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This question is not backed by serious economic research but mainly by a very simple attempt to look at how the world economy has changed.

I am asking whether and why the world has, over the past 50 or so years, become less productive (not used in the strict economic sense here) and therefore people have less money to do stuff/buy things.

Several reasons why I believe this to be the case (I am open to be corrected):

  • Real wages in developed economies have not risen for a long time
  • Financial crisis now been going on for many years (almost 10)
  • Unemployment in the EU is very high
  • Tax rates are ever-increasing (it seems) relative to median wages
  • More and more people are reliant on welfare (from what I gather, unfortunately I don't have a source at this point
  • Growth in developing countries (China) has decreased
  • National debts are ever-increasing

This has left me with the feeling that in many situations, there is simply 'less' money to go around and be spent. I can observe this, for example, by the seemingly constant need of companies and countries (even where I live, in wealthy Switzerland) to save money and reduce expenses (I don't know if it only seems this way because of some biases or it is actually the case).

Again, not sure if this is actually happening or if it only seems so to me (Also apologies for not being able to express this in very 'economy' terms).

Several reasons that I could explain to myself why it would seem like we have less to spend and are less productive than we used to be:

  • Rising inequality (the rich keep getting more so the majority has less)
  • Less incentive for technological progress (apart from in IT). In many industries, there is no reason to keep making everything better, only to make it cheaper and more profitable. We have most of what we need and don't see a point in improving it (cupboards, beds, kitchen utensils etc.)
  • Lethargy of people. Many people are happy with what they have and do not want to work more/harder
  • We have most of what we need, and the things that are left to buy are luxury items (which we maybe didn't think about before)

Again sorry for the very vague way of asking this question without any evidence, but if someone could help me make it more concrete I would be very open to that.

I guess what I want to say is do people have less money and less to spend than they used to, and if so, why?

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    $\begingroup$ Real wealth since the great depression in the United States has grown by 6 times, so no, the world has not gotten poorer. $\endgroup$ – BB King Nov 17 '15 at 13:10
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    $\begingroup$ Please define real wealth $\endgroup$ – fishlein Nov 17 '15 at 13:16
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    $\begingroup$ I guess that you are clearly distinguishing in your mind the evolution of total wealth from how this total wealth is distributed among individuals, right? $\endgroup$ – Alecos Papadopoulos Nov 17 '15 at 14:19
  • $\begingroup$ I know that if total wealth increases this doesn't mean that individual wealth must increase, too. However, in my question I am not as interested in individual wealth as total wealth; I am merely acknowledging that uneven distribution may make it seem as if total wealth is decreasing and asking whether this is true. Hope this makes sense $\endgroup$ – fishlein Nov 17 '15 at 14:26
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    $\begingroup$ The true answer is that the gap between richer and poor has increased... further population among poor is faster increasing.. $\endgroup$ – user6330 Nov 17 '15 at 14:27
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The short answer is No.

Every single year, except 2009, for the past 55 years of continuously recorded economic history, the world has been getting richer. The -2.1% global recession in 2009 was made up in 2010 with 4.1% growth. I was just working with the World Bank's World Development Indicators, which track global GDP growth, and I double checked.

We measure prosperity and growth by the quantities of goods produced. Money is irrelevant. Every year we, humans, produce more and more goods and services and that makes us richer. Not every country grows steadily though. Some countries are stagnant, like Greece, and some grow remarkably rapidly over very long periods of time, like China. Moreover, there is increasing inequality withing many countries (measured by GINI coefficient). So it is very natural for many to feel like everything around them either stands still or degrades. But on average, the world keeps getting richer.

If you are in Switzerland, you may have felt the shock from recent currency appreciation. Sharp currency appreciations hammer exporters and industries reliant on tourism, which make up a large portion of Swiss economy.

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    $\begingroup$ Is that GDP per capita? Also could you please provide a link as I only found the GDP of each country and not the global 'GDP' $\endgroup$ – fishlein Nov 17 '15 at 11:21
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    $\begingroup$ It was real GDP growth rate, but you are right, real GDP growth rate per capita is a more accurate measure of wealth per person. Nevertheless, GDP per capita has also grown steadily over the past 50 years and receded for 5 years (1974, 1975, 1982, 1991, and 2009). The link for the World Bank Databank is databank.worldbank.org/data/… You can choose WDI as the database, World as the country, 'GDP per capita growth' as the series, and check all years for time. You can also switch to Chart View on top to make it easier to spot recessions. $\endgroup$ – Arthur Tarasov Nov 17 '15 at 11:40
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    $\begingroup$ On a related note, the fraction of the world in extreme poverty has fallen from 44% in 1981 to less than 10% today: worldbank.org/en/topic/poverty/overview $\endgroup$ – dismalscience Nov 17 '15 at 13:34
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    $\begingroup$ @JRE: well, depending what you think "news" means ;-) $\endgroup$ – Steve Jessop Nov 17 '15 at 14:36
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    $\begingroup$ @fishlein— Yes, the number is inflation-adjusted, and conversions are done using PPP. The World Bank is not full of total amateurs! $\endgroup$ – dismalscience Nov 17 '15 at 15:41
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To add to some of the answers above, there is another subtle point one must bear in mind. Inequality is a relative concept, not an absolute one. Growing inequality by itself does not bear any consequences on absolute levels of wealth. For instance, think about the ratio of the 90-10 quantile of income for the past few years. If this ratio has been growing, all this means is that the 90th quantile of income is growing faster than the 10th quantile of income. Both could be growing, and one could be growing faster than the other. I suggest you check out the study by Dollar and Kraay (2002) "Growth is good for the Poor."

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The world as a whole is richer than ever. And people are richer than ever. The last 50 years show a remarkable decrease in extreme poverty in the world, especially in Asia. Your observation that growth in the richest countries have been slow the last 10 years is correct. However, compared to 50 years ago, people in the richest countries are much better off in general.

A good way to illustrate this is to view official statistics through the Gapminder tool.

https://www.gapminder.org/tools/#$chart-type=mountain

Choose Income and press play.

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Rising inequality (the rich keep getting more so the majority has less)

This is false. What do rich people do with their money? They invest. Investments stimulate business. They start companies. They buy million dollar homes that provide jobs for construction workers. They own companies that employ thousands. They buy 4k TV's and similar expensive products which gives companies the capital to begin producing things on a large scale.

The richer the rich people are, the better for us. Take more rich people and richer people as a sign of an improving economy, not a poorer one.

I recommend Basic Economics, by Thomas Sowell. It'll give you a great idea of how economies work.

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    $\begingroup$ "What do rich people do with their money? They invest. Investments stimulate business." Demand stimulates business. edit: hit enter instead of shift+enter, ops $\endgroup$ – industry7 Nov 17 '15 at 16:22
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    $\begingroup$ This is a very silly answer. The rich do not automatically invest in things which help the rest of us. In fact they waste a lot of what they have, because they don't have to watch every penny. They also tend to circulate their wealth among their own class. Kings in castles may have controlled most of the resources of a mediaeval country but that didn't make the peasants any less poor. Increasing inequality is a sign of an inefficient economy struggling to support the population as a whole. "Trickle down" was never more than a threadbare excuse for greed. $\endgroup$ – Nagora Nov 17 '15 at 17:16
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    $\begingroup$ This answer is wrong. Inequality is actually bad for the economy. While the things you write about rich people are true, it turns out that they are more true when you have a larger number of mediumly rich people, as opposed to a smaller number of very rich people. I recommend wikipedia's page about "Economic Inequality", which says "Too much inequality can be destructive, because income inequality and wealth concentration can hinder long term growth". This is intuitive: people who are only mildly rich still have lots of motive to better themselves through constructive economic activity. $\endgroup$ – Jonathan Hartley Nov 17 '15 at 17:58
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    $\begingroup$ @JonathanHartley Let's imagine a world where there are lots of mildly rich people. They 'better themselves through constructive economic activity'. Where does that money go? To business owners. The rich and super rich. What does that do? Make the rich and super rich, richer! The rich don't have all their money sitting in a bank or in cash under their pillows. They invest it all over the place. This is constructive economic activity that benefits the economy. $\endgroup$ – SethWhite Nov 17 '15 at 19:17
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    $\begingroup$ @Prinsig When you invest in a company, that company can now afford to expand, open new stores, create new product lines, etc. However, companies will only expand if they have reason to believe that there is sufficient demand. So investment doesn't stimulate a business to do anything. However, if there is in fact sufficient demand for a business to expand, investment is not required to do so. Businesses take out loans all the time. Businesses also save capital from year to year, so they can use those profits in order to do things like expand. $\endgroup$ – industry7 May 17 '16 at 15:23

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