One of the central concerns now in the Former USSR within economics departments concerns how many new faculty members have a western education, but have a position in an institution in the Former USSR somewhere. So, in Department X, there is one single economist with a Western Phd in year 1. Then in year 2, they manage to find another 1, and this means the number of local economists with a Western Phd has increased by 100%. In year 3, they hire one more. Three is certainly better than 1 and it is certainly better than 2, right? Wrong. Now the increase is only 50% (1 on 2) and further increases serve what purpose? They decrease the growth rate. So they should have stopped at 2 – where growth rates were highest, and had fewer, not more, economists to serve the interests of the region. More economists is not better, it is worse; it reduces our growth rates.
Albeit this logic sounds crazy, it is also true for income. More income is worse because it makes it harder and harder to keep growth rates high. If average income is 1000 dollars, and next year goes up to 2000 dollars, growth is 100%. Another 1000 is bad, however, and not good, because another 1000 on 2000 would only be 50% growth. This would support the idea that if governments really care about economic growth, they are on the right track. More wars, more taxes, and a failure to relieve poverty serve the public’s interests by reducing income and increasing our growth rate. After all, would people really want to hear that growth has slowed to 1% instead of growth is going up to 10%!
