy must grow. Growth, in this sense, appears to be defined as the common Gross Domestic Product formula, which seeks to calculate the sum of economic activity within a given set of arbitrary boundaries (namely the borders of a nation or state). The world economy might be defined in a similar manner, although the category of exports and imports would, at this time at least, have to be eliminated. Coming from the Austrian School of Economics (ASE) that differs highly from most mainstream economic schools, whether they be Neoclassical, various strands of Keynesianism or Chicagoan, I don’t view the GDP statistic as the end-all standard of the performance of an economy. Indeed, the GDP category of government spending should be dubious because the government does not operate within an economic system of private property and profit/loss. Thus, it is unclear whether government expenditures create how much or any value since there is no metric of profit/loss—more directly, it is unclear whether persons operating in the economy view the services as beneficial since they have no recourse to trade for them or choose not to, i.e., profit and loss. Secondarily even the private measures of consumption and investment are suspect due to government interventions into the economy or by a bubble mentality. The GDP of the United States during 2005-2007 period were generally non-descriptive given the enormous misallocation of resources as a result of the housing boom, via both actions of the Federal Reserve as well as the quasi-private relics of the New Deal in Fannie Mae and Freddie Mac (which have since been nationalized), in addition to the reckless practices of banks and other financial institutions riding the bubble, all the way down to homebuilders and home supply stores. In considering this, it is possible that under an Austrian perspective that GDP loses a significant portion of its meaning. It may provide some sort of an indication of the health of an economy, but the distortions in the data may be too extreme to lend a complete picture.
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