5 Reasons Why Prioritizing Growth Is Bad Policy
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Not much in our society is more faithfully followed than economic growth. Its movements are constantly monitored, measured to the decimal place, deplored or praised, diagnosed as weak or judged healthy and vigorous. Newspapers, magazines, and cable channels report regularly on it. It is examined at all levels -- global, national, and corporate. Indeed, one of the few things on which left, right, and center agree is that growth is good and more of it is needed.
There are only five problems with America's growth imperative:
- Growth doesn't work. It doesn't deliver the claimed social and economic benefits.
- Our measure of growth -- gross domestic product or GDP -- is fundamentally flawed.
- The focus on growing GDP deflects us away from growing the many things that do need to grow.
- The over-riding imperative to grow gives over-riding power to those, mainly the corporations, which have the capital and technology to deliver that growth, and, much the same thing, it undermines the case for a long list of public policies that would improve national well-being but are said to "slow growth" and to "hurt the economy."
- Economic activity and its growth are the principal drivers of massive environmental decline.
1. Growth doesn't work. It doesn't deliver the claimed social and economic benefits. Since 1980, real GDP in the United States has grown about 130 percent, and you know what happened: wages stagnated, jobs fled our borders, life satisfaction flatlined, social capital eroded, poverty and inequality mounted, and the environment declined.
Today, GDP has more than fully "recovered" from the Great Recession and now exceeds pre-recession levels, but unemployment is still about 7.5 percent with an almost equal number of Americans either underemployed or no longer in the work force for lack of opportunity.
Desperately seeking more GDP growth is unlikely to yield better results, for reasons described subsequently. Also described are some better approaches.
2. Our measure of growth, GDP, is terribly flawed. GDP should stand for Grossly Distorted Picture. Still, it sits in regal enthronement. Never mind that GDP is simply a gross measure of all activity in the formal economy -- good things and bad things, costs and benefits, mere market activity, money changing hands, busyness in the economy -- for the bigger it gets, the greater the potential for both private profit and public revenue.
Never mind also that even the creator of its formalisms, Simon Kuznets, warned in his first report to Congress in 1934 that "the welfare of the nation [can] scarcely be inferred from a measurement of national income as defined above" and by 1962 was expressing deeper skepticism: "Distinctions must be kept in mind between quantity and quality of growth, between its costs and return, and between the short and the long run," he wrote. "Goals for 'more' growth should specify more growth of what and for what.'"
Though it is still very much on the throne, GDP's continued dominance is threatened today. Of all the transitions discussed in America the Possible, the transition from GDP to a fuller, more accurate depiction of where the nation is and is heading may be the closest to a tipping point that can hasten its completion. We can now envision a dashboard of indicators to supplement those that measure economic activity, unemployment, and inflation. That dashboard should include (1) measures of true economic progress that correct and adjust GDP so that we can gauge sustainable economic welfare in society, (2) indicators of objective social welfare such as the status of health, education, and economic security, (3) indexes of environmental conditions and trends, (4) indicators of political conditions and democracy, and (5) measures of subjective well-being such as life satisfaction, happiness, and trust.