funduffer wrote:Nimrod103 wrote:
There is a limit to the amount of debt which countries can build up, and many western countries including the USA are now approaching it. It will be interesting and not a little nerve wracking to see how much more debt we can take on.
Without recourse to further debt, governments can only bribe the electorate by paying Peter (their supporters) by taxing Paul (their ideological enemies).
Debt as a % of GDP - USA 110%, Japan 214%, so USA nowhere near any limit.
If you want the main influences on GDP growth - then they are, in my opinion low birthrate/increasing longevity, climate change and inequality.
Low birthrate can be fixed by increasing immigration - as Japan are finding out
Climate change will need public investment, particularly in renewables, which improve energy self-sufficiency. Food security will become a problem and UK is in a poor position.
Inequality can be fixed by progressive taxation policies - call it socialism if you like. Too much wealth in the hands of the few will lead to civil strife and does nothing to promote growth. Trickle down has never worked.
FD
The debt limit for a country depends on who holds that debt. Japan gets away with its high debt because it is held domestically, with a culture that encourages domestic savings. The USA probably has headroom because it issues the World's dominant currency, and is the World's most productive economy. How much more borrowing can the UK do? We may soon find out.
GDP growth depends a lot on the cost of energy. The UK has electricity costs 75% higher than the USA, combined with an anti-investment culture. No wonder it is cheaper to import immigrants instead of increasing automation. Wind power may give us electricity self sufficiency (when the wind blows), but don't let us fool ourselves that it is cheap.
Food security is not an issue while we can still import avocados. But should the need arise, I am sure we can change our diet to one of turnips and potatoes. The main issue is just the sheer number of unproductive mouths we have to feed here.
Too much wealth in the hands of a few leads to greater investment and greater productivity. That is what happened in the Industrial Revolution. Spreading the money around just leads to more people who prefer and can eat avocados when they should be eating potatoes.