The Economist – not one of my favorites as you know – had a cover story last month:
I thought “hey maybe we’ll get down to the nuts and bolts of why the major economies of the world haven’t been growing – things like resource limits, growing wealth inequality, or at least why growth would be good for the world, etc…”
Instead we get….basically nothing. Growth is simply something to be chased after, regardless of any environmental or social consequences. Nowhere in the report is there any mention of resources – the foundation of any earth-based economy – none. No mention that, hey, either we have plenty forever, or that we better get better at conserving, or that we are actually at resource limits.
No mention of the huge gap in wealth equality, or the dangers that poses to the US, and the rest of the world.
But there’s also no cheering about the benefits of growth. There’s no grandstanding that says “with growth, the poor will be better off!” No, “with growth, the environment will be protected!” No, “with growth, the future will be better than the past!”
None of that. Instead, we simply read that the world just needs to do some better “policy” whatevers and voila “growth” will return. All in all, it’s a pretty limp and lifeless article about the one thing that supposedly is more important than all the rest.
Read it here
Every time you hear the words “economic growth,” just ask yourself “for who’s benefit?”
150 years ago, Americans fought a war over a the righteousness of an economy built on slavery. One side couldn’t imagine any other alternative. How many of our leaders have that same view point today: “we can’t image any other kind of economy than the one we have?”
I could find tons of information about the huge gap of economic equality in this country caused by “growth” – but here’s a good article from the Financial Times:
“most Americans have been treading water” while the wealthiest one percent have seen their salaries increase threefold.
“Dubbed ‘median wage stagnation’ by economists, the annual incomes of the bottom 90 per cent of US families have been essentially flat since 1973 – having risen by only 10 per cent in real terms over the past 37 years. […] In the last expansion, which started in January 2002 and ended in December 2007, the median US household income dropped by $2,000 – the first ever instance where most Americans were worse off at the end of a cycle than at the start. Worse is that the long era of stagnating incomes has been accompanied by something profoundly un-American: declining income mobility…
“…Nowadays in America, you have a smaller chance of swapping your lower income bracket for a higher one than in almost any other developed economy – even Britain on some measures. To invert the classic Horatio Alger stories, in today’s America if you are born in rags, you are likelier to stay in rags than in almost any corner of old Europe. Combine those two deep-seated trends with a third – steeply rising inequality – and you get the slow-burning crisis of American capitalism. It is one thing to suffer grinding income stagnation. It is another to realise that you have a diminishing likelihood of escaping it…
“…[renowned Harvard economist Larry Katz] offers the most compelling analogy. ‘Think of the American economy as a large apartment block,’ says the softly spoken professor. ‘A century ago – even 30 years ago – it was the object of envy. But in the last generation its character has changed. The penthouses at the top keep getting larger and larger. The apartments in the middle are feeling more and more squeezed and the basement has flooded. To round it off, the elevator is no longer working. That broken elevator is what gets people down the most.’
The picture painted is that of a triple threat to the middle-class engine of the US economy: stagnating wages for most, diminished opportunity for upward income mobility, and rising income inequality. According to the FT, a substantial majority of polled Americans “expect their children to be worse off than they are,” and with that the “golden era of the American middle class” remains on the decline.
Who benefits from growth indeed.