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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).

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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

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
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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
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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
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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
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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
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benchmark than anything that exists in real life or nature
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you know like a helpful customer service rap or an
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honest politician It would be difficult to hold population steady
03:15
in any society at least without resorting to authoritarian move
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like the one China did with their one child policy
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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
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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
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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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