Veteran economist blasts 'prioritizing growth' as 'a losing game'

Veteran economist blasts 'prioritizing growth' as 'a losing game'
Image via Creative Commons.

In economics, be it liberal Keynesian economics or right-wing Milton Friedman shareholder economics, “growth” is considered sacred. But one veteran economist who believes that growth is overrated is Herman Daly.

As Daly sees it, way too much emphasis is placed on economic growth. And the veteran economist, now 83, discussed his reasons for feeling that way during an interview with the New York Times’ David Marchese that was published on July 18.

“Growth is the be-all and end-all of mainstream economic and political thinking,” Marchese explains. “Without a continually rising GDP, we’re told, we risk social instability, declining standards of living and pretty much any hope of progress. But what about the counterintuitive possibility that our current pursuit of growth, rabid as it is and causing such great ecological harm, might be incurring more costs than gains? That possibility — that prioritizing growth is ultimately a losing game — is one that the lauded economist Herman Daly has been exploring for more than 50 years.”

READ MORE: Paul Krugman and Nate Silver butt heads over the US economy

During the interview, published in a Q&A format, Daly told Marchese that he isn’t opposed to “growth” per se. But he believes that too many economists overemphasize it.

“First, I’m not against growth of wealth,” Daly noted. “I think it’s better to be richer than to be poorer. The question is: Does growth, as currently practiced and measured, really increase wealth? Is it making us richer in any aggregate sense, or might it be increasing costs faster than benefits and making us poorer? Mainstream economists don’t have any answer to that.”

Daly continued, “The reason they don’t have any answer to that is that they don’t measure costs. They only measure benefits. That’s what GDP is. More specifically, it’s the monetary value of the final goods and services produced by a nation. There’s nothing subtracted from GDP. But the libertarian notion is logical. If you’re going to be a libertarian, then you can’t accept limits to growth. But limits to growth are there.”

Over the years, liberal and progressive economists have had plenty of debates with right-wing conservative or libertarian economists about Reaganomics and the performance of the U.S. economy under President Ronald Reagan during the 1980s. Right-wing students of Friedman or “shareholder economics” often point out that the U.S. economy grew by leaps and bounds under Reagan; liberals such as Robert Reich and the New York Times’ Paul Krugman, both major proponents of New Deal and Great Society economics, will argue, in response, that too much of the growth went to the top during the Reagan years and that “trickle-down economics” didn’t really trickle down the way that Friedman disciples claim it did.

READ MORE: Economist Paul Krugman explains why the US is a long way from the painful 'stagflation' of 1979

Some liberal or progressive economists will argue that President Franklin Delano Roosevelt and his New Deal pursued pro-growth policies but wanted to make sure that economic growth benefitted a wider range of the U.S. population. But whether an economic argument is coming from the left or the right, “growth” is often cited as a key goal.

Marchese asked Daly how a country would “continue to raise its standard of living without growing its GDP?”

Daly responded, “It’s a false assumption to say that growth is increasing the standard of living in the present world because we measure growth as growth in GDP. If it goes up, does that mean we’re increasing standard of living? We’ve said that it does, but we’ve left out all the costs of increasing GDP. We really don’t know that the standard is going up. If you subtract for the deaths and injuries caused by automobile accidents, chemical pollution, wildfires and many other costs induced by excessive growth, it’s not clear at all.”

READ MORE: Watch: Robert Reich dismantles the 'rubbish' behind minimum wage myths

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