Arnold Kling  

What is a Collapse?

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I'm surprised that Bryan, of all people, would ask. If you're looking for a notion of collapse, try here.

A society can get stuck in an "idea trap," where bad ideas lead to bad policy, bad policy leads to bad growth, and bad growth cements bad ideas.

As far as the definition of being "on the verge" is concerned, I think I prefer a probabilistic story. I would say that the probability that several European countries will fall sufficiently far into the idea trap that their standard of living stagnates for more than a decade is about 25 percent over the next forty years. Stagnation would be particularly bad, given that I expect technological progress to accelerate, causing economic growth to exceed 5 percent per year in much of the world as we get toward the middle of the century. In that context, zero economic growth for a decade will seem like a collapse.

See also The Economist blog

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CATEGORIES: Political Economy

COMMENTS (2 to date)
Curt Gardner writes:

Economic growth of 5% per year, in much of the world? Yes, probably, since so much of the world has a lot of economic catching up to do. But could developed Europe grow anywhere near that rate? And if it did, what would it look like? (I suspect it would look like America, which in general it may not like to do).

Japan was basically stagnant from an economic point of view... did it collapse? did its people even suffer much? It doesn't seem like it. So if you are starting from a good position, the 'necessity' for growth seems questionable.

Viscus writes:

On the contrary Kling, the probability of stagnation is only 18.56777777774% not the preposterous 25% that you claim!

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