At the national level, it is traditional for economists to distinguish investment income (profits, interest, dividends and royalties) from salaries and wages. These income items are equated to personal expenditures. Borrowing is implicitly equated to repayments. To the extent that the two flows are in balance, there is no effect on GDP. However, one source of 'economic growth' is the increased expenditure resulting from increased borrowing, whether secured (for example, by rising asset prices) or unsecured.

Government borrowing is a special case. It is secured only by financial markets' faith in the future ability to repay, based on the expectation of increasing tax revenues resulting from future GDP growth. There is no doubt that one significant source of US GDP growth in recent years is increasing private and public debt. Again, if future GDP growth is based on a valid expectation of increased productivity, there is no problem. However, to the extent that it is based on increased debt, we have a circular system where debt spawns more debt that can never be repaid. In effect, GDP growth in this case is achieved by consuming capital and decreasing real national wealth.

To the extent that the substitutes are also improvements, the original resource can eventually become worthless, just as whale oil is no longer needed and most natural drugs and dyes have been replaced. On the other hand, if the resource is finite and not readily substitutable, like petroleum or copper, the impact of increasing scarcity will cause depression at the macroeconomic level.

Evidently, there is no necessary correlation between national income (GDP) and national wealth. In a pioneer 'Robinson Crusoe' society such as the 19th-century US, they may grow together, but in a mature society the opposite can and does occur. For this reason (among others), GDP growth should not be regarded as necessarily 'good', however much we are apparently addicted to it.

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