Dynamics of Welfare of the Population of a Country
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DYNAMICS OF WELFARE OF THE POPULATION OF A COUNTRY UDC 330.101.541–336.7
B. B. Dunaev
Abstract. The author shows that there is a limit in economy at which the rate of growth of GDP becomes less than the rate of growth of welfare; and to maintain current welfare, the population decreases by birth rate decrease. In post-industrial economies, the welfare of population is retained and grows due to budget deficit paid off by borrowing. Under the conditions of the world economic crisis lasting since 2008, hasty growth of debt service payments with the retention of welfare of the population will result in bankruptcy of post-industrial economies. Keywords: economy, equilibrium, crisis, market, conjuncture, labor, capital, money, depreciation, profit, investments, welfare, population, debts. INTRODUCTION The welfare of population depends on public welfare and welfare of an individual resident. Public welfare can be expressed by gross domestic product per one resident [1]. Welfare of a resident of the country is defined by the cost of goods and services consumed by him/her. Many foreign authors paid attention to problems of the welfare of population: T. Campanella, T. More, C. H. de Saint-Simon, F. M. C. Fourier, R. Owen, A. Smith, D. Ricardo, J. S. Mill, K. Marx, A. Marshall, W. F. Pareto, A. C. Pigou, J. M. Keynes, L. Erhard, et al. The richer a society, the less people needs social benefits provided by the state. The higher the society development level, the greater the value of social needs of the population. Under welfare growth, it is expedient to hold each person socially responsible for him/her family [2]. The economy of the majority of countries grew for more than twenty years after the Second World War. The welfare of population in industrially developed countries increased due to production profit. However, the available resources of economic growth at the existed industrial potential exhausted at the end of the 1960s and the further growth of welfare of the population became impossible. In developed countries, production profit became insufficient to keep the attained social security level. The state budget deficit in social security had to be compensated by money printing, which has caused their devaluation. Dollar (USA), pound sterling (Great Britan), mark (Federal Republic of Germany) and related currencies were devalued during 1967–1969. In 1973, the jump in oil price per barrel from 3 USD to 11.65 USD, called “oil shock,” caused a world economic crisis. As was mentioned in [3], “During the crisis, industrial production scaled down by 13% in the USA, 20% in Japan, 22% in Germany, 10% in Great Britain, 13% in France, and 14% in Italy.” To combat the crisis, governments of the countries employed Keynesian economic management by increasing the consumer demand through money printing and reducing bank credit rates, which aggravated the crisis and has led to stagflation (simultaneous growth of inflation and unemployment) [4, 5]. For Keynesianism, the problem of stagflation became a puzzle, which has not been solv
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