GDP Growth versus Hawaii

February 20, 2023 by Joshua
in Models

Everyone says GDP has to grow or everything will fall apart, based on economic theory.

When Captain Cook found Hawaii in 1778, people had lived there for at least 500 years.

Settling Hawaii

500 years before now, the human population was 450 million, suggesting that 500 years was enough for Hawaiians to overrun the islands and cause them to collapse.

They didn’t, meaning they must have stopped growing, for centuries. Yet they survived and apparently thrived.

If a theory says something is necessary but a society survives without it, how can we not conclude that theory is wrong, or at least doesn’t always apply?

In physics, we hold that if a theory predicts something and observing nature shows something else, the theory is wrong, not nature. Hawaii is one case of many where communities thrived without growing. How can we not conclude economic theory that says we require growth is wrong or at least limited?

How successfully have economists predicted the future? It seems like most of their theories explain the past. If we want to manage our economies for non-growth, why wait for a theory? Did Adam Smith predict capitalism or did he explain what he saw in the past?

Here’s Richard Feynman making this point:

If it disagrees with experiment, it’s WRONG. In that simple statement is the key to science. It doesn’t make a difference how beautiful your guess is, it doesn’t make any difference how smart you are, who made the guess, or what his name is, if it disagrees with experiment, it’s wrong. That’s all there is to it.

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