Wed, 22 Oct 2008

New Scientist, Old Nonsense 2

Feel free to send me email in liu of commenting. I'm happy to reply to any comments.

Michael Augden writes:

I just read your post about the new scientist article. I'm not an economist, but it seems your argument against their assertion forgets one thing. My apple is grown in Washington, your banana is grown in Central America, a great deal of resource goes into transporting those two products to their respective markets. Am I not seeing something here??

No, you're seeing too much. Ordinarily in economics, a good thing. The assertion made by the non-scientists at the New Scientist (maybe that's why they're new scientists?) is that economic growth always requires consumption of resources. In order to prove them wrong, I only need to show that economic growth can happen without consumption of resources.

Yes, resources were consumed transporting the apple and banana to the same location. That was economic growth. However, when you and I trade our bananas and apples, we're in the same location. No more resources will be consumed than have already been consumed. Yet when we trade, we grow economically. No resources consumed in *that* trade, which is my point. Resources do not need to be consumed to have economic growth.

In case the appleness and banananess are confusing you, consider the case where somebody needs coins for a vending machine that doesn't take bills. They take a bill and ask somebody for change. They get the change, so they're better off. Somebody else gets a bill which they value equally to the change. They bothered to make the change because being nice has intrinsic value to them.

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