Economic system Flashcards
When it comes to the post industrial shift of economies
some countries are still at the beginning. Their shift will happen differently then ours
(Already moving towards the city, but not because of job availability)
Most important part is the …. (economic system)
physical resource chain
Important factors for the resource chain
- resources are a limiting factor to growth
- “real” prices (so including environmental effects), tax, etc
- Ability to substitute is important to continue growth
… of resources is …. (economic system)
importing
displacing the problem
unless society and income stabelize
there is a chance it will lead to overshoot and collapse
Some of the environmental pollution can be solved by
cleaning and treating welfare diseases
3 ways to prevent doomsday scenario
1) a backstop resource that can substitute and has unlimited supply
2) a technology that can do economic activity at vanishing resources
3) change lifestyle
weak sustainability
complete substitution by technology
strong sustainability
limited substitution options. (Must be mostly done by using resources responsible and efficient.)
3 factors for a strong SD community (economic)
- resilience
- efficiency
- sufficiency
Economic growth loop by smit
Growth of income -> specialisation -> growth of market -> growth of income -> etc.
Malthus … with the economic growth loop created by smit because
disagreed
the fact that resources were finite was not taken into account
Malthus did not take the power of … into account in his model, ….
technology and money.
Yield would increase and population growth rate would decrease. (He only saw overexploitation and collapse)
the determinant of economic growth
technology
No longer is the determinant of economic growth
- resource limits
- capital accumulation
- labour substitution
Input/output tables (economic)
primary inputs are labor, capital and intermediate deliveries.
Intermediate deliveries (economic)
they will get converted to something that is final demand
investments in technologies are often based on
pay back period
3 types of potential (economic)
- theoretical
- technical
- economic
Transaction costs
costs from doing research, surveying, maintenance, etc.
Are often not taken into account in installation calculations
Why are efficiency investments often not made?
- Too long pbp
- Too high transaction costs
GDP
gross domestic product
Why is GDP a bad welfare indicator?
1) it includes expenses like military and cleaning pollution that say nothing about wellbeing
2) it does not include stocks like resources, therefore depletion and future effects are not in the GDP
3) it excludes trade in products (leading to underestimation)
4) it excludes household activities that are part of life
The political system needs to change
pro actively
sustainability issues are often about (economics)
behavior of humans in the face of scarcity
economics is expanding on it’s topics and methods to include things like…
resource management and other environmental topics
limits to growth
the limits will show up through depletion and pollution
New growth scenario’s show (economics)
scenarios of overshoot and collapse as well as stabilization
In the growth scenario’s, we are missing 2 things:
- influence of price
- influence of technologies
Influence of price
when prices rise, we will get smarter
time for adaptation and finding alternatives that will have lower prices
Economics from system perspective
population and productivity loop
Economist think
that economic growth is the most important thing needed to live
in science, economy is seen as
a part whose exergy can be used
alternative view on economy
monetary value is the most important part of economy, with industry and services at it’s core.
(all other parts like the financial system, ecosystem services etc. don’t play a role)
Commercializing household activities
would contribute to economic growth
shadow economy
- can add a large part to the economy
- is illegal
A high shadow economy
is not good because it means that a large part of the transactions are all illegal.
(so no tax is payed…)
The size of ecosystem loss and home farming (economic)
are both around the size of global GDP
GDP is
what we add in terms of value to what nature provides for free.
GDP is increased by
- labor
- knowledge
- entrepreneurial skill
nature is never discussed as a (economics)
a source of resources or as a sink
all official institutions expect (economics)
a doubling of GDP of the next 20 years
Recipe for economic growth
- scaling up (learning rate)
main point of R&D
reducing labor needed for creating of products
R&D is hardly ever about energy and resource input because the largest costs come from labor
A theory says that sustainable growth can be reached (economic)
through working less and having more time to spend money
higher consumption can lead to more sustainability problems
From money to physical materials
monetary and physical flows
- capital resource substitution
- input/output formalism
capital resource substitution
a function where capital and labor can replace eachother
input/output formalism
method where you want to account for the fact that when you buy something, the energy use from the whole economy can be analyzed for that product
