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Econ: What are Steady State, Steady State Growth and Steady State Per Capita Growth? 2 Views
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What are Steady State, Steady State Growth, and Steady State Per Capita Growth? A steady state has the goal of balancing population growth and economic production; there is the ideal amount of people to complete the work that needs to be done and produce goods and services efficiently. Steady state growth means that all facets of the economy are growing at the same rate or remaining constant (including population). Steady state per capita growth is the idea that all variables in the economy grow at a rate that is identical to population growth; it is the idea of growth per person (or per capita).
Transcript
- 00:00
And finance Allah shmoop What are steady state steady state
- 00:05
growth and steady state per capita growth Bigger is better
- 00:13
True when it comes to offensive lineman and wedding cakes
- 00:16
and brass bands and the size of your uh you
- 00:19
know belt buckle Well it's also true in economies Everyone
Full Transcript
- 00:22
likes economic growth The faster the growth the better More
- 00:26
production constant expansion But there's another option The city state
- 00:30
economy an economy with no growth Think of the steady
- 00:34
state as the economic equivalent to that feeling People say
- 00:37
Yeah they get from meditation that Zen state that purportedly
- 00:41
purges you of all earthly worries No desires no wants
- 00:45
just peaceful days spent in quiet fulfilling meditation Now imagine
- 00:51
an economy sitting cross legged on a mat humming it's
- 00:54
mantra That's the steady state The term steady state economy
- 00:58
refers to a situation where physical wealth and population remain
- 01:01
steady An economy with zero percent growth or at least
- 01:04
as close to zero percent is it Khun Get population
- 01:07
doesn't grow birth rates run it replacement levels that is
- 01:10
the birth rate matches the death rate So the population
- 01:13
of your country is in twenty million people in two
- 01:15
thousand eighteen It's twenty million In two thousand twenty eight
- 01:18
it's still twenty million in twenty two eighteen more than
- 01:22
just stable population in a steady state economy The per
- 01:25
capita growth is also at zero as well Per capita
- 01:29
growth refers to the amount of growth per capita or
- 01:32
person You divide economic output usually measured by GDP by
- 01:36
the number of people in the country You have a
- 01:38
country with twenty million people with annual GDP of a
- 01:41
trillion dollars Divide one trillion buy twenty million and that
- 01:45
gets you per capita GDP of fifty grand So your
- 01:48
country has per capita GDP of fifty thousand dollars Now
- 01:51
in a steady state economy a few fast forward twenty
- 01:54
years per capita GDP is what Yes still fifty grand
- 01:58
It's days fifty thousand dollars One hundred years from now
- 02:01
we'LL in a steady state economy Production is on Ly
- 02:03
used to replace stuff that gets worn out where Chevy
- 02:06
Nova breaks down so the factory makes another one for
- 02:09
you You get to drive that one until well you
- 02:12
know the wheels fall off There's no additional growth Everything
- 02:15
on ly operates to replace things that have broken down
- 02:18
there's another connotation to the steady state economy it has
- 02:22
to do with the environment Will the steady state is
- 02:24
considered more ecologically friendly because it doesn't grow It doesn't
- 02:28
burn through a CZ Many resource is compared to an
- 02:30
economy that chases constant growth Imagine a civilisation in tune
- 02:35
with nature a small village separated from modern conveniences one
- 02:39
surrounded by lush forests and fertile river banks the kind
- 02:42
of civilization that uses the last remnants of moose and
- 02:46
trails to make organic water filtration systems for their camp
- 02:50
Not exploitive of resource is on ly hunting as much
- 02:53
as is needed Replanting every tree your crop They used
- 02:56
everything done in a way that doesn't deplete the environment
- 03:00
That's a steady state In practice A steady state would
- 03:03
be difficult to maintain right It's more of a conceptual
- 03:05
benchmark than anything that exists in real life or nature
- 03:09
you know like a helpful customer service rap or an
- 03:12
honest politician It would be difficult to hold population steady
- 03:15
in any society at least without resorting to authoritarian move
- 03:19
like the one China did with their one child policy
- 03:23
Also keeping per capita growth at zero would require significant
- 03:26
limitations It would also make the economy susceptible to recession
- 03:30
It would be easy to slip from zero percent growth
- 03:33
into Ah you know shrinkage Small closed societies in relatively
- 03:37
isolated areas might be able to maintain a steady state
- 03:40
but it would be difficult for a large modern economy
- 03:43
to live that way So yeah we keep coming back
- 03:45
to the meditation thing It's relatively easy to meditate in
- 03:49
an isolated monastery on a mountaintop somewhere alone away from
- 03:53
distraction But try to meditate when you're surrounded by ringing
- 03:56
cellphones and traffic noise and the smell of someone brewing
- 03:59
coffee in the next room Yeah it's enough to give
- 04:02
someone a cynic You have been there done that going
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