Showing posts from March, 2016

Measuring economic growth over generations

Berkshire Hathaway's annual report was released last week and it of course includes another letter written by Warren Buffet. There are always nuggets in there to help understand our world, business management, and even obligatory diet advice (burgers and cola all the way down). But in this issue I found a theme on measuring "economic growth" over time. The percentage of people employed in farming has decreased tremendously over the past 200 years however output increased. This resulted in many disrupted jobs but now nearly everybody has access to very affordable food. This drastic change has also happened in other industries and as we speak there are several being steamrolled right now. What tools should we use to determine if this was a good development (improvement in quality of life) or a bad one (exploitation of labor, concentration of wealth, robot conspiracy)? Lots of numbers are available from statisticians: GDP, worker productivity, inflation, gini index and