entitlement programs and productivity

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Arjen's picture
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Joined: Mar 11 2010
Posts: 3
entitlement programs and productivity

Even though I believe that economists are generally deluded about everlasting economic growth, I still like to learn more about economic theory by reading the viewpoints of progressive economists. What I have read elsewhere considering entitlement programs and demographics, is that it doesn't really matter if there are less workers per retiree, since the productivity per worker is increasing continuously. Dean Baker formulates it as follows:

"In standard economic theory, a smaller labor force will lead to a higher capital to labor ratio, which will increase productivity. If productivity is higher, workers can both enjoy higher living standards and be able to support a larger population of retirees. A smaller population will also make over-crowded countries more affluent by reducing the stress on space."

Of course it is very questionable that productivity per worker keeps on increasing once we passed peak oil, but that means that the issue is an energy problem and NOT a demographics problem. The end result will be the same, but I think it is important not to confuse the issue by creating a problem that does not seem to exist. I would love to hear other people's thoughts on this.

earthwise's picture
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Joined: Aug 10 2009
Posts: 848
Re: entitlement programs and productivity


 Soooo.... Let me get this straight: according to Dean Baker, if I invest my effort and resources to make my company more efficient and thereby increase the productivity of my workers, the benefit of said improvements shall accrue to my workers and an increased number of retirees who have contibuted nothing to the effort.

No thanks. I'll go Galt before that happens.

ckessel's picture
Status: Martenson Brigade Member (Offline)
Joined: Nov 12 2008
Posts: 486
Re: entitlement programs and productivity

I think we ought to see if we can get Dean Baker on the Glen Beck show. The friction should at least temporarily reverse our energy generation problems!


I question the real productivity of the workforce in our current FIRE economy. (FIRE= Finance, Insurance and Real Estate)  The products we need for well being would seem to be related to Food, Clothing, Shelter and transportation. Since we have largely shipped these offshore, I question how  the productivity gains will show up in our daily lives?


CassandraH's picture
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Joined: Mar 15 2010
Posts: 1
Re: entitlement programs and productivity

     Let’s talk about the productivity of Hoki fish. The Hoki fish fishing practice has drawn some criticism.  A 2009 New York Times article questioned the sustainability of the hoki fish fishing practices around New Zealand, which allows an annual fishing quota of about 100,000 tons.  But the New Zealand fishing industry disputes the questions. Large company is withholding of Hoki fish which has a large number also of labor. And so, the investment to the resources is big. I’m just wondering if the growth in the economy of Hoki fish is can be drawn by decreasing in qowta?

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