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Physical capital, human capital

I started this section mainly as a placeholder. It is going to take a little while for me to develop because of my schedule. My notes from Bjork (1999) have some fundamental material, but the subject is somewhat complicated. I have to do some more reading before I can best describe diminishing returns on capital per worker. I also have to discuss depreciation. Then I have to add some information about capital in the neoclassical model. National income accounting (NIA) does not recognize human capital, but Bjork's opinion is that it is as important for growth as physical capital. Denison is of a similar opinion as Bjork on human capital.Phmoreno (talk) 01:57, 21 May 2015 (UTC)

This is a general level article so most of the details should really go in the specific articles, like Solow model. What's the Bjork source? Not sure what you mean by "NIA does not recognize human capital". NIA measures flows not stocks. Also, the idea that human capital is as important or even more is pretty well established. See for example the classic Mankiw, Romer and Weil paper (whatever its flaws).Volunteer Marek (talk) 02:44, 22 May 2015 (UTC)

The Bjork reference is:

• Bjork, Gordon J. (1999). The Way It Worked and Why It Won’t: Structural Change and the Slowdown of U.S. Economic Growth. Westport, CT; London: Praeger. pp. 2, 67. ISBN 0-275-96532-5. This book is a good practical introduction to the subject of economic growth for the non-economist, although many professional economists could benefit from the big picture view according to Bjork. Good introduction to government statistics and the accounting behind the numbers. Bjork discusses the structural changes in the U.S. economy through the changing size of the various economic sectors. Lots of other good information applicable to this article.Phmoreno (talk) 18:49, 22 May 2015 (UTC)

I don't think this sentence makes sense:

"The notion of growth as increased stocks of capital goods was codified as the Solow-Swan Growth Model". The notion of growth as increased stocks of capital goods is not the notion of growth of Solow-Swan. The notion of growth in Solow-Swan is still increases in per capita income, as in all other theories of growth.Volunteer Marek (talk) 06:59, 31 May 2015 (UTC)

Physical constraints to growth- reason to keep

Physical constraints were part of classical economics and were mentioned by Ricardo and others who were concerned about the negative effects of depletion by extractive industries. One source I have for this is: I have another one somewhere in my notes. A main theme of economic thought is substitution of other resources for depletable ones,(many sources in addition to previous cite) but in many cases, such as phosphorus there are no substitutes. Use of powered machinery initially raised productivity of extractive industries, but now resource quality has continued to decline for many minerals and productivity is in decline. Copper is a poster child because of the continued decline in ore grades. Oil and gas are other examples. My sources on this subject are out of date, but this information is easy to find on the internet. Peak minerals has several references, Geodestenies (1998) is a good but dated ref. Euan Means has also written about thisPhmoreno (talk) 01:23, 2 June 2015 (UTC)

References

1. Hunt, E. K.; Lautzenheiser, Mark (2014). History of Economic Thought: A Critical Perspective. PHI Learning. ISBN 978-0765625991.

New IMF Staff Discussion Note

"if the income share of the top 20 percent (the rich) increases, then GDP growth actually declines over the medium term, suggesting that the benefits do not trickle down. In contrast, an increase in the income share of the bottom 20 percent (the poor) is associated with higher GDP growth. The poor and the middle class matter the most for growth via a number of interrelated economic, social, and political channels." should be included. EllenCT (talk) 21:40, 24 June 2015 (UTC)

Income inequality still not correctly portrayed

This section still is written to misrepresent the facts. In economics inequality is the result of the distribution of income. If wages are raised at the low end, the result is the substitution of more capital for labor. Unintended consequences, like rising prices, also result from redistribution of income. Also, the inverted U curve of inequality versus per capita GDP is not adequately represented, so we don't have inequality in perspective between developing and developed countries. All of these issues need to be discussed in the first paragraph of the section.Phmoreno (talk) 13:43, 25 June 2015 (UTC)

What is your source for the statement that "If wages are raised at the low end, the result is the substitution of more capital for labor"? And what do you mean by that? If wages are raised at the low end, aggregate demand increases and a greater number of people are able to express their preferences in the marketplace. EllenCT (talk) 17:29, 26 June 2015 (UTC)

There are numerous sources for the statement that if wages rise then there is more incentive to substitute capital for labor. It's basic economics, but if you want a source see A history of Economic Thought that is cited in the article. Any increase in aggregate demand has to be net of jobs lost due to substitution of labor for capital. If you want a wonderful example read The Box about container shipping.Phmoreno (talk) 18:32, 26 June 2015 (UTC)

That is a wonderful book! Excellent! Worth re-reading. Capitalismojo (talk) 21:08, 26 June 2015 (UTC)

Again, what is the specific source and page number for that statement? How does it square with ? EllenCT (talk) 18:49, 1 July 2015 (UTC)

The citations with page numbers will appear in the text when I rewrite this mess.Phmoreno (talk) 23:14, 1 July 2015 (UTC)

Do you plan to discuss what you may reasonably expect to be controversial edits on the talk page before rewriting long sections arrived at through detailed dialectic, or just impose a new version as a surprise? EllenCT (talk) 01:20, 5 July 2015 (UTC)

Order of importance

The fundamental factors and the components of national income accounting go before the secondary variables. Some of these, like income inequality, don't even belong here and are going to get significantly downsized to clear up some of the inequality myths that are being perpetuated here. References will of course be provided when that edit happens.Phmoreno (talk) 02:20, 5 July 2015 (UTC)

Do you have any sources in support of your opinions? The IMF graph clearly indicates that income equality is the most determinate factor in the duration of growth spells. After several months, you have been unable to cite a single peer-reviewed source which agrees with your increasingly persistent opinion that income equality is unimportant, let alone any source of the quality and reliability of the several secondary sources which are already in the article. Do you expect editors to take your opinion on faith? EllenCT (talk) 18:41, 6 July 2015 (UTC)

Quit telling lies about my lack of sources. You are so extreme that you will use any underhanded, deceptive thing that you can to push your POV. Several editors beside myself have had enough and I have their support.Phmoreno (talk) 19:24, 6 July 2015 (UTC)

Let's see your sources, then. The last time you complained about me on WP:ANI, you initiated a WP:BOOMERANG which almost got someone else topic banned. Do you think you have support from anyone other than those who don't like the consensus of the peer reviewed secondary sources for no other reason than their personal political preferences? EllenCT (talk) 23:34, 6 July 2015 (UTC)

I think the organization of this article should follow the standard presentation that is found in textbooks. And yes, that means that the effect of income inequality is somewhere towards the end, as that is not one of the main factors which are usually discussed in this context. There might be one or two studies out there which argue that income inequality is THE most important determinant of growth but then there's one or two studies out there which argue that "factor X" is the most important determinant of growth. Basically you'd have to show that these one or two studies are representative of the literature as a whole (they aren't).Volunteer Marek (talk) 01:24, 8 July 2015 (UTC)

I'm going to make a slight change by grouping together "determinants of growth" per Bjork (1999). This is from his quantitative record chapter on GDP. This change will addresses comments made by others in a previous Talk discussion.Phmoreno (talk) 01:34, 8 July 2015 (UTC)

Income inequality Undue weight

The only quantitative information that can be found in the citations regarding the relationship between income inequality and growth says "Although statistically significant, the magnitude of the relationship between inequality and growth is relatively small." See blockquote in section for reference. Phmoreno (talk) 02:10, 7 July 2015 (UTC)

A quote from the Temple paper:

Yet macroeconomists have traditionally shown little interest in the gulf between rich and poor. The study of growth at the aggregate level has often been something of a backwater, relegated to a brief last chapter in mainstream textbooks, and rarely taken on by anyone outside development economics.

So if economists don't bother discussing income inequality, why does it deserve so much attention here?

The literature on growth discusses numerous problems with income inequality studies such as poor data, time lags, the Kuznets hypothesis and other political and social factors that make it extremely difficult to understand the true relationship between inequality and growth. At most, this section should summarize a few points and leave the rest to Economic inequality.Phmoreno (talk) 02:23, 7 July 2015 (UTC)

Temple (1999) was complaining that economists in general did not give sufficient attention to the income distribution among the determinants of economic growth, and his primary conclusion is directly contrary to your contention that it should be ignored. Your use of the term "only" indicates that you have missed at least five other references in that section. Please re-read it and let us know if you can find them. EllenCT (talk) 17:54, 7 July 2015 (UTC)

Inequality myths

http://www.cato.org/publications/commentary/inequality-myths

http://fortune.com/2015/03/02/economic-inequality-myth-1-percent-wealth/

http://www.forbes.com/sites/jeffreydorfman/2014/05/08/dispelling-myths-about-income-inequality/

http://www.forbes.com/sites/johngoodman/2014/01/02/the-five-biggest-myths-about-income-inequality/

http://www.cnbc.com/id/101367332

http://www.thefiscaltimes.com/2015/02/24/Incessant-Myth-Growing-Wealth-Gap

http://www.economist.com/blogs/democracyinamerica/2010/09/inequality

http://www.brookings.edu/research/opinions/2014/01/06-income-gains-and-inequality-burtless

These primary source op-eds and advocacy sites are poor quality sources. Please remember to sign your posts with four tildes. EllenCT (talk) 17:55, 7 July 2015 (UTC)

The Economist is a poor quality source? The Economist? Capitalismojo (talk) 18:57, 7 July 2015 (UTC)

The Economist is a primary news source which frequently runs unsigned op-eds. It is neither WP:SECONDARY nor peer reviewed. Please familiarize yourself with Misplaced Pages's reliable source criteria. EllenCT (talk) 23:13, 7 July 2015 (UTC)

The Economist is not a primary source and it is reliable. However in this case this the economist blog not the magazine itself. That makes it more questionable.Volunteer Marek (talk) 01:21, 8 July 2015 (UTC)

I am entirely familiar with WP:RS. Other editors clearly are not. The Economist is absolutely not a primary source. The Economist website falls under WP:NEWSBLOG and is not at all questionable. Capitalismojo (talk) 16:52, 8 July 2015 (UTC)

Added a paper by the Brookings Institute that backs up some of these claims.

What to do about the IMF paper?

I thought this was a lousy paper.

"despite the attention given to an International Monetary Fund paper purporting to find that countries with more inequality experience weaker recoveries from recessions, the academic literature comes to no consensus. Studies are as likely to find that more inequality corresponds with higher growth, as they are to find a negative relationship. The IMF study was primarily focused on developing countries, while including only a few industrialized nations in Asia. The liberal Center for American Progress has published no fewer than three studies concluding that, among the studies which directly examine the question, there is little evidence that higher inequality harms growth."<ref>"Income Inequality in America: Fact and Fiction" (PDF). Manhattan Institute. May 2014. Retrieved April 29, 2015.</ref>

Phmoreno (talk) 20:28, 8 July 2015 (UTC)

Which IMF paper? The Manhattan Institute, the Center for American Progress, CATO, Hoover, and Brookings are all advocacy organizations. None of them subject their publications to peer review, and none of them (nor The Economist) publish literature reviews frequently like the Journal of Economic Literature and law reviews covering the economic results of legislation do. The IMF papers in the article have uniformly been supported by the peer reviewed literature reviews and meta-analyses for decades. Paid shills at think tanks can't do a thing about that. EllenCT (talk) 00:24, 9 July 2015 (UTC)

The IMF paper is not peer reviewed, except for the Manhattan Institute's review above.Phmoreno (talk) 14:50, 9 July 2015 (UTC)

How do you feel about this OECD book? EllenCT (talk) 23:12, 10 August 2015 (UTC)

Does Capitalism Cause Poverty?

There is not enough coverage in this article about the role of government policy as a cause of poverty.

Zero Hedge post with a couple of possible source links. Does Capitalism Cause Poverty?

Di Tella & MacullochPhmoreno (talk) 01:50, 24 August 2015 (UTC)

Dr. Cecchetti's comment on this article

Dr. Cecchetti has reviewed this Misplaced Pages page, and provided us with the following comments to improve its quality:

This is an accurate piece. I would link it to the piece on growth accounting.

We hope Wikipedians on this talk page can take advantage of these comments and improve the quality of the article accordingly.

Dr. Cecchetti has published scholarly research which seems to be relevant to this Misplaced Pages article:

• Reference : Stephen G Cecchetti & Enisse Kharroubi, 2015. "Why does financial sector growth crowd out real economic growth?," BIS Working Papers 490, Bank for International Settlements.

ExpertIdeas (talk) 02:19, 29 August 2015 (UTC)

@ExpertIdeas: Dr. Cecchetti would like this article to cite http://www.bis.org/publ/work490.pdf because of its statements about growth accounting? EllenCT (talk) 15:38, 1 September 2015 (UTC)

Hi EllenCT. I am the administrator of ExpertIdeas. I think Dr. Cecchetti is referring to the Growth_accounting article on Misplaced Pages. Please feel free to contact me in case of any questions. I.yeckehzaare (talk) 16:57, 1 September 2015 (UTC)

User:Volunteer Marek did about half of that article. EllenCT (talk) 17:35, 1 September 2015 (UTC)

Oh yeah. Wow, that was long time ago.Volunteer Marek (talk) 20:34, 1 September 2015 (UTC)

As to the BIS paper, that makes me note that this article does not have much on the role of financial sector in economic growth. The basic starting point for that would be Demirgüç-Kunt and Levine (which the BIS paper references, I believe).Volunteer Marek (talk) 20:36, 1 September 2015 (UTC)

Kuznets and Piketty

The Kuznets curve - and Piketty's comment about it - is about the effect of growth on inequality, not vice versa. Hence it does not belong in a section entitled "Factors affecting growth". If there was a section called "The effect of growth on other factors", or something like that, it could go in there.Volunteer Marek (talk) 01:52, 4 September 2015 (UTC)

Evisceration of secondary literature in favor of primary sources

@Volunteer Marek: it is hard for me to believe that you think your recent version of the inequality section is anywhere near compliance with the reliable source criteria, neutral, easy to understand, or in any way an improvement. You discard and disguise the WP:SECONDARY sources in order to get repeated mentions of the flawed trickle down perspective in the first paragraphs, again elevating the primary research by Li and Zou which so clearly contradicts the literature reviews.

And take this edit for example. Here is an excerpt from the source you deleted:

How is that not about growth? Read the other parts about deflation risk from sagging aggregate demand, too. I am replacing the version which we arrived at after several months of discussion. EllenCT (talk) 00:31, 11 September 2015 (UTC)

EllenCT we've already discussed it. My version is better organized... hell, it actually has SOME organization, the previous version is just a hodge podge pot pourri of randomly assembled quotes and snippets. Cutting out cherry picked sources and giving the discussion of literature a historical context actually improves neutrality (fact you don't like it says more about your biases than anything else). Etc.

As to that quote, it's not about growth. Aggregate demand generally affects fluctuations not long term growth. Volunteer Marek  00:41, 11 September 2015 (UTC)

Better organized? Are you kidding? I doubt you could have made it look any more like an attempt to push supply side trickle down if you tried. I waited months for you to comment on the reorganization. And your edit summary here is absurd. Just like you, when asked to provide a WP:SECONDARY literature review in agreement with his position, Jimbo cited two primary sources. He did cite a third source, a bona fide WP:SECONDARY meta-analysis which is clearly in the "inconclusive" category. That still means your attempt to elevate the position against which the conclusive secondary sources are opposed is wrong. EllenCT (talk) 01:04, 11 September 2015 (UTC)

EllenCT, based on our previous discussions and the nature of your comment above it's pretty clear that you are in no way willing to compromise or work together. I'm pretty sure that other editors have had the same experience when trying to engage you and deal with you. For example, the idea that I'm trying to "push supply side trickle down" is so absurd that I don't even know how to respond. You need to either make a good faith effort at engaging the comments made by myself and others over the course of several months or walk away from this article since your WP:BATTLEGROUND attitude is really not helping to improve it. Volunteer Marek  02:17, 11 September 2015 (UTC)

Based on the fact that you refused to comment on the organization for months, you think I'm unwilling to compromise or work together? Just because I care about properly reflecting the secondary sources in the article, you think your attempt to get the discredited trickle down idea that inequality can increase growth in each of the first two paragraphs, and I haven't even counted the rest of them, isn't transparent POV-pushing? EllenCT (talk) 12:36, 11 September 2015 (UTC)

And it's "Jimbo" not "Jumbo", and no secondary sources is exactly what he provided. I'm starting to think you can't tell the difference where you think that "literature review" or "secondary source" means "stuff that agrees with my POV". It doesn't. Volunteer Marek  02:19, 11 September 2015 (UTC)

Typo fixed. You've been saying that you are "starting to think" the same thing for more than a year now, all during which time you have personally produced how many secondary sources? EllenCT (talk) 12:36, 11 September 2015 (UTC)

"Aggregate demand" is not "growth". Perhaps a quote about "economic growth" should be used in this article on economic growth. Capitalismojo (talk) 01:28, 11 September 2015 (UTC)

Grain is not bread. EllenCT (talk) 12:36, 11 September 2015 (UTC)

Actually that article by Shin, which User:Jimbo Wales referred to and which Ellen is dismissing as not-secondary, has a really nice table (Table 1) which neatly summarizes the state of the debate and which could help us organize the relevant section. Volunteer Marek  02:23, 11 September 2015 (UTC)

I'd appreciate being left out of this debate. Having said that, since I've been mentioned, it is clear that Ellen is misrepresenting the literature whenever she impllies that the issues in this area are as settled in one direction as in the scientific literature on 'homeopathy'. The exact relationship between inequality and growth is clearly a valid topic within economics with a range of views evident in the literature. Her claim that it is completely settled is clearly just plain false..--Jimbo Wales (talk) 11:53, 11 September 2015 (UTC)

Since you have provided an inconclusive secondary source, I no longer believe the issue is as settled as I did prior. I remain convinced that all of the secondary sources which take a conclusive position do so opposed to the supply side trickle down position. I also remain convinced that the sooner you come to realize that fact, the better off we all will be. EllenCT (talk) 12:36, 11 September 2015 (UTC)

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