Is the US Government Really Spending Its Way to Oblivion?
As the global monetary system, with the US dollar at its heart, desperately gasps its dying breaths before reaching full cardiac arrest and joining the Hall of Shame of all previous private bank-issued fiat currency monopolies, the blame game is heating up. Proponents of all political and economic ideologies are claiming victory, as it’s always someone else’s fault when things fall apart.
Worldwide, debt-to-GDP ratios are spiralling out of control as one central bank after another officially announces unlimited bond buying programs to service unserviceable debt obligations. First it was the US, then Europe, and now Japan. For years now the US has enjoyed 0% interest rates, translating into about 2% on its debt bonds, “thanks” to the Fed’s easy money policy of flooding the world with worthless pieces of counterfeit confetti to bury the systemic insolvency under inflationary money printing. Clearly, the road we are now on is leading to hyperinflation, not deflation, absent a new gold standard which would entail a drastic overnight devaluation of the dollar.
This inflation is masked behind the US government’s official CPI (Consumer Price Index) adjuster, which arguably understates true inflation several times over. Much has been written about why and how this is done, but basically it facilitates the transfer (theft) of wealth from savers to debtors. Those “debtors” of most concern are of course the US Government and the Too Big To Fail financial complex.
Those on the Keynesian left point to millions of homeless, unproductive workers needing education and assistance to re-enter the workforce and help facilitate a resumption of growth. Those on the right blame exponentially bloated government spending and bureaucracy as the cause. Indeed, just look at the pattern of US Federal spending and it’s obvious something’s not right.
That’s a LOT of debt to rack up! They managed to balance the books a total of 4 years out of 40!
If only we could just get our finances under control and force austerity to balance the budget … then the private sector would begin innovating again and start rebuilding the battered American economy…
… so insist the libertarian Tea Party types. Let’s analyze that.
On one hand, the government-spending bashers like to point out how federal spending and deficits are spiralling out of control, and then they make a causal link to the collapse of the economy. But remember the old saying, “correlation does not imply causation”? I wonder: Is government spending the cause or the correlation of a collapsing economy? Or how about both — or maybe neither?
Ironically, those same government-spending bashers will also fervently hold up the Shadowstats inflation adjusters to show how artificially stating inflation too low allows the financial complex to magically turn economic contraction into growth and make levitating stock indices seem justifiable, with the ultimate goal, as mentioned, of transferring wealth from savers to debtors.
Well, have they ever put the two together? What does US Federal spending look like if we adjust for real inflation as per Shadowstats? Thankfully, the Now and Futures website has graphed this for us. Federal Government spending:
And Federal Government receipts:
Hmm… You will notice the exponential trend in the black lines, which is the nominal value, unadjusted for inflation. The monetary system is by design an exponential system so it’s getting steeper and steeper every year. So are deficits and debt, as would be expected, since money is made from debt!
But have a look at the Shadowstats-adjusted green lines which more accurately represent real-world spending, adjusted for exponential currency devaluation. They have actually been going down, and significantly so, over the last 15 years! What’s up wit dat?
Let’s take this further and adjust the data to account for the increasing US population over the years, since obviously to gain a true picture of how much the government is supposedly wasting on helping people in need we would have to factor in how many people there actually are:
Per capita government spending sure hasn’t been increasing as far as I can tell! It hasn’t been this low in 40 years! It seems the “bleeding heart socialists” aren’t being very successful at robbing from the rich and giving to the poor. But they sure are taking a lot of the blame for the apparent nominal runaway government spending which, as we see above, isn’t runaway government spending at all. Subtract out what’s going to the military and Wall Street bailouts, and then per-capita government spending goes even lower.
What’s really going on here? Well, as can be seen below, government receipts are dropping even faster than spending is, and that’s why the deficit is running away, and that’s why the government is always having to play catch-up in a losing battle just to maintain previous levels of real-world, inflation-adjusted, per-capita spending.
Why are receipts falling so fast? Here’s my paraphrasing of the story you’ll typically hear from right wingers:
The amount of government spending in proportion to total GDP has been increasing. That’s why the economy is collapsing. It’s a vicious circle – in response to political pressure from vested interests demanding more free money give-aways, government increases its share of spending in relation to total GDP. Since government spending isn’t “productive”, supposedly, whereas that from the private sector is, and since this increased spending comes from increasing debt and taxes, the result is economic stagnation. We are becoming an inefficient, centrally-planned Nanny State that provides no incentives for people to go out and get a job and work to become productive members of the economy capable of taking care of themselves. This stagnation of productivity then lowers GDP further, requiring even more government spending to prop the system up as we all move towards living hand to mouth from the government welfare cheque. The necessary cuts to spending that would be required to fix this system get harder and harder to make as the “can is kicked down the road” and never addressed, for political reasons, until debt spirals out of control and the whole monetary system implodes.
This is a nice little story that appeals to libertarian ideals, but how well does it hold up to rudimentary scrutiny of the data? Well, here is total US government spending as a percentage of GDP:
The sources I used to come up with this data are here, here, here, and here, so it’s probably reasonably accurate. My federal data goes back to 1930, but the chart is a little less reliable between 1930 and 1950 because I don’t know what state government spending was before 1950, but we can still see the trends. In the early 1930’s we had the very low government spending during the Great Depression, which I will consider to be an anomaly. Shortly afterwards, WWII started and government spending went through the roof, which I will also consider to be an anomaly. It soon dropped to more sane levels and after that there was an increasing trend from around 20% in 1950 to 35% in 1975. It then maintained that 35% plateau for about 30 years until the 2008 financial collapse, at which point it jumped to 43%.
While this trend in government spending certainly isn’t going down, it doesn’t seem to be out of control either, like many hysterical right wingers would suggest as they shriek about how we can’t afford to provide pensions to the elderly and medicine to the sick, while at the same time taxes to the ultra wealthy amount to virtually nothing on a percentage-of-net worth basis. Moving from 20% to 35% over 60 years isn’t enough of an increase to explain the problems we’re seeing, especially with an ageing demographic over the years. And that latest jump up from 35% to 43% was a response to the 2008 crash, not the cause of it. The economy was well on its way to self destruction before then, all by itself.
So no, I reject the assertion that the economy is faltering because of excessive government spending. The data does not support this. There is something else going on.
What is this “something else”? Well, notice on my graph above how the budget deficit got out of control in the mid 1970’s. Why did this happen? And why has it been getting worse ever since? To answer this, let’s now move beyond the imaginary economy of finances over to the real-world economy of resources. I would like you to look at this chart:
That’s quite a chart! If you ran your bank balance that way for 50 years you’d have some serious debt problems on your hands!
Do you think it’s all mere coincidence that the fiscal deficit got out of control in the mid-1970’s, shortly after the US peaked in oil production in 1970, at the same time that the oil trade deficit started ratcheting up? Since then, oil production has been on a pretty much steady decline, with a few temporary upticks along that trajectory. As of 2011, the US imported 58% of the oil it consumed (it’s since gone down somewhat due to lower consumption combined with increased production). The much-hyped recent surge of production from tight oil formations like the Bakken and Eagle Ford fields (the “shale oils”) is minor when compared to the overall trend. And those tight oil wells have dramatic decline rates after a couple years of high production, so overall they will peak in the near future and then decline. Furthermore, they are only being developed because of the record high oil prices we’ve seen over the last 5 years, combined with record low persistent interest rates. Without these prices, they wouldn’t be economic (they barely are right now, and are only profitable because of ultra-low interest rate Wall Street ponzi schemes).
If we again plot in relation to the growing US population, then on a per-capita basis, oil production’s gone down even more dramatically than it has on a gross basis:
That is a huge deficit, and a horrendous chart. It’s not like oil consumption has dropped because other alternatives have risen up to take its place, which would be a step in the right direction. Far from it. Rather, Americans are both “producing”, and consuming, less oil. Period. Certainly, energy efficiency has improved over this period, but not that much. Otherwise those imports wouldn’t be needed!
Basically, Americans are now “producing” about half as much oil as they were 40 years ago, on a per-capita basis. Yet per-capita oil consumption in the US remained fairly constant from 1980 to about 2007, after which it hit new lows. So there has been a very significant mismatch between domestic oil production (peaked in 1970) and consumption (roughly “peaked” in 2003, after the first peak in the 1970’s). That mismatch, of course, has had everything to do with the US trade deficit and the imposition of the American empire around the world to keep that flow of goods moving back into the US.
Amazingly, a full 13% of global oil “production” gets funnelled into the US oil trade deficit alone. That represents the gap between the red and blue lines you see in the above charts — that’s 13% of global oil production you’re looking at! When we add in domestic US production, we see that 21% of global oil “production” is consumed by Americans. But Americans represent only 5% of the world’s population.
And how is that oil trade deficit paid for? Well, oil is traded internationally in the currency of the US dollar. This exorbitant privilege has allowed the US to buy oil over that whole period in return for simply printing up pieces of paper. Oil-exporting nations provide their oil to the US in exchange for dollars, or in other words, Treasury Bonds. Where do Treasury Bonds come from? Umm … Treasury Bonds are debts, and specifically, the US government’s debt! They are what the fiscal deficits in the above graphs represent! So the fiscal deficits have been what is buying America’s oil imports (and imports of other manufactured goods as well).
But it’s not like the US government is directly buying foreign oil via it’s fiscal deficit by handing over Treasury Bonds to Saudi Arabia. What actually happens is that the oil is bought by US oil refinery companies and imported. Where do the oil refinery companies get their money from? From US consumers who buy the finished products made from that imported oil (i.e gasoline, diesel, etc.). Where do US consumers get their money from? Well that’s where the US government’s fiscal deficit spending comes into the picture, because that is what juices the whole ponzi scheme to prop up US consumption. Then the countries that have a trade surplus from exporting oil in return for dollars from the US oil refineries turn around and buy Treasuries with those dollars, since dollars don’t return interest while Treasury Bonds do (not only that, but the price of Treasuries goes up in a falling interest rate environment, which is what we’ve been in for the last 30 years). See how the cycle works?
So is it any wonder that the American economy (I include Canadians as “North Americans” too, it’s just that Canada still has lots of oil), which is so dependent on consuming such copious quantities of (foreign sourced) natural resources, is amongst the first to feel the pinch if and when the world as a whole hits resource constraints?
And here’s another significant trend to consider. While US oil production peaked back in 1970, the world as a whole seems to be at Peak Oil right now, 40 years later, right around when Hubbert predicted it would. Since 2005, global oil production rates have not increased in any statistically significant amount despite prices more than doubling over that period!
And since oil specifically, and fossil fuels in general, power virtually the entire economy, it would stand to reason that the trends in oil highlighted above probably have a somewhat significant role to play in the ongoing drama of the US financial picture… and that any analysis thereof which does not include a discussion of how energy is central to it all will not be able to meaningfully explain what we’re seeing and make predictions about the future.
To put this into perspective, the US oil trade deficit alone, all 4 billion barrels of it, at $100 a barrel, adds up to $400 billion. That is equivalent to one third of the federal fiscal deficit! Since a lot of other manufactured goods are also imported, the total trade deficit, as of October 2012, is $506 billion a year. So how could any meaningful analysis of the US fiscal situation not include an analysis of the oil and trade deficits? How can this supposed excessive government spending receive so much public and media wrath as the cause of the runaway deficit, when it’s only gone from 20% to 35% of GDP over 60 years (with a recent bump up to 43%), at the same time that the massive oil trade deficit lurks as the elephant in the closet everyone’s trying to ignore? Which trend do you think might be primarily responsible for the economic problems we’re seeing?
And what about interest rates? Surely oil has something to say about them, too. The ten years that passed after the 1971 abandonment of the gold standard, and the rise of perpetual budget and trade deficits, coincided with the stagflation of the 1970’s (stagflation is the situation where prices rise at the same time that there is a recession, which is opposite to what normally happens in a recession where prices drop due to destruction of credit money and lack of demand — stagflation is double-whammy hit to the middle class because not only do people lose jobs, but things cost more to buy as well). That stagflation was put to a halt by Volcker jacking interest rates up to 17% in 1981 to prevent runaway inflation due to the dollar, post-1971, being backed by nothing but increasingly vacuous debt. By increasing interest rates, the Treasury bonds (debts) that are used to make dollars became an attractive investment, since the 17% return was greater than inflation. Since then, nominal interest rates have dropped continuously from 17% in 1981 to basically 0% today in the 30 year bull market in bonds that has now reached its end.
Along with this, debt to GDP ratios have trended upwards. Are all these things related? I think they just might be!
Extended periods of positive real interest rates, in an inflationary environment, necessarily imply real-world economic growth (in other words, if the amount of money in the system is increasing and at the same time the bonds that are used to create money maintain a positive real return in purchasing power for real-world goods, then there must be a corresponding increase in the amount of goods available to buy, and this directly correlates with economic growth). And real interest rates went negative in 1990, according to data from Shadowstats:
Surprise-surprise: from my above analysis we see that real inflation-adjusted US economic growth has also trended lower and lower over this period, reaching negative territory on a per-capita basis in 1987, and on a gross basis in 1999. How do those dates coincide with real interest rates turning negative in 1990? Pretty close?
Now, I should point out that in this analysis I have taken the Shadowstats inflation statistics at face value. I haven’t looked into how these are actually derived. I generally prefer to investigate things myself down to the nitty gritty to see if I agree with the assumptions being made. So it would be an interesting exercise for me to develop my own inflation adjusters (anyone can do it — all you need to do is get ahold of the history of nominal prices for certain key commodities that you feel are important, and then make a table of how the cost to live has changed over the years). But, I am reasonably confident that the Shadowstats adjusters are probably closer to being accurate than the US government ones are, so I will let this all stand as is for now.
If you Google the topic of marginal GDP productivity of debt, you’ll get tons of hits bringing up this chart which shows the marginal increase in GDP resulting from every unit of new debt accrued.
I can’t verify the underlying data behind this chart right now, but I think it clearly shows the trend. What this chart reveals is the increasingly worthless nature of US debt, and correspondingly, that of the dollar which is created from debt. It’s well into negative territory now, which means that in order to keep the monetary system alive, money printing will increase exponentially, and there is nothing that can be done to stop this death spiral until the current monetary system ends in either a hyperinflationary supernova, or a new gold standard. This is apparent if you look at the graph further up the page showing per-capita inflation-adjusted Federal Receipts and Outlays. Post-2008, even though government spending went up (which came from more debt), government receipts actually went down!
Of course government debt is out of control! So is the private sector’s! How else could the ponzi scheme that has enabled the American empire to rise to such heights have been extended for so many decades to sustain that plateau in oil consumption from 1981 to 2007?
There is nothing particularly new or surprising about this trend in debt (money) devaluation. It is the inevitable end result of a debt-based monetary system that by design must grow at an exponential rate in a real world that cannot keep up with that growth. This is how debt-based monetary systems die — by drowning in debt! How could it possibly be any other way? This is the same endgame that’s happened hundreds of times throughout human history whenever such a monetary system is put in place. In fact, the US dollar, at 41 years old, is now the longest lasting debt-based fiat currency to have ever existed. Is it any wonder that it’s now on its deathbed? How could anyone with any knowledge of the history of debt-based fiat currencies delude themselves into believing that the current system wouldn’t end like this?
There are a few differences, however, between the current collapse we’re facing today and previous instances throughout history. Firstly, the current system is much bigger, and it involves the entire world’s monetary system, as it’s all one giant computer-linked beast these days; historically, only individual countries were affected. So the collapse will be global in nature, and catastrophic, when it does happen.
Secondly, the majority of the people in the world are unfamiliar with monetary collapses — it’s been centuries since the US currency last collapsed. But the US dollar arguably died in 1971 when the gold standard defaulted. What we’ve had since has not been the same currency, even though most people don’t realize this. As a result, many people believe that currency collapse could never happen in the “first world” — that’s something only crackpot third world basket cases go through. So there is a lot of unwarranted confidence in the system that has allowed the ponzi scheme to reach heights that would have otherwise not been possible with a more suspicious and vigilant populace. This creates the potential for an even greater collapse when it does eventually happen.
Thirdly, historically, there were always enough resources available for countries to pick up the pieces after their currencies died and move on to start again and continue with the previous growth trend. Since the world is now at Peak Oil, that will not be possible, so what will happen after the monetary system collapses this time remains a big question mark.
And fourthly, the US empire is at the heart of this system, which has enabled that country to maintain extraordinary trade deficits over the last half century. When the dollar loses its reserve currency status, then oil will no longer be traded in dollars and the US trade deficit will no longer be able to be maintained. Then the US will be faced with extreme resource shortages. It will simply not be possible for the US economy to pick up the pieces afterwards and continue anew with a fresh round of growth using a new currency. Rather, contraction will continue to intensify. Then the US will experience a huge decline in real GDP and living standards, beyond what it’s already suffering through right now, as that 13% of global oil production no longer makes its way over to US shores. If the US does not develop alternative energy strategies to offset this, then as its oil “production” decline continues, so will its economy, even further. And there will be no amount of reshuffling the deck chairs on this sinking titanic between the false polemics of the public versus private sector that will make one iota of difference, until that energy scarcity is resolved. Because the whole system is falling apart, from all sides.
The risk, of course, is that the shock waves resulting from the destruction of the dollar and the end of the US trade deficit will cause such social upheaval that this necessary reworking of the energy sector will not happen because the capital and social order needed to carry out this complex and long process simply won’t be there. This would be the beginning of the Malthusian Collapse that many doomers, including myself, are predicting. This is what Peak Oil looks like! Institutionalized theft from the middle class cannot be sustained if no additional wealth can be generated because an economy is out of resources.
The economy is NOT collapsing because “government spending is out of control“. It is collapsing because we are all enslaved by a debt-based monetary system that by design requires perpetual exponential growth to function, in a real-world economy that, due to resource shortages, has not only stopped growing, but has been contracting since 1999. This is the end game that all of the great empires throughout history have had to face, as they ALWAYS overextend themselves beyond what the underlying resource base supporting their economies can sustainably provide. That’s why empires conquer other lands in order to grow — because they run out of resources on home turf!
“We’re an empire now, and when we act, we create our own reality. And while you’re studying that reality—judiciously, as you will—we’ll act again, creating other new realities, which you can study too, and that’s how things will sort out. We’re history’s actors … and you, all of you, will be left to just study what we do.”
Karl Rove, 2004, former Senior Advisor and Deputy Chief of Staff during the George W. Bush administration.
Unfortunately for Mr. Rove (and all of us who will have to live with his legacy), we can indeed study his policies and actions and come to some pretty good predictions about the consequences, because every action that the empire takes has implications for energy. We can also study all previous empires that were led with the same mentality and use that to make even better predictions about the future of the American empire. Mr. Rove wasn’t making history; he was repeating it.
I’ve spent my career so far in the resource sector – forestry, aquaculture, mining, pipelines, water, power plants, factories. I come from the part of the economy that’s providing all the raw materials that give substance to the higher level financial charts economists like to throw around. Coming from this perspective, something I’m finding quite frustrating is that economic / financial types don’t seem to be very good at analysing things from a real-world perspective relating economies to resources. Along with this, engineering / scientific types don’t seem to be very good at seeing the financial umbrella under which all the “real world” activities of the economy they’re working in take place. There is a Great Divide here that needs to be closed.
Specifically, discussions about the problems with the US economy generally fall back to the topic of faltering economic “productivity”, and how to get that “productivity” back on track. Inevitably, various policies are recommended that would, hopefully, restore “productivity” to former levels and lead us back into prosperity. What those recommended policies actually specifically entail is of course totally dependent on the political predisposition of the person making them…
And amongst these discussions, assertions are often made that productivity and wealth come from the private sector only, and that government is merely a necessary draw on productivity that should be minimized so as to support only the basic requirements necessary to keep society humming along (police, judicial, public works, etc.). Since the private sector, supposedly, responds to incentives provided by price signals from supply / demand dynamics, whereas the government doesn’t, it therefore follows that through its activities that “produce” goods for us to consume and thereby raise our standards of living, it is the private sector that performs the grunt work of the economy. Therefore, government should exist only to support the private sector.
I suggest, however, that the above assertion that economic productivity comes from the private sector only, and that government is merely a necessary drain of productive resources … is hogwash. This may be how the monetary system works, but it isn’t how the real world works. Historically, before the Federal Government started running a 25% deficit, three quarters of which is funded by the Federal Reserve printing up worthless monopoly money, the government got its money from taxing the private sector, and the private sector supposedly “made” that money. This is the origin of the popular meme that government spending is a draw on the rest of society. But the monetary system is fundamentally flawed, and therefore so is this suggestion that government spending is parasitic to productivity.
Productivity and wealth do not come from the private sector (and just to be clear here, I’ve spent my entire professional life working in the private sector). And productivity and wealth don’t come from the government, either. Instead, the public and private sectors are merely different ways of organizing society that differ in how they consume productivity. That productivity does not come from labour, it does not come from factories, it does not come from corporate investments, it does not come from mom-and-pop small business, it does not come from Treasuries, not gold, not banks, not the market, nor rich people, the middle class or the poor.
No, productivity and wealth come from one place and one place only – from the natural world, and specifically from the ecological productivity that has provided all of these fossil fuels, biofuels, and food that allow us to burn complex carbon molecules and liberate net energy (exergy) to run our economies. This is where 97% of global energy supply comes from — literally, from burning plants! (The other 3% comes from nuclear, hydro, wind, solar, and geothermal) The only difference between the public and private sectors is in how they harvest, distribute, and burn that productivity, and in how they relate to the monetary system and achieve their “price discovery” (note — neither the private nor public sector does a good job at price discovery, but that’s a topic for another day).
The suggestion that all we need to do is just cut back on government spending bit by bit and deregulate everything so as to allow the private sector to move in and take up the slack from inefficient government bureaucracy, to let the private sector do what it needs to do to match supply with demand and therefore return us to full productivity, is … well … silly, and quite oblivious to how energy flows through the economy. Seriously — how could the “productivity” of the economy possibly improve when the vital resources that are needed to run the economy are in such steep decline? This blind faith in the ability of an unregulated private sector to magically devise fantastic new “technology” that can produce more and more stuff using less and less inputs (i.e. a perpetual motion machine) is ridiculous. But, it seems that perpetual motion machines are the hopes to which the majority of economic commentators out there these days, both left and right, are clinging.
Now don’t get me wrong. I’m not supporting many of the things governments have been wasting money on lately, and of the draconian policies that have been enacted to continue the extraction of wealth from the middle class to the wealthy. And I’m not calling for an abandonment of the private sector. Not at all. I’m actually best described as being a “mild capitalist” — I argue for a healthy and independent private sector, and more importantly, a clear separation between private and public sectors. Because it’s when the private and pubic sectors merge that oppressive regimes emerge.
This is a much bigger topic to which Charles Hugh Smith, in the above referenced piece from Zerohedge, is not doing justice based on his simplistic one-sided narrative boiling everything down to an out-of-control public sector that’s progressively stifling private entrepreneurship. While Smith does a fairly good job of characterizing how a central state-controlled economy succumbs to corruption and devolves into an Orwellian 1984-type scenario, he is mistaken when he blames this on “Peak Government”. Because as I’ve shown here, government has barely expanded at all over the decades, so the collapse we’re seeing could not be due to government overspending.
Since this Orwellian regime that’s emerging is a result of the merging of the public and private sectors and the resulting unchecked centralization of power, Smith could just as justifiably be instead wailing about an under-regulated free-market “Peak Private Sector” that got out of control and took over the government. We’ve actually been under the control of this regime since 1913 when the Federal Reserve took power, and yes, back then government spending was only around 15% of GDP, based on my best-guess estimate using the data I have available to me, so there’s no way this could have happened because of runaway government spending! Is the process we’re seeing the fault of the private sector, or the public sector? Is that really a relevant question? Clearly, Smith’s “Peak Government” hypothesis is one driven purely by political ideology.
So, assuming government spending was around 15% of GDP when the Federal Reserve (a cartel of privately owned banks) took over, then I’m wondering if Smith could please suggest how low he thinks government spending should be slashed in order to prevent this from happening in the future. Is he arguing for a virtual abolishment of government altogether? What are we going to do for a monetary system when there’s no government left? Is Smith an anarchist? If so, he should state this so we can all be aware of where he’s coming from.
The people who suggest that we should make drastic cuts to the public sector in some utterly hopeless attempt to balance the budget in a debt-based monetary system that by design can never have balanced budgets (for any significant length of time); those people who propose slashing social and environmental government spending in homage to the greater cause of fostering this supposed “economic productivity”, in the mistaken belief that the private sector will be able to take over the role of what is clearly best performed by the government, and that the ensuing social misery resulting from this is somehow necessary for re-organizing the economy back into “productive” endeavours, well those people are making a very grave error. It all comes back to this erroneous narrative that only the private sector has productivity.
I think I’m now getting a little bit ahead of myself by delving into this issue of “economic productivity”, and moving beyond the original intent of this post. So I am working on another future post that will once and for all nail down what this thing called “economic productivity” really is, why different people define it the way they do depending on their political leanings, why almost all of these definitions are just plain false, and where wealth and economic productivity really come from. I’ve discussed this several times previously but I want to wrap it all together into its own dedicated post.
Understanding and accepting what economic productivity actually is then allows us to escape the clutches of this banal left vs. right, “Does government spending or the private sector create wealth?” national diversion that gridlocks debates, prevents us from understanding what’s really happening to our economies, and totally clouds the analysis of our predicament and what we need to do to get out of it, if it’s even possible to get out of it at this point along the trajectory of our population overshoot.