{"id":109,"date":"2008-04-29T01:09:02","date_gmt":"2008-04-29T09:09:02","guid":{"rendered":"http:\/\/www.oeconomist.com\/blogs\/daniel\/?p=109"},"modified":"2009-09-23T19:04:44","modified_gmt":"2009-09-24T03:04:44","slug":"the-curse-of-stagnant-change","status":"publish","type":"post","link":"https:\/\/www.oeconomist.com\/blogs\/daniel\/?p=109","title":{"rendered":"The Curse of Stagnant Change"},"content":{"rendered":"<p><a href=\"http:\/\/news.bbc.co.uk\/2\/hi\/business\/7372438.stm\">Here, from the <abbr title=\"British Broadcasting Corporation\">BBC<\/abbr><\/a>, is a bit of rot: <blockquote>Policy makers will begin their two-day meeting later amid signs that economic growth has stagnated, or even shrunk.<\/blockquote> Okay, <q>stagnate<\/q> means <span style=\"font-style: italic ;\">to become unchanging<\/span>; which is to say that <em>stagnant<\/em> growth would be a <em>constant<\/em> growth.  Some might perhaps hope for <em>ever-accelerating<\/em> growth, but most people would be <em>happy<\/em> with constant growth at, say, 3% to 4% <span style=\"font-style: italic ;\">per annum<\/span>.<\/p> <p>There is indeed some concern that the rate of growth has <em>shrunk<\/em>, but what really concerns people is the possibility that the rate of <em>production<\/em> (rather than of <em>growth<\/em>) may have shrunk.<\/p> <p>Journalists are just <em>constantly<\/em> confusing underlying values, first differences, second differences, and so forth.  In this case, <abbr title=\"Gross Domestic Product\">GDP<\/abbr> (or something like it) is our <var>x<\/var>, <em>growth<\/em> is &Delta;<var>x<\/var>\/&Delta;<var>t<\/var>, and the <em>change<\/em> of the rate of growth is &Delta;<sup>2<\/sup><var>x<\/var>\/&Delta;<var>t<\/var><sup>2<\/sup>.  A stagnant rate of growth would imply <div style=\"padding-left: 2em ;\">&Delta;<sup>2<\/sup><var>x<\/var>\/&Delta;<var>t<\/var><sup>2<\/sup> = 0<\/div> where&auml;s the fear is that <div style=\"padding-left: 2em ;\">&Delta;<var>x<\/var>\/&Delta;<var>t<\/var> &#8804; 0<\/div> <a href=\"http:\/\/news.bbc.co.uk\/2\/hi\/business\/6265765.stm\">Last year, the <abbr title=\"British Broadcasting Corporation\">Beeb<\/abbr> similarly confused the inflation rate with the price level:<\/a> <blockquote>The latest inflation rate &mdash; or Consumer Prices Index for December as it is formally called &mdash; was known to the Bank of England before it made the decision last Thursday to raise interest rates to 5.25%.<\/blockquote> (The initial version of the story was even worse, having the title <q>Cost of living <q>at 11-year high<\/q><\/q>.  Various parties tried to tried to get the <abbr title=\"British Broadcasting Corporation\">Beeb<\/abbr> to fix things, but they just couldn't wrap their heads around the matter.)<\/p> <p>This confusion of underlying values and differences is illustrative of the more general problem that the mass of journalists and the mass of their editors just have <em>no understanding of economics<\/em>, and <em>couldn't<\/em> sensibly inform the typical reader even if they <em>wanted<\/em> to do so (and I seriously <em>doubt<\/em> that they want to do so).<\/p>","protected":false},"excerpt":{"rendered":"Here, from the BBC, is a bit of rot: Policy makers will begin their two-day meeting later amid signs that economic growth has stagnated, or even shrunk. Okay, stagnate means to become unchanging; which is to say that stagnant growth would be a constant growth. Some might perhaps hope for ever-accelerating growth, but most people [&hellip;]","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_bbp_topic_count":0,"_bbp_reply_count":0,"_bbp_total_topic_count":0,"_bbp_total_reply_count":0,"_bbp_voice_count":0,"_bbp_anonymous_reply_count":0,"_bbp_topic_count_hidden":0,"_bbp_reply_count_hidden":0,"_bbp_forum_subforum_count":0,"footnotes":""},"categories":[6,36,4],"tags":[181,182],"class_list":["post-109","post","type-post","status-publish","format-standard","hentry","category-commentary","category-economics","category-public","tag-bbc","tag-journalism"],"_links":{"self":[{"href":"https:\/\/www.oeconomist.com\/blogs\/daniel\/index.php?rest_route=\/wp\/v2\/posts\/109","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.oeconomist.com\/blogs\/daniel\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.oeconomist.com\/blogs\/daniel\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.oeconomist.com\/blogs\/daniel\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.oeconomist.com\/blogs\/daniel\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=109"}],"version-history":[{"count":0,"href":"https:\/\/www.oeconomist.com\/blogs\/daniel\/index.php?rest_route=\/wp\/v2\/posts\/109\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.oeconomist.com\/blogs\/daniel\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=109"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.oeconomist.com\/blogs\/daniel\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=109"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.oeconomist.com\/blogs\/daniel\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=109"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}