I usually just say that "economic growth" means the increase of GDP, and then point out that GDP is a measure of income. So people who say we don't need economic growth are saying that they don't want to increase their income.
But perhaps that is not the best argument in favor of economic growth.
Benjamin Friedman makes an impressively relevant argument in The Moral Consequences of Economic Growth. From page 4:
The value of a rising standard of living lies not just in the concrete improvements it brings to how individuals live but in how it shapes the social, political, and ultimately the moral character of a people.
Economic growth -- meaning a rising standard of living for the clear majority of citizens -- more often than not fosters greater opportunity, tolerance of diversity, social mobility, commitment to fairness, and dedication to democracy. Ever since the Enlightenment, Western thinking has regarded each of these tendencies positively, and in explicitly moral terms.
Even societies that have already made great advances in these very dimensions, for example most of today's Western democracies, are more likely to make still further progress when their living standards rise. But when living standards stagnate or decline, most societies make little if any progress toward any of these goals, and in all too many instances they plainly retrogress.
The book is from 2005, well before the Trump retrogression.
3 comments:
I have a really hard time accepting that constant economic growth is a necessary condition for human happiness; even for human dignity. "Line go up or millions get plunged into poverty" makes the whole setup seem to me to be a pyramid scheme. Likewise I find it impossible to think of any of the people concern trolling about "energy poverty" to be anything other than Big Energy shills.
Like Uncle Noam says, you can buy a Ford, but you can't buy a subway. All other things being equal, I'd rather live in an apartment, take a bus to work, and have a solid health plan and a pension, than have a big house, a big car, an HMO, and a 401(k). But multi-family housing and mass transit, in particular, seem to be systematically removed from the menu of options in our otherwise free-market economy.
I have a hard time with neoliberalism because it claims that the poor countries are poor because their GDP is low. Even if a more accurate metric of economic growth is found, the problem remains that either the poorest countries experience double digit economic growth, or they remain in desperate poverty. And of course as long as there are poor countries in the world, there will be cheap labor in the world economy, and livelihood itself will continue to be a race to the bottom.
There is also the question of whether the fate of a business is to "grow or die." Growth of a business almost always requires outside financing, which is fine so far as it goes, but if I were to take the plunge into entrepreneurship the only reason for doing so that makes sense to me would be in order to be more independent than non-self-employment allows. Kissing up to investors instead of managers seems just another "circulation of the elites" and not a real change. The question remains whether it is possible to maintain a small business at the "ramen profitable" level indefinitely, with little to no outside financing.
Proponents of steady state economics want us to believe that human quality of life can improve by the world economy becoming more sophisticated, while not necessarily becoming bigger. I may be misreading your blog, but you seem convinced that that claim is patently false.
LL: I have a really hard time accepting that constant economic growth is a necessary condition for human happiness...
I guess we are far apart on this. I have a really hard time accepting the human pseudo-happiness in TV and commercials, and the giddy desperation in 80% of liberals' jokes about Trump.
But the first thing I thought when I read your opener was:
"you have to have lived in the 1950s and 1960s to have experienced a good economy." I didn't do the math, but I'm thinking you came along after the "good economy" years, so you don't believe there is any such thing. I (b. 1949) firmly believe there WAS and CAN BE a good economy, and my hobby is working to achieve that goal. (If I didn't have that, I could not be happy in this world.)
LL: Proponents of steady state economics want us to believe that human quality of life can improve by the world economy becoming more sophisticated, while not necessarily becoming bigger. I may be misreading your blog, but you seem convinced that that claim is patently false.
Hey, I used the Benjamin Friedman quote because I thought it was a good argument and I thought LL would like it. Oops!
I have said about "peak oil" that I do not know whether we have reached peak oil or it only looks that way because the economy is so bad. I guess would say the same about the steady state economy.
• I don't know how people can be so dissatisfied with the existing economy that they want to just throw it away, rather than figuring out what is wrong and fixing the few key problems.
• I do not believe that we CAN "change the world" to make it a steady-state economy, BUT we CANNOT change the world to reduce debt to something people can live with so that we can end up with a decent measure of Full Employment.
What would a "more sophisticated" economy look like?
Is the concern about resource consumption increasing as growth increases? I think even if consumption was constant, GDP would be going up exponentially because population increases. And even if population was constant too, GDP would still be going up exponentially because technology improves. (This is perhaps a cherry-picked example, but e.g. computing power per watt increases exponentially over time. Other technology is like that too, though maybe less measurably and reliably so.)
So I don't think it's necessarily true that resource consumption has to increase exponentially in order to get exponential growth.
Probably GDP is not a good metric. But in general I am not that sure I understand why someone would argue that e.g. you don't want your kids to be better off than you are.
I guess that hunter-gatherer humans might subsist indefinitely (or at least until they fail to deflect an asteroid), but I don't think that would be more enjoyable than what we have now.
Probably that is not the argument? But I don't think I understand what the argument is. Can you point me to something maybe?
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