ies have the same total productive capacity, and lets also assume they both have the same population. Now Case I is using about 1/3 rd’ of its capacity to add productive capacity, and about roughly twice as much capacity to produce consumer goods. The Case II economy is using about 2/3 rd of its capacity to add productive capacity, and roughly as much to produce consumer goods. So the Case I economy is going to have a higher standard of living. Actually twice the standard of living because it is using twice a much of its capacity to produce consumers goods as the Case II economy is. So the people in the Case I economy are better off today, and the people in the Case II economy are poorer because they have a lower standard of living; they’re not as well off. Other things being equaled rich are better than poor, but other things are not equal. According to Buechner the Case I economy is also using less of its capacity to add capacity meaning that the economy is going to grow more slowly assuming that it’s even using enough capacity to actually grow. (Recording) So here is the Case I economy 10 years later 2009. Table 4The inner circle represents 1990’s total productive capacity the red lines branching out from the inner circle to outer circle of the pie represent the total productive capacity in the year 2009. The red lines represent the increase of productive capacity in the economy. The proportions are identical to what they were in 1990 there has been no change if we assume that the population hasn’t changed in those 10 years the standard of living has risen. How does that compare to Case II, which was using a much larger portion of its capacity to add capacity? Here is Case IITable 5As you can see the Case II economy for 2009 when compared with Case I economy for 2009 has grown much more in course of 10 years signified by the shear size of the diagram. According to Buechner this is because in the previou...
