What is a "good economy" for an society?

Question

Does it mean its citizens have a better living standard? Or does it mean the society has a better productivity?

Answer 1

I think a good economy shall be if there is more money - due to the produciton and transfer of goods moving around in the economy and optimally benefitting everybody.

Eventually as it happens more and more - everybody will have a higher standard of living.

What is not desirable is that to achieve this target the environment and the underpreviliged (less educated, fortunate or immigrants) are abused to the extent that there is a clear drift in the distribution of wealth which later on creates social problems.

Education and education for the sake of productivity and social awareness is the key - in my opinion.
Then there is the justice system.

However, the values of the society are of utmost importance, a charitable understanding society creates better living standards although lack technological advancement.

It is a very complicated phenomena .... Hope I have addressed important points in to direction of your inquiry.

EnJoy

Answer 2

There are 2 ways of looking at your question, one is from the perspective of people in a society (which is what I think things should be about) and one from that of pure theoretical economics.

1 From the Point of View of People

Standard of living is measured often by 'Average Per Capita Real GDP or GNP' which is how much each person in the economy earns in terms of goods and services he/she can buy.

Productivity is Average Product, which is how much is produced divided by the number of people who work.

Now, in theory, what i sproduced is equivalent to what people earn, that is why National Income approximately equals GDP.

Therefore, productivity and standard of living are almost the same thing.

That is why, for example, Americans get paid so much more than Mexicans to do the same job; Americans claim higher productivity and hence get paid more, and enjoy higher standards of living (since the price differences are not that huge).

So, standard of living and productivity are nearly the same.

But these measures hide a few things, especially income distribution, and other factors that are important to people in a society that economic statistics do not take into account.

For example, an economy (let's call it A) of 100 people, all of whom work, each earning enough to buy 10 hamburgers is likely to be a better place than an economy (let's call if B) with 100 people all of whom work, with 1 guy able to buy 901 burgers and the rest 1 burger each. Both economies produce 1000 burgers, but the income distribution is much worse in the second case.

What if the economy B could produce 1200 burgers instead, so, on average each person earns enough to buy 12 burgers, which is higher than the 10 burgers of economy A, but again, 1 guy earned enough to buy 1101 burgers and the rest earned 1 burger each? While AVERAGE standards are higher in economy B, is is really a BETTER place that economy A? I don't think so.

That's why many other measures have been adopted. For example the Human Development Index (HDI). It measures and combines stuff like poverty, literacy, life expectancy... but also includes standard of living.

It is amusing to see Equatorial Guinea 3rd in terms of GDP per capita https://www.cia.gov/cia/publications/factbook/rankorder/2004rank.html ,
but in HDI terms it is 121. See:
http://en.wikipedia.org/wiki/List_of_countries_by_Human_Development_Index
although the years are different.
(Or could the CIA have made a blunder?)

Anyway...

I would say that looking purely economic measures cannot tell you if an economy is good for its people, you need to go beyond that.

2 Theoretical Econs View

As mentioned above, Standard of living and Productivity are closely related. However, a gap could appear in terms of age unemployment. If you have huge unemployment, then while on average workers produce a lot, on average people earn little, so Standard of living can be low even if productivity is high.

Therefore a better standard of living is a better indicator.

Answer 3

It is both... A more productive society naturally has a better living standard. This is why, even though people complain about American companies outsourcing jobs to other countries and paying low wages, those low wages are better than no job at all and are better than any job they would have had otherwise. Eventually, even the $4/day job will allow that local population to raise their living standard. Besides, it allows us to buy relatively cheap Nikes and Adidas. Also, a free market means a "good economy," as it will always correct itself if we will just stop messing with it.

Answer 4

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Answer 5

The key word is stablility, any good economy must be a stable one, huge economic growth (and as such increased living standards) be it via increased aggregate demand or increased exports or whatever does not neccesarily lead to a 'good economy'. As it creates inflation, increased wage demands and ultimately the loss of the comparative advantage which created the economic growth in the first place a 'good economy' is one which steadily increases economic growth while balancing it with other economic objectives such as low unemployment, low inflation, fiscal rectitude and balance of payments equilibrium

Answer 6

A prosperous society is one where those in the bottom of the food chain can enjoy a minimum standard of living, and where those on the top are heavily regulated so that they don't take unfair advantage of the former.

Answer 7

When it all boils down - the easiest way for REAL economic growth (growth outpaces wages) is that productivity somehow increases.

Obviously, increased growth leads to a better standards of living. If you need clarification on that last point, let me know.

Answer 8

If we are paying athletes millions to "play", and sending so much of our production to places like china (walmart), and buying cars made in Japan, than we are not taking care of Americans and all of the hard working people of this country that are begging for work and the respect we deserve, which is some damn decent pay....Yes the rich get richer and the.....

Answer 9

people are buying goods and making goods.

Bad economy is when people penny pinch.

Answer 10

One that is not so complicated that voters can not understand it and one that produces more than it buys.