Monday, October 01, 2007

Kling on explaining economic growth to a 5-year-old

It might even work for a journalist, or even an MIT economist:
There are lots of people in the world who will give us things that we want, as long as we give them something they want in return. This is called trading. Some of the things we trade are hard to see--they are like nice thoughts. Other people keep thinking up nicer things to trade with us, and we keep thinking up nicer things to trade with them. We keep trading nicer and nicer things. Many years ago, people had not thought up all of these nice things, so they did not have as much to trade as we do. That is why people who lived back then were poor, and we are not.

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