Dresden 2014 – scientific programme

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SOE: Fachverband Physik sozio-ökonomischer Systeme

SOE 17: Economic Models

SOE 17.6: Talk

Thursday, April 3, 2014, 10:45–11:00, GÖR 226

G7 growth is bypassing the people — •Hans Danielmeyer and Thomas Martinetz — Institut für Neuro- und Bioinformatik, Uni Lübeck

The title identifies one of Paul Krugman's famous articles on socioeconomic mysteries. It was published in The NY Times years before the banking crash. We present its first theoretical proof and get perfect agreement with G7 data.

The absolute problem of macroeconomics is that it can only quantify supply since demand cannot be divided into added value chains. We solved it with symmetrical completion of variables and parameters for obtaining an equilibrium condition between supply and demand. The main costs are maintaining the technical infrastructure TI and law and order LO. Both increased since World War II from 8 to 20 % of the GDP, LO not least because the distribution of wealth (=TI) is nationally and internationally diverging. This doubles the cost of TI which is the driver of economic growth. The equilibrium condition shows that the rising cost of LO resulted in a flat maximum benefit for G7 people around 1985. This explains also why the weekly working time is increasing again after it had decreased from 96 hours per week in 1800 to a minimum of 35 hours around 1985.

Further consequences are just mentioned.