Published with kind permission by Macrobusiness
Fairfax’s Ross Gittins has penned a good article questioning the economics profession’s infatuation with growth and calling for policy makers to focus on quality and raising living standards instead:
Most economists I know never doubt that a growing economy is what keeps us happy and, should the economy stop growing, it would make us all inconsolable.
They can’t prove that, of course, but they’re as convinced of it as anyone else selling something.
I’m not so sure. I’m sure a lot of greedy business people would be unhappy if their profits and bonuses stopped growing, but I often wonder if the rest of us could adjust to a stationary economy a lot more easily than it suits economists and business people to believe…
That’s been my big problem with economists’ obsession with economic growth. It defines prosperity almost wholly in material terms. Any preference for greater leisure over greater production is assumed to be retrograde.
Weekends are there to be commercialised. Family ties are great, so long as they don’t stop you being shifted to Perth.
But I’d like to see if, in a stagnant economy, we could throw the switch from quantity to quality. Not more, better.
I feel your pain, Ross. I have previously argued that “economists’, the media’s, and the Government’s infatuation with GDP is one of the biggest shortcomings in macro-economics”.
This infatuation with real GDP growth has led to spurious (and damaging) policies like the pursuit of endless population growth on the basis that it stimulates headline GDP (more inputs equals more outputs), even though it provides next to no long-term benefits to everyone’s share of the economic pie and arguably reduces living standards of the incumbent population (think greater competition for jobs, more time stuck in traffic, smaller and more expensive housing, environmental degradation, etc).
Then there is the focus on the quantity of growth in GDP, rather than the quality (and sustainability) of growth, such as frivolous debt-fuelled consumption and the Government and RBA’s never ending drive to increase house (land) prices and private debt, which creates structural imbalances and damages longer-run productivity and competitiveness.
The sooner economists, commentators and policy makers abandon their fetish with “growth” and replace it with broader measures of well-being, the better.
Full marks to Mr Gittins for raising this again. It has cropped up a few times on this blog, but doesn’t seem to get much traction. The more it gets spread, the more it might take root.
David Suzuki has been talking about his ever since I’d heard of him in the 80s. Here’s his latest:
http://www.davidsuzuki.org/blogs/science-matters/2015/09/its-time-to-talk-about-a-new-vision-for-the-economy/
Suzuki also makes (elsewhere) a compelling case that proves mathematically that continuous growth cannot be sustained. You simply run out of resources. Folding (i.e. doubling) a 1/100 of an inch thick piece of paper just forty times (if you could) creates a stack that would reach past the Moon. The economy doubles every x years. Do the math if you want a fright.
Mr Gittin’s plea is a good one – but who can make it happen? And how? A multi lingual, multi cultural, disparate-State world governed by the full spectrum of enlightened, ignorant and/or belligerent leaders (including hair-do buffoons) will never work towards a common good. The very idea is anathema to many leaders because it smells like communism, or at the very least threatens their imagined manhood. And I’ve yet to see a stock market reward cooperation. All this in a future of digital-induced unemployment producing billions of idle, angry males, and the world is well and truly – what’s the word – oh yes – screwed, unless we learn to use less and be happy with what we have. Unfortunately we don’t all learn at the same rate. Winning in the jungle has not prepared us well (at all?) for living in harmony. And going to Mars won’t change anything.
+∞
In an ideal world I would love it if more people lived this way.
I agree. We never seem to get the right balance between self-interest and looking out for others. Always one extreme or the other. The recent backlash in the UK and US is a good example of political and business leaders losing touch with the challenges facing ordinary folk.
We give sport stars, rock stars and successful entrepreneurs (like Steve Jobs or Bill Gates) more recognition than someone who has devoted their whole life to finding a cure for cancer or malaria or saving the environment…. Who has created real value (not measured in dollars)?