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Stephen Heins's avatar

Michael, I love your longterm thinking and scholarship.

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Rick Teller's avatar

Excellent post. What people forget is that the most powerful force for raising living standards has been and always will be investment by businesses in things that increase productivity - new and better equipment and factories, R&D to create better products and processes, and employee training.

Investment requires savings, and our net savings are far lower than in the past and not unlimited. To the extent we divert investment from what raises productivity toward what has no effect on productivity but merely reduces CO2 output, living standards will stop growing.

What people do at work counts! Despite losing WW2 and absorbing massive destruction of their infrastructure and skilled workforce, both Germany and Japan, within a few decades took over a big piece of the US markets for autos, specialty chemicals, cameras, consumer electronics of all types, precision equipment, and other things. That was because, as losers of the war, they were forbidden to produce any kind of output that had military applications. While our best engineers took jobs at Lockheed, General Dynamics, Raytheon, and other aerospace and military related companies, their best engineers got jobs at Toyota, BMW, VW, Sony, Panasonic, etc., and came up with better designed and made products than what US companies could create. US consumers took note, and bought from them instead.

With the trillions of government money that green companies have to spend, they can outbid other outfits for engineers and scientists. We might produce less CO2, but other than that, the progress in living standards we’ve been used to for centuries will stop.

Please see this post for more: https://economicsreimagined.substack.com/p/what-people-do-at-work-counts-1

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