How the West Could Double GDP Growth in Two Easy Steps

Reposted from JohnBrianShannon.com | Written by John Brian Shannon

GDP Growth | Empowering the bottom-two economic quintiles via a Guaranteed Basic Income and a 21st century minimum wage will allow them to become part of the solution… instead of part of the problem.

We Have a Problem in the West

The top-three economic quintiles are doing just fine thank you very much, and any one of those top-three quintiles contribute more to society… than the bottom-two quintiles combined!

That includes the CO2 emission contributions of any one of the top-three quintiles by the way. And it includes the high level of government spending required for the enhanced infrastructure and security considered de rigueur for those who live near the top of the economic pyramid.

If you don’t believe that the top-three economic quintiles cost the government more, just take a drive around some of the ‘tony’ neighbourhoods in your city. Look at the streets (nice, broad thoroughfares and sidestreets that are always well paved, etc.) look at the decorative streetlights, the curbing, the sidewalks. Also don’t miss the world-class schools and recreational facilities. And of course, visit an international airport to see how many of the travelers boarding planes to sunny locales hail from the top-three economic quintiles. That would be most of the travellers in the airport.

While the top-three economic quintiles are driving their Land Rovers and taking exotic vacations and sending their kids to university (and yes, they do work hard for their money — nobody is saying any different) the bottom-two quintiles can’t.

While the top quintiles cost society much, they also contribute much. And why shouldn’t they contribute much? They’re the prime beneficiaries of that society.

At the end of it all we may conclude that (apart from their astonishing CO2 footprint and the astronomical security costs to ensure almost total security in their neighbourhoods) the top-three quintiles aren’t the problem when we’re talking about the economy.

Through no fault of their own the problem lies with the bottom-two economic quintiles and we can thank (some) economists and (some) politicians for this miserable state of affairs.


Shall We Toss the Bottom-Two Economic Quintiles into the Ocean?

Or should we allow them to become ‘part of the solution’ on the path to dramatically increasing national GDP growth?

If we did toss them in the ocean, just for argument’s sake; Who will pour your latte at your favorite coffee joint? For that matter, who will pick up your trash, man the gas station counter, feed the ducks in the city park, or cut your lawns and clean your swimming pool?

Wouldn’t you rather be earning your $100 per hour or whatever you earn, instead of spending your free time sweeping the sidewalks and changing burned-out streetlamps? Wouldn’t you rather be racing your personal watercraft with friends at your lakefront cottage? You work hard, you play hard. Great!

Now let the other people contribute too.


Maybe Those Bottom-Two Economic Quintile Types Aren’t So Bad!

As it stands now however, the bottom-two quintiles are a drag on the economy. There’s no hiding that fact.

Some are homeless and may engage in property crimes or other offenses. Others may find themselves often unemployed or in a permanent state of underemployment as 34% of all manufacturing jobs have left Western nations for Asia since 1975. (Not the fault of the bottom-two economic quintiles by the way)

And still others just can’t find their niche, nor do they have the education, nor the financial clout to engage in the type of business where they could succeed in personal terms, but also contribute to the overall economy.

They want to contribute(!!!) to their country but can’t find a way forward. And they’re not up for moving to Asia to reclaim their former manufacturing job. Nor should we expect them to.


Changing a Negative Into a Positive!

Many people have experienced the kind of drag induced by leaving your car’s emergency brake in the ‘on’ position as you travel down the highway. As soon as you realized your mistake and moved the e-brake to the ‘off’ position the car appeared to have 100 more horsepower.

But of course it didn’t. The motor had the same horsepower it always had, it’s just that by accidentally leaving the e-brake ‘on’ it took extra power to move the car.

So it is with the economy and the bottom-two quintiles.

Prior to all those manufacturing jobs leaving for Asia, the bottom-two economic quintiles contributed much to the economy. We used to call them ‘the middle class’ or ‘blue collar workers’ or ‘the rank and file’ and other descriptors.

But there just aren’t the jobs to employ them now. So many people (millions) have exhausted their unemployment insurance benefits and have given up looking for a job, any job, that they’re no longer listed as officially ‘unemployed’. The corporate world, and governments too, appreciate that those are rarely reported stats. It makes them look bad and feel bad, but they don’t know why, or how, this has happened. In any case, it’s better for them that it’s rarely reported.

Yet, there is no need to leave two-fifths of the population in a permanent state of poverty and thereby not able to move ahead with their lives — let alone contribute to GDP.

A two-track plan could accomplish a number of good things for the overall economy.


Allowing the Bottom-Two Economic Quintiles to Become Part of the Solution, Instead of Part of the Problem

Working people always contribute more to the economy than non-working people. But what’s the use of getting a job if you can’t afford the monthly bus fare to get back and forth to work? It’s a very common thing nowadays.

Make your choice now; Eat for the month, or use your grocery money for subway fare. Pay the electricity bill, or buy a monthly bus pass to get back and forth to work. Buy some decent clothes for a job interview, got the job! now you can’t afford the bus fare to get you back and forth. Ugh!

These are the very real concerns of the McJobs era. It’s even multi-generational. Older workers may work as low-paid greeters at WalMart, while younger, low-paid workers at fast-food restaurants experience similar life choices.

Two-fifths of the working age population are a drag on the economy — but only because of poorly thought-out policies and on account of the race for corporate profits which were (and are still) improved by outsourcing jobs to developing nations. Bad!

Therefore, because the situation is so tragic ANY solution is better than allowing the status quo to continue!

Two Ways to Solve Gross Inequality and Increase GDP:

  1. Legislate a standardized $15/hr wage right across the country. In this way, people who would rather work will be able to afford to eat for the month AND pay their electricity bill AND have enough money for bus fare to travel back and forth to a job. Perhaps Mom and Pop can front them the money to buy some decent ‘job interview appropriate’ clothing and help in other ways such as babysitting young children, etc. However, we can’t expect Mom and Pop to pay for all of those things, as their time and resources are limited too.
  2. A guaranteed basic income (GBI) of $1088/month per adult (a generally recognized amount, accepted by researchers and governments)
    In some cases, this would effectively ‘top-up’ the monthly income of welfare recipients and Old Age Security recipients to $1088/month from all sources. It would likewise replace all other low-income schemes, grants, etc. So much duplication of services exist that entire government departments could be down-sized (by attrition) thereby saving some government departments up to 5% in their annual budgets. Especially police and court budgets. And the multi-billion dollar SNAP programme and Food Banks could be eventually discontinued, for example.

With 21st century policies in place, the bottom-two quintiles could then afford(!) to look for a job, afford(!) to move to a different jurisdiction to accept a job offer, afford(!) to return to vocational school or attend night school to brush-up on job-skills, or afford(!) to move to a safer neighbourhood where they aren’t afraid to take the bus to a night shift job they’ve been offered.

As soon as they report on their annual tax return that they’re earning any amount over the poverty line, then their GBI payments would be discontinued. Success!


If policymakers want the present situation to continue to deteriorate; Just keep on doing what you’ve been doing, and you’ll keep on getting what you’ve been getting

But if we want the bottom-two quintiles to contribute to the economy like they did in past decades, policymakers must set payscales at rates that are relevant to 21st century cost of living standards (they’re not now!) and they must institute a GBI that replaces all low-income schemes and empowers people to either; move to a job, retrain for a job, afford transportation to and from a new job, and in the meantime, maintain their home / electricity connection / phone connection / internet connection / job interview and other employment-related clothing needs / childcare / normal caloric intake / buy medicine, and afford other necessities in our modern world until they get back to work.

How can you get a job nowadays if you can’t afford an internet connection? Do you know? (I don’t know. Can that still be done in the year 2017? Probably not)

The time for navel-gazing is over. It’s time to get brave and release the brakes from the economy and allow the bottom-two quintiles to again contribute to the economy by passing legislation that’s designed to make people part of the solution, instead of part of the problem!

UK Leads G7 in Combined Metric of Economic Growth / CO2 Cuts

Reposted from Letter to Britain

by John Brian Shannon

A new Energy & Climate Intelligence Unit report confirms that Britain has been the most successful G7 nation over the last 25 years on the combined metric of growing its economy and reducing greenhouse gas emissions.

In the 25-years since 1992 when clean air and the corresponding lowering of healthcare spending suddenly became an important policy, Britain grew its per capita GDP by 130% while lowering GHG emissions by 33% — proving that a country can simultaneously grow their economy AND lower greenhouse gas emissions.

Comparatively, Japan grew its per-capita GDP by 83% while increasing its per-capita emissions by 10.5% — making it the worst performer of all the G7 nations. (Not to pick on Japan which has the most difficult population pyramid demographic problems of any nation on the planet)

“It’s really time to slay once and for all the old canard that cutting carbon emissions means economic harm.

As this report shows, if you have consistent policymaking and cross-party consensus, it’s perfectly possible to get richer and cleaner at the same time. Britain isn’t the only country that’s done it – it’s true for most of the G7 – but we’ve clearly been the best of the bunch.

There are signs that these successes are now transferring to the rest of the world.

Globally, emissions have been flat for three years while world GDP has grown by 8%. But science indicates this isn’t enough to fulfil the objective of the UN Convention and prevent ‘dangerous’ climate change – for that, emissions need to start falling soon.

This study should give confidence that with good policies, it’s achievable.” — Richard Black, director of the Energy and Climate Intelligence Unit

And in the United Kingdom, Scotland has led the way on the switch from coal to renewable energy and it rightly deserves many of the accolades handed to the UK over the ongoing clean air success story, while England and Wales deserve much of the credit for growing the UK economy. As usual, Northern Ireland is ‘holding its own’ and although it is presently caught in the middle of an election cycle it seems that it might ramp-up to follow Scotland’s environmental success, post-election.

Scotland sets 50% renewable energy target (BBC)

Pre-Brexit, UK Leads G7 In ‘Conscious Decoupling’ Of Economic Growth & Carbon Cuts (CleanTechnica)

The Road to Decoupling: 21 Countries Are Reducing Carbon Emissions While Growing GDP (World Resources Institute)


By far, the biggest reason UK emissions have dropped in every decade since WWII is a HUGE shift away from coal. At one time, almost 100% of Britain’s electricity was sourced by brown or black coal. Some of which was replaced by hydro-power, and later, by nuclear. Eventually, even more coal-fired capacity was replaced by natural gas, and most recently, by renewables.

The inexorable march away from coal-fired generation in the UK resulted in cleaner air. It is by far the biggest factor in Britain’s ongoing clean air success story.

Still, it’s not enough progress. Scotland has set the standard that the rest of the UK should follow — which will take strong leadership in the House of Commons.


The Way Forward for Clean Air, Lower Healthcare Spending, and a Thriving Economy for Britain

There are many ways to accomplish those goals and everything has its own particular cost. But two pathways jump out as the most beneficial per pound sterling.

ONE: Continue to replace coal-fired power generation with any other power generator. Yes, everything else burns cleaner than coal! Burning home heating fuel is cleaner than coal. Natural gas-fired power generation can be up to 1-million times cleaner than burning some grades of brown coal. Even upgrading coal-fired power generation from brown coal ‘lignite’ fuel to black coal ‘anthracite’ fuel results in astonishing improvements in air quality.

Fortunately, this is the (unevenly applied) default in the United Kingdom, which, when combined with the solid and thoughtful policies of Scotland and Wales, results in cleaner air, lower healthcare costs, and boosts economic growth via lower energy prices.

Record UK wind generation lowers electricity prices (Power Engineering)

TWO: In addition to everything mentioned above, the other low-hanging fruit leading towards cleaner air, to lower healthcare spending and to boost economic output (by lowering energy costs) is via energy-efficiency.

Prime Minister Theresa May should recognize that no matter how cleanly we can generate one GigaWatt of electricity, energy-efficiency equal to one GigaWatt is many times cleaner — and such improvements are typically simple and cost-effective.

Imagine a UK government policy that lowers primary energy consumption (demand) by 30% across-the-board over the next 5-years.

That’s possible with the right policy, and infinitely cheaper than adding the exact same amount of energy production capacity (demand) to the grid.

Cheaper, by orders of magnitude. In fact, the Hinkley Point C nuclear power plant construction could be cancelled AND other proposed power plant projects could be shelved for at least a decade with that much efficiency added to the grid.

Simple programmes get the best results

If the UK government added an energy-efficiency programme shared by three government entities, costs and (importantly) accolades would be shared between them.

The Department of Energy & Climate Change, the Secretary of State for Business, Energy and Industrial Strategy, and the Department for Communities and Local Government, would gain support from voters and expats by supporting a national energy-efficiency programme consisting of a £100 per capita credit on energy-saving electronics and materials.

For a business that employs 5 people, that’s a one-time credit of (up to) £500 towards energy-efficiency at that business, which will buy A TON of efficiency and thereby lower energy consumption/energy bills for that company.

All else being equal; Are those business owners more likely to vote Conservative in the next election? I would have to say, Yes.

Obviously, those 5 employees also live near their workplace and use electricity at home. Therefore, they too should receive a one-time (up to) £100 per capita credit at the hardware store for the purchase of LED or other energy-saving lights, smart thermostats, weather-stripping, insulation, receptacle gaskets and other energy-saving electronics or materials.

Each of those 5 people will now save significant amounts on their monthly electricity bill.

Again, all else being equal; Are those homeowners or tenants more likely to vote Conservative in the next election? The answer is likely to be affirmative if the present government decides to save each one of them, tens or hundreds of pounds per year on their annual electricity bill.

It sounds expensive until you consider the cost of adding 30 GigaWatts to the UK grid to cover wasted energy vs. spending a much smaller amount to conserve the same amount of energy.

There is simply no comparison. Energy-efficiency wins every time, and it’s cheap in relation to the costs of building new generation capacity.

A £100 per capita energy-efficiency credit for the UK is the way forward for clean air, lower healthcare spending, and a thriving economy for Britain (via lower energy costs) and pound for pound, nothing else comes close to accomplishing those goals at such a comparatively low spend.

The Synergy of the Good Economy

Reposted from JohnBrianShannon.com

An economy that constantly grows and improves because it has enough virtuous circles (and cycles) is by design, a good economy.

It’s what every economy wants to be when it grows-up.

However, there are no generally accepted metrics to measure what constitutes a good economy — but a definition by Edmund S. Phelps in his recent Project Syndicate essay is a definition that one can appreciate.

It is worth noting that the UN Happiness Index could be a way to grade the successful march towards a ‘Good’ or ‘Virtuous’ economy, as nations that rank highly on the UN Index also tend to have high productivity, high per capita income, low unemployment, a high degree of personal rights and freedoms, low crime rates (and related to that stat) generally high levels of education, and in other ways their citizens live fulfilling lives in a stable environment.

It’s easy to ‘work it back’ from the end-user point-of-view.

Another way to grade the march toward a Good Economy would be the Social Progress Imperative’s SPI Index.

If nations are ranking highly on SPI heuristics, it’s obvious that everything needed to support those high grades are *already in place* and working. Ergo, a high-scoring SPI nation is one with a Good Economy.

Social Progress Index 2015
The Good Economy as demonstrated in the Social Progress Index 2015

Perhaps nations (and economists!) should put more emphasis on UN Happiness Index and SPI heuristics and less emphasis on GDP growth.

After all, You Can’t Feed a Family with GDP

The 1%’ers will always rate their country highly on the UN Happiness Index and on the SPI Index, as their incomes and security are guaranteed and their income growth meets or exceeds GDP growth. What matters in this case, is what 99% of the population thinks.

In developed countries, GDP growth has largely plateaued, and even in the United States of America the largest economy on the planet and the country with the strongest military, GDP growth is anemic at 2% annually.

There just isn’t room to grow the U.S. (and other) developed economies more than 2% per year under the existing paradigm.

“If you keep on doing what you’ve been doing, you’re going to keep on getting what you’ve been getting.” — Jackie B. Cooper

Einstein said something similar — “The definition of insanity is doing the same thing over and over again, but expecting different results.”

Therefore, to try to get more growth out of the U.S. economy by ‘doubling-down’ on everything that we’re already doing, does nothing except prove the truth of such quotes.

But what the U.S. hasn’t tried (enough) is to use heuristical analyses to plot a policy path towards high UN Happiness Index and high SPI scores. By doing so, I posit that the U.S. could unlock another 2% of GDP growth annually.

If that’s true for the U.S. economy, it works double for China’s economy.

Did anyone else notice the productivity increases in China during, and for a short time after, the Beijing Olympics?

Yes, a mini economic boom occurred as a result of hosting the Olympics — just as it does in any country that hosts the Olympics. But productivity isn’t known to spike upwards when a country hosts the Olympics.

I guess after not seeing the sky for decades due to a permanent and thick blanket of industrial smog, Beijing residents finally got to see the sky — due to some very foresighted Chinese air pollution abatement policies that were implemented for the duration of the Olympics.

“Look everyone, The Sky!”

The Good Economy gave much-needed respite to Beijing residents during the 2008 Olympics by lowering smog levels which improved their quality of life, consequently and unexpectedly, worker productivity improved. Image by scmp
The Good Economy gave much-needed respite to Beijing residents during the 2008 Olympics by lowering smog levels which improved their quality of life, consequently and unexpectedly, worker productivity improved.

Constant smog is a normal state of affairs for residents of China’s major cities, except during the 2008 Olympics when special air quality policies went into effect (in Beijing only) unfortunately.

An improved quality of life picture for Beijing residents worked to improve overall productivity, improving the bottom line for Chinese companies.

Certain other perks were added, including never-before-seen-in-China freedoms to travel and to miss time from work in order to travel to the Olympics.

That’s what I call a virtuous circle!

Imagine if that could be made permanent. It’s an example of how improved lives for workers can positively affect productivity and the bottom line.

By employing end-user heuristical data, developing nations could double their GDP growth annually.

For the rest of us; Now that the standard economic tools to increase growth have largely ‘topped-out’ in developed nations, it’s now time to look at improving the lives of citizens by using heuristical analyses — to increase the happiness of citizens, which will increase productivity, improving the bottom line, leading to higher GDP growth.

The proof that this works well is easily found by investigating the Norwegian, Danish, Swiss, Swedish, Liechtenstein, and UAE economies.

Ultimately, the question is a regional one; How can we improve the lives of workers and their families so that productivity can be enhanced, and thereby improve annual GDP growth?

Some nations have asked, and the results have been astonishing.

Soon, people will be saying things like; “The synergy of the Good Economy is that the pursuit of happiness by individuals is directly related to the pursuit of worker productivity by corporations, which is directly related to the bottom line and GDP growth.”

And when those words are commonly spoken by both the masses and the elites, for the first time in history, our civilization will be firing on all cylinders — courtesy of the Good Economy.

by John Brian Shannon