Do we really need economic growth?
Ever since I started my undergraduate studies in economics, I have become surprisingly enamored with the field of study. I have adopted its framework of thinking and even applied many of its lessons to my personal life (much to the demise of my love life, but I digress). Quite frankly, I really like economics.
However, there's one thing I don't like about economics. This particular thing, in fairness, is more the way in which politicians and government officials use economics rather than the profession itself, but it makes my blood boil nonetheless.
It's the rabid obsession with economic growth.
In public speeches, government officials rarely pass up the opportunity to tout their goals for economic growth for the upcoming period and/or bask in the glory of the previous period's growth achievements.
Two, three, four percent economic growth... Wonderful! With the way that these numbers are announced, you'll be forgiven for thinking that everything else must be rosy and well in your country. However, this type of tunnel vision is extremely upsetting to me. It's as if the worryingly high levels of suicide, depression, and mental illness and low levels of job satisfaction are mute as long as we achieve x% of economic growth.
Economic growth mainly points to consumerism. To put it very simply, how much more is a country producing and consuming compared to the previous period of time? Hence, the assumption is that if a country produces and consumes more goods and services, the standard of living must be increasing (which, broadly speaking, is a good rule-of-thumb) and so the government deserves a pat on the back for a job well-done. Does this mean that the size of people's bank accounts is more important than the actual wellbeing of the citizens?
It's slightly ironic that I'm preaching this so much given that I used to always roll my eyes at those World Happiness reports ranking the happiest countries in the world (the latest winner of the lot is Finland). I laughed at these studies because I thought that they were just cute PR stunts and that something as subjective as happiness could never be measured accurately. However, one day I realized that these reports (despite their flaws) are actually on to something.
Should it not be the norm to measure and prioritize the happiness of a country's citizens? Even though as an economist it is borderline blasphemy to say this, should governments not prioritize the metrics in such reports – despite their notoriously subjective nature – over the holy grail that is economic growth? Isn't one of the biggest purposes of government to maximize the welfare of its citizens? Speaking of which...
What is The Purpose of Government?
Not an easy question to answer, so I did some research to enlighten me. It's funny that online search results are so America-centric because I struggled to find any resource regarding this question from a non-American perspective. Anyway, the U.S. Constitution has the following to say:
Union, justice, domestic tranquility, common defense, welfare, and liberty.
I think that these six goals capture the essence of government quite succinctly. For the purposes of this blog post, let's zoom in on welfare. I believe that politicians have squarely equated welfare to economic growth and thus see any improvement in the latter as an indication that they're doing their jobs well.
'As long as economic growth remains positive, people must be happy and the general welfare must be fantastic.'
Except that, as we all know, money doesn't buy you happiness (not entirely, anyway). We still witness unacceptably high levels of depression, mental illness, obesity, inequality, suicide, loneliness, people that are unhappy at their jobs and in their marriages, and so on. Surely these factors constitute welfare? What good is it to see record levels of economic growth if we still see high levels of these types of metrics? And if the purpose of government truly is to promote the welfare of the people, should these metrics not take priority over economic growth (especially in public speeches by government officials)?
Now you see why the obsession with economic growth upsets me so much. I just don't understand why politicians neglect to emphasize the components of welfare in their national speeches, despite the focus on it in something as important as the U.S. Constitution (and presumably in the founding documents of other countries as well, though I would have to do further research to verify that). There's no lack of preaching about how important the Constitution is to the fabric of the nation, yet there is a glaring absence of discussion about a key component of it: welfare.
I wholeheartedly agree that one of the greatest purposes of government is indeed to maximize the welfare of its citizens instead of striving for ever-greater levels of economic growth. Granted, it could very well be – in fact, it's probably certain – that a particular level of economic growth has to be achieved in order to maximize welfare. This is obvious. Money doesn't buy happiness, but it sure does buy the peace of mind that comes with being able to pay your rent, utilities, food, and other daily necessities.
I'm not suggesting that we do away with money and consider economic growth as completely useless, I'm merely advocating for us to see economic growth as a means to an end: happiness. That's it. It has to be the tool that is required to get people those much-needed family vacations, that financial security to be able to pursue a dream career as an artist, the peace-of-mind to be able to take the required time off after giving birth to a child, or whatever it is that constitutes happiness to you.
I know this is all very cliché and maybe a bit too "soapboxy", but discussions like these really make me see how (sadly) much of Western society is fueled by consumerism. Consumerism requires constant growth and, obviously, consumption to sustain itself. We are continually reminded of this when this talk of growth, growth, growth is emphasized in public rhetoric. That said, the assumption is that more consumption leads to more welfare and thus it makes sense that consumerism is such a focal point. To say it cynically, happiness and welfare aren't great ways to fuel an economy.
Perhaps the counterpart to consumerism – minimalism – became so popular because it was an inevitable backlash to all the tension that was built up from it. Perhaps people finally realized that more stuff, more growth, more GDP per capita wasn't doing much for their happiness and started asking why all these things weren't solving the deeper, painful emptiness in their souls. Whatever the case, simply producing and buying more stuff is simply cannot be the way to go.
This was probably the most idealistic and preachy (and naive?) blog post I've written to date, so forgive me if it came over as obnoxious. One question continues to bother me though: Will never-ending levels of economic growth solve the more existential, social problems our society faces? I personally believe not and lament the fact that too many government officials seem to think otherwise.
All in all, my overarching goal in this blog post was to provide a deeper perspective to the old saying of "money doesn't buy happiness". Whether I succeeded or not, I hope to have at least convinced you that economists actually do care about people, not just numbers.
See you, Space Cowboy.