Economic growth and inequality are among the political matters most discussed these days. It is often thought that economy is more stagnant compared to the buoyant days of the middle of the last century and economic inequality much more pronounced. Politicians offer new government programs as remedies for these perceived reversals.
My skepticism about such claims has a common core. The government has difficulty measuring economic growth and inequality, particularly in an age of accelerating technology. A centralized decision maker cannot create a set of rules to pin down an ever changing and dynamic economy.
Famously, socialist governments in the last century wrongly thought they could calculate the appropriate prices for goods. Today calculation problems also beset government measurement of growth and inequality. In this post and in the next, I will take up economic growth. I will then discuss economic inequality.