I know that I sound like a broken record, but I am going to keep telling my story.
Why do economists just focus only on growth in the GNP and the unemployment rate and end there? For some reason, they do not understand secondary impacts of those numbers. I am going to try to explain some of this.
First, let's start with an economy that has "zero" growth. Even though the economy is growing at "zero", you have to look at what is happening with individuals. We are all individuals and we think and act as individuals. Realize that people die and retire from their jobs. When this happens, younger people move up the ladder to take their higher paying jobs. It is my position that this affect alone can cause a person's income to go up additionally at at least 2% or 3%. That my not be big growth, but it is growth.
Now, let's look at the addition of growth in the GNP on top of the individual growth in income as defined above. If the GNP grows, it means that the workers are producing more and thus are worth more even though they may still hold the same job. Companies pay for what people produce and if they produce more, they get paid more. Think of your self as a salesman working on a comision. If you sell more, you get paid more, but still have the same job.
Next, look at lower unemployment. If more people have more jobs then the growth rate in the basic population, exactly what jobs are they going to get? Think in terms of a typical company. If the business picks up, the first thing that companies do is to start promoting the workers that they have. They then fill in the jobs left as a result of these promotions with new lesser skilled workers. If you look at this as an individual as described above, this is great. You got a promotion and now make even more.
The problem that I have with economist is that they never talk about these types of impacts, but we know that they exist because they affect us as individuals. We need to start teaching Econ 101 more from how it affects the individual rather than just how it affects the GNP and the unemployment rate!
Why do economists just focus only on growth in the GNP and the unemployment rate and end there? For some reason, they do not understand secondary impacts of those numbers. I am going to try to explain some of this.
First, let's start with an economy that has "zero" growth. Even though the economy is growing at "zero", you have to look at what is happening with individuals. We are all individuals and we think and act as individuals. Realize that people die and retire from their jobs. When this happens, younger people move up the ladder to take their higher paying jobs. It is my position that this affect alone can cause a person's income to go up additionally at at least 2% or 3%. That my not be big growth, but it is growth.
Now, let's look at the addition of growth in the GNP on top of the individual growth in income as defined above. If the GNP grows, it means that the workers are producing more and thus are worth more even though they may still hold the same job. Companies pay for what people produce and if they produce more, they get paid more. Think of your self as a salesman working on a comision. If you sell more, you get paid more, but still have the same job.
Next, look at lower unemployment. If more people have more jobs then the growth rate in the basic population, exactly what jobs are they going to get? Think in terms of a typical company. If the business picks up, the first thing that companies do is to start promoting the workers that they have. They then fill in the jobs left as a result of these promotions with new lesser skilled workers. If you look at this as an individual as described above, this is great. You got a promotion and now make even more.
The problem that I have with economist is that they never talk about these types of impacts, but we know that they exist because they affect us as individuals. We need to start teaching Econ 101 more from how it affects the individual rather than just how it affects the GNP and the unemployment rate!
