ShmoopTube

Where Monty Python meets your 10th grade teacher.

Search Thousands of Shmoop Videos

Econ: What are Steady State, Steady State Growth and Steady State Per Capita Growth? 2 Views


Share It!


Description:

What are Steady State, Steady State Growth, and Steady State Per Capita Growth? A steady state has the goal of balancing population growth and economic production; there is the ideal amount of people to complete the work that needs to be done and produce goods and services efficiently. Steady state growth means that all facets of the economy are growing at the same rate or remaining constant (including population). Steady state per capita growth is the idea that all variables in the economy grow at a rate that is identical to population growth; it is the idea of growth per person (or per capita).

Language:
English Language

Transcript

00:00

And finance Allah shmoop What are steady state steady state

00:05

growth and steady state per capita growth Bigger is better

00:13

True when it comes to offensive lineman and wedding cakes

00:16

and brass bands and the size of your uh you

00:19

know belt buckle Well it's also true in economies Everyone

00:22

likes economic growth The faster the growth the better More

00:26

production constant expansion But there's another option The city state

00:30

economy an economy with no growth Think of the steady

00:34

state as the economic equivalent to that feeling People say

00:37

Yeah they get from meditation that Zen state that purportedly

00:41

purges you of all earthly worries No desires no wants

00:45

just peaceful days spent in quiet fulfilling meditation Now imagine

00:51

an economy sitting cross legged on a mat humming it's

00:54

mantra That's the steady state The term steady state economy

00:58

refers to a situation where physical wealth and population remain

01:01

steady An economy with zero percent growth or at least

01:04

as close to zero percent is it Khun Get population

01:07

doesn't grow birth rates run it replacement levels that is

01:10

the birth rate matches the death rate So the population

01:13

of your country is in twenty million people in two

01:15

thousand eighteen It's twenty million In two thousand twenty eight

01:18

it's still twenty million in twenty two eighteen more than

01:22

just stable population in a steady state economy The per

01:25

capita growth is also at zero as well Per capita

01:29

growth refers to the amount of growth per capita or

01:32

person You divide economic output usually measured by GDP by

01:36

the number of people in the country You have a

01:38

country with twenty million people with annual GDP of a

01:41

trillion dollars Divide one trillion buy twenty million and that

01:45

gets you per capita GDP of fifty grand So your

01:48

country has per capita GDP of fifty thousand dollars Now

01:51

in a steady state economy a few fast forward twenty

01:54

years per capita GDP is what Yes still fifty grand

01:58

It's days fifty thousand dollars One hundred years from now

02:01

we'LL in a steady state economy Production is on Ly

02:03

used to replace stuff that gets worn out where Chevy

02:06

Nova breaks down so the factory makes another one for

02:09

you You get to drive that one until well you

02:12

know the wheels fall off There's no additional growth Everything

02:15

on ly operates to replace things that have broken down

02:18

there's another connotation to the steady state economy it has

02:22

to do with the environment Will the steady state is

02:24

considered more ecologically friendly because it doesn't grow It doesn't

02:28

burn through a CZ Many resource is compared to an

02:30

economy that chases constant growth Imagine a civilisation in tune

02:35

with nature a small village separated from modern conveniences one

02:39

surrounded by lush forests and fertile river banks the kind

02:42

of civilization that uses the last remnants of moose and

02:46

trails to make organic water filtration systems for their camp

02:50

Not exploitive of resource is on ly hunting as much

02:53

as is needed Replanting every tree your crop They used

02:56

everything done in a way that doesn't deplete the environment

03:00

That's a steady state In practice A steady state would

03:03

be difficult to maintain right It's more of a conceptual

03:05

benchmark than anything that exists in real life or nature

03:09

you know like a helpful customer service rap or an

03:12

honest politician It would be difficult to hold population steady

03:15

in any society at least without resorting to authoritarian move

03:19

like the one China did with their one child policy

03:23

Also keeping per capita growth at zero would require significant

03:26

limitations It would also make the economy susceptible to recession

03:30

It would be easy to slip from zero percent growth

03:33

into Ah you know shrinkage Small closed societies in relatively

03:37

isolated areas might be able to maintain a steady state

03:40

but it would be difficult for a large modern economy

03:43

to live that way So yeah we keep coming back

03:45

to the meditation thing It's relatively easy to meditate in

03:49

an isolated monastery on a mountaintop somewhere alone away from

03:53

distraction But try to meditate when you're surrounded by ringing

03:56

cellphones and traffic noise and the smell of someone brewing

03:59

coffee in the next room Yeah it's enough to give

04:02

someone a cynic You have been there done that going

Up Next

GED Social Studies 1.1 Civics and Government
39794 Views

GED Social Studies 1.1 Civics and Government

Related Videos

Fake News
11938 Views

How do you tell fake news from real news?

Finance: What is Bankruptcy?
260 Views

What is bankruptcy? Deadbeats who can't pay their bills declare bankruptcy. Either they borrowed too much money, or the business fell apart. They t...

Finance: What is a Dividend?
1777 Views

What's a dividend? At will, the board of directors can pay a dividend on common stock. Usually, that payout is some percentage less than 100 of ear...

Finance: How Are Risks and Rewards Related?
589 Views

How are risk and reward related? Take more risk, expect more reward. A lottery ticket might be worth a billion dollars, but if the odds are one in...