Report Card for Donald Trump

[Mikebert]

(01-01-2017, 07:21 PM)Warren Dew Wrote: If a real reduction in cost is achieved with the same production,  real, inflation adjusted, GDP goes up, because everything that was being produced before is still being produced, plus some more.  The average person ends up better off.

A real reduction ins cost means a firm is producing the same output while using less inputs.  Those inputs are someone else's output, which necessarily is lower by the amount of cost saved. This loss would be recovered, by the additional  spending freed up by the cost savings.  

Quote:You're essentially arguing that for the cost savings to be spent, there have to be new categories in the economy for it to be spent on.  That's not necessarily true; people could just spend it in existing categories, buying BMWs instead of Toyotas for example.

No.  The savings spent makes up for the inputs not purchased.  I am arguing for costs savings to be accompanied by growth for the economy as a whole there must be some economic sectors whose markets have not yet reached saturation.

Are you familiar with the S-curve for product introduction?  Harry Dent applies this concept to the economy that explains the mechanism I am referring to.  I give a summary in this 2001 article:
http://www.safehaven.com/article/71/the-...ket-trends

Here's long defunct page where I go though this idea in more detail, its a pretty messy page. I think I did it in 1999.  It has been retained by the internet archive:

http://web.archive.org/web/2004021500171...ngwav2.htm.  I applied it to economies further back in time for my K-cycle book.  Here's a graph I made I found in a article by Chris Chase Dunn.  You can see the information economy at the extreme right.