EconDebates - Productivity and Growth

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Productivity and Growth

Title

Introduction

Is There A New Economy?

Full Debate

The rate of growth of productivity in the U.S. economy remained relatively low in the 1980s and early 1990s. Real wages fell in many industries during this period. Many economists argued that structural changes in the economy had resulted in a natural rate of unemployment that was over five percent. The late 1990s, however, provided a very different economic situation in which a more rapid rate of productivity growth resulted in higher real wages throughout the economy. This increase in productivity growth was accompanied by relatively low inflation and a rather substantial decline in the unemployment rate (reaching a low of 3.9% in April 2000). This change has been so dramatic that many have argued that the U.S. now has a "new economy" in which the old rules no longer apply. It is generally argued that this "new economy" is the result of the growth of the internet and an expansion of global competition.

Will Social Security survive into the 21st century?

Full Debate
The online resources listed below provide a wide range of opinions concerning the magnitude of the problems facing the social security system. Part of the reason for this is that forecasts of future social security revenue depend on factors such as future rates of economic growth, the level of future unemployment and labor force participation rates, and similar factors. Small differences in rates of economic growth can have dramatic effects on the level of output (and tax revenue) over the course of a 20-30 year period. Different assumptions about such future outcomes result in very different conclusions about the future solvency of the social security system.

Do technological advances result in higher unemployment?

Full Debate

Technological advances allow society to produce more output from the existing mix of resources. These advances may take the form of less costly methods of producing existing output or may result in the production of new (or substantially improved) commodities (such as DVD players, HDTV, anti-lock braking systems, and similar innovations). Society clearly gains from the production of either more output or more highly valued output. But, how do these technological advances affect employment?

Does foreign direct investment hinder or help economic development?

Full Debate
One of the requirements for economic development in a low-income economy is an increase in the nation's stock of capital. A developing nation may increase the amount of capital in the domestic economy by encouraging foreign direct investment (FDI). (Foreign direct investment occurs when foreign firms either locate production plants in the domestic economy or acquire a substantial ownership position in a domestic firm.)

How should we reform the current tax system?

Full Debate
While virtually everyone agrees the the current tax system is excessively complex, there is no tax simplification plan that is universally accepted. The major problem is that most proposed changes in the tax structure will benefit some taxpayers and harm others.

How should the U.S. budget surplus be used?

Full Debate
After three decades of federal budget deficits, a budget surplus was realized in 1998. Economic forecasts suggest that such a federal budget surplus is likely to continue for the next several years (in the absence of a major recession or substantial revisions in fiscal policy). In the past, much of the discussion of the federal budget has dealt with the possibly adverse consequences of a federal deficit. Over the past couple of years, the discussion has gradually shifted to examine what, if anything, should be done with the federal budget surplus.

Is more spending on infrastructure the key to economic growth?

Full Debate

U.S. Presidential elections are often won and lost on the basis of the state of the economy in the period leading up to the election. When people are asked to list the economic problems about which they are most concerned, unemployment and inflation generally top the list. Economic growth is rarely mentioned as one of the most pressing concerns. The importance of economic growth is often overlooked. While the effects of growth may be small in any one year, the cumulative effect of compound growth becomes rather dramatic over time.

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Productivity and Growth
Title	Introduction
Is There A New Economy? Full Debate	The rate of growth of productivity in the U.S. economy remained relatively low in the 1980s and early 1990s. Real wages fell in many industries during this period. Many economists argued that structural changes in the economy had resulted in a natural rate of unemployment that was over five percent. The late 1990s, however, provided a very different economic situation in which a more rapid rate of productivity growth resulted in higher real wages throughout the economy. This increase in productivity growth was accompanied by relatively low inflation and a rather substantial decline in the unemployment rate (reaching a low of 3.9% in April 2000). This change has been so dramatic that many have argued that the U.S. now has a "new economy" in which the old rules no longer apply. It is generally argued that this "new economy" is the result of the growth of the internet and an expansion of global competition.
Will Social Security survive into the 21st century? Full Debate	The online resources listed below provide a wide range of opinions concerning the magnitude of the problems facing the social security system. Part of the reason for this is that forecasts of future social security revenue depend on factors such as future rates of economic growth, the level of future unemployment and labor force participation rates, and similar factors. Small differences in rates of economic growth can have dramatic effects on the level of output (and tax revenue) over the course of a 20-30 year period. Different assumptions about such future outcomes result in very different conclusions about the future solvency of the social security system.
Do technological advances result in higher unemployment? Full Debate	Technological advances allow society to produce more output from the existing mix of resources. These advances may take the form of less costly methods of producing existing output or may result in the production of new (or substantially improved) commodities (such as DVD players, HDTV, anti-lock braking systems, and similar innovations). Society clearly gains from the production of either more output or more highly valued output. But, how do these technological advances affect employment?
Does foreign direct investment hinder or help economic development? Full Debate	One of the requirements for economic development in a low-income economy is an increase in the nation's stock of capital. A developing nation may increase the amount of capital in the domestic economy by encouraging foreign direct investment (FDI). (Foreign direct investment occurs when foreign firms either locate production plants in the domestic economy or acquire a substantial ownership position in a domestic firm.)
How should we reform the current tax system? Full Debate	While virtually everyone agrees the the current tax system is excessively complex, there is no tax simplification plan that is universally accepted. The major problem is that most proposed changes in the tax structure will benefit some taxpayers and harm others.
How should the U.S. budget surplus be used? Full Debate	After three decades of federal budget deficits, a budget surplus was realized in 1998. Economic forecasts suggest that such a federal budget surplus is likely to continue for the next several years (in the absence of a major recession or substantial revisions in fiscal policy). In the past, much of the discussion of the federal budget has dealt with the possibly adverse consequences of a federal deficit. Over the past couple of years, the discussion has gradually shifted to examine what, if anything, should be done with the federal budget surplus.
Is more spending on infrastructure the key to economic growth? Full Debate	U.S. Presidential elections are often won and lost on the basis of the state of the economy in the period leading up to the election. When people are asked to list the economic problems about which they are most concerned, unemployment and inflation generally top the list. Economic growth is rarely mentioned as one of the most pressing concerns. The importance of economic growth is often overlooked. While the effects of growth may be small in any one year, the cumulative effect of compound growth becomes rather dramatic over time.