Wednesday, September 8, 2010

Line of Demarcation

From: United We Stand, by Ross Perot (1992) page 14
Remember this graph? From the time of Ross Perot's third-party assault on the White House. (That's my red-pen "1973" there, and my funny little arrowheads.) Perot's graph is just another way of looking at the slowdown of GDP growth.

The after 1973 bar is 7½ times higher than the before 1973 bar. Big difference. After 1973, the economy grew a lot slower than it did before 1973.

So, no matter what numbers we're looking at, if we divide those numbers by GDP we will see a big difference between the "before 1973" and the "after 1973" results. Or if we "evaluate the effect of X on growth" we will see much less growth in the "after 1973" period, no matter what X we choose to evaluate!

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