Friday, 19 September 2008

The tortoise doesn't always win

The hare and tortoise story is given a good outing in the press to explain how Lloyds' risk-limited strategy beat HBOS's gallop for growth - but it doesn't always hold true. Following from Nick's comments on a post below on the economic growth enjoyed by BRIC, what is extraordinary is that it's happened in spite of rather than because of the turgid central planned economies that Nick so accurately describes. But differences of rates of economic growth can have dramatic effects over quite a short time period if they're sustained and it's the hare that streaks past the winning post:-

Year GDP growing at 2% GDP growing at 7%
0 100 50
1 102 54
2 104 57
3 106 61
4 108 66
5 110 70
6 113 75
7 115 80
8 117 86
9 120 92
10 122 98
11 124 105
12 127 113
13 129 120
14 132 129
15 135 138

I'm naturally much more pessimistic than Nick about the West's future, I think - and as a sort of follow-up essay to 'Colossus' Niall Ferguson penned a decent piece for Vanity Fair HERE that rehearses the arguments - but no doubt something we both agree on is the awful damage that socialism does to economic growth; it's a perverse, alien and inimical influence wholly contrary to the national good. If, as Nick suggests, the current bust is enough to push socialism out of British politics for ever all the pain will be worth it.


Blue Eyes said...

It isn't possible to sustain those kind of rates once a country has caught up with the leaders. While catching up a country can adopt technology and practices faster than the leaders, but once at the front of the pack productivity growth slows to the rate at which technology is developed. That is why Britain has had pretty much the same trend growth rate for "ever", because we have been at or near the front for a long time. Even the better-placed USA doesn't have a much higher trend growth rate. Japan and Germany boomed post-war while they caught back up with the leaders but have since slowed back down. BRIC will catch up rapidly but will not overtake.

Newmania said...

My nasal inuition is along the Blue Eyes lines . It all sounds a little too satisfyingly apocalyptic to me .Things are usually duller .

Oh this reminded me of a lovely ,if antique ,piece of political satire but Lord Dunsay. I have posted on my now ex blog having tracked it down

Bill Quango MP said...

BOM are going the other way. State intervention is now seen as the ONLY method of avoiding market collapse.
More, not less, socialism seems to be on the cards.

Anonymous said...


For now.