Share of GDP: China, India, Japan, Latin America, Western Europe, United States

As a historian, several things intrigue me here. First is very slow increase of W. European GDP from 1500 to the early 1800s despite its vastly increasing overseas trade. Second is the collapse of China’s dominant position from the early 1800s to 1870, which is presumable a consequence of both industrialization in W. Europe and the US and the reversal of a positive silver flow to China. Finally, I am surprised at how little the dominant position of the US has eroded in the last 50 years, despite repeated economic crises. I suppose the question for this century is whether China’s 19th-20th century decline will ultimately appear as little more than a blip on the radar.

Cheers,
Profane

This is very interesting. It would be interesting to see GDP compared to population over time as well.

This graph (in part) illustrates the fundamental lie the world is being fed about the run up in oil prices. Supposedly, increased demand for oil in China and India are the demand pressures creating this phenomenon. Baloney!

Chinese currency is pegged to the US dollar. This makes it easy to compare GDP without concern for currency fluctuation. Even with the current and marked growth of the Chinese economy, it only represents 23.48% of U.S. GDP (use the IMF GDP ranking by country for 2007). China represents just 4.95% of world GDP (2006 World GDP, per the CIA Fact Book, was 65.61 trillion US dollars) India is only 7.94% of U.S. GDP and 1.68% of world GDP.

A simple application of proportionality is enough to completely debunk the lie we are being fed by the oil companies. The economies of China and India would have had to double, several times over, since the run up in fuel prices began in August 2006, to explain the price of gas increasing from about $1.89 per gallon, to over $4 a gallon in the U.S.. (And oil increasing from under $50 a barrel in mid-2006 to over $140 a barrel today!)

It is also important to note that the growth of the Chinese and Indian economies has been at least partially offset by a significant reduction in the market share of output of Japan, Latin America, and the rest of the world (further illterating the lie we are told about increased demand’s responsibility for energy prices). The graph above visually shows that Japan, Latin America, and “All Other Economies” have given up market share to China, India, and to a lesser degree, the U.S..

So, while overall economic activity is increasing, it only nets to about %5 annual GDP growth world-wide. (This also exposes the myth that the growth in China and India has been at the expense of the U.S., because, as this graph clearly shows, the U.S. also continues to gain “market share”, although at a much more nominal rate.)I am willing to say that if production capacity is static (which it is, albeit an artificial condition), there should be some increase in energy price, but nothing like what is happening. Beyond that, the very people who benefit from this static capacity are the ones who will not increase that capacity, although this is easilly possible.

It is one thing to suspect this, but here is graphic proof that what we are experiencing is destructive and unparalled greed, facilitated by lies and manipulation of the market. This underscores the limitation of capitalisim and market economics to work in the real world, when an industry or individual becomes so powerful, they transcend the forces of the market place, and are able to independently manipulate the playing field.

Monopolies are a cancer to capitalisim and freedom. They have routed the blood supply of our economy and government to feed the tumor they are growing on each of us. Oil and gas are a utility, just like electric and water. They need to be regulated as such, since they are obviously unable to impose any self limitation on their own greed. Electric and water utilities must increase output to meet demand. They do not unfairly reduce supply, or simply produce the same amount of energy at a grossly higher price, thereby circumventing the market. They are quite capable of this, and did so at will historically, until stopped by government intervention and regulation. (Ask California what happens when you deregulate a utility, 400% price increases at the same level of demand! See Enron!)

Regulating big oil as a monopoly (which they effectively are), and as a utility will crush this practice. What we are experiencing from them now is not capitalisim, it is feudalisim.

I know it makes all the Adam Smith fans crazy, but capitalisim cannot function without government to superseed situations like this, where the power of limited individuals is used to crush everything else in their path. When our government is apparently on a pay to play basis, and lobbyists write the laws to gain unfair advantage, it is time for us to use what remains of our constitutional rights to reinstitute balance.

This is the wisdom of democracy and capitalisim and the system of checks and balances instituted by our founding fathers, but just as we were warned in grade school, democracy and capitalisim cannot exist unless there is a highly educated and actively engaged populace, something the power elite has worked to destroy in America for so long.

Now we see why!

As a believer in free markets and less regulation, I take exception to Joe’s concept that oil companies should be treated as regulated monopolies.

Rather, we need to free up the capacity for energy production in this country, both alternative and conventional, as well as encourage conservation.

We can encourage conservation – not with pure regulation (like the demands for higher MPG requirements of the auto companies that never seem to work) but rather with tax driven incentives that aren’t burdensome. We can charge an excise tax on gas guzzlers (built into the sticker price) that gives a rebate on more energy efficient autos (built into the sticker price). To the degree we do this we will drive the consumer from one to the other and get a more conserving nation. We can do the same thing with refrigerators, air conditioners, airplanes, trucks, light bulbs, water heaters, new home construction, etc.

We can encourage domestic energy production by:
(a) not disallowing off shore drilling,
(b) building an electric national grid that can move the electricity around the country,
(c) finishing a valid solution to storage of spent nuclear materials, and encouraging new nuclear plants with tax incentives.
(d)passing an energy floor tax on imported oil – one that would only be conditional and come into play if a barrel of oil fell below an approved floor price (perhaps $60 per barrel). This would allow biofuel startups, solar and wind companies, shale oil production, clean coal technology, etc, etc, to not have to worry about the possibility of oil falling to $30 a barrel and bankrupting all of the nascent technologies.
(e) granting the most politically desired technologies various cheaper corporate tax rates and advantageous depreciation schedules. A lower rate of corporate tax received is still more than a higher rate on a non existent company.

To get back to the original point – many different energy solutions – attracting energy growth works better than regulation. Of course, if any one company became a monopoly, or even if a few of them functioned as an oligopoly, the anti trust laws should be involked.

I was interested to find this blog. 20 years ago I had a book published on different economic concepts to point the way to a sustainable world economy. Someone who liked the book recently contacted me to suggest that I update and re-publish it as a blog. She set up the blog, and the book is nearly complete on the blog in a series of postings. Here is the link:

http://www.economicsforaroundearth.com

With all good wishes,
Charles Pierce

….

has anyone mentioned opium wars or colonization?…..

(white privilege…..)

Trust me, China didn’t lose is productivity arbitrarily…look up the date for the Opium wars, look at the graph, then please post an analysis that shows you aren’t utterly blinded by bourgeois discourse and ideology.

It’s a milestone in our times that China
and India are on their way to powerful station
again.

Joe doesn’t understand the role of price elasticity in determining market oil prices — oil demand is relatively inelasticity of both demand and supply over the SHORT RUN — thus small changes cause large changes in in price — i’m not going to stop commuting to work because gas prices have doubled

in the world history china and india ruled the world econic and politics for 1900 years and usa too over in last 70 years . now it seems to me the chinese and indians are taking back the kingdom ,

It might be neglecting unequal spatial distribution of wealth within national boundaries.

Western Europe was politically divided for last 500 years too.
I think that this chart was intended to show how geographical distribution of wealth changed over time, rather than to describe economic development of some political entities.

India got screwed big time during the british rule. From being one of the major economies in the world up until mid 1700s they only had a fraction share of the world gdp by the time the brits were done with them

steve b button did more to harm these economies rather than to contribute to their growth.  So why should it count as part of their gdp.  Speak sense.  Also g button had no legitimate claims to these territories.  Colonization was never legitimate, I don’t care what white people say.