By Jenesa Jeram*
Have you ever heard the adage that you cannot have infinite economic growth in a finite planet?
Or that economic growth is all well and good, but it is time New Zealand focussed our attention on other things?
How about that we must face a constant trade-off between economic growth and happiness, the environment, and greater equality?
Announcing one’s disdain for economic growth has always been popular in certain circles. Back in the seventies, we would have called these people hippies. Today, we call them enlightened intellectuals.
The New Zealand Initiative has recently released The Case for Growth, authored by Dr Eric Crampton and me. The report dispels many of the persistent myths that are intended to discredit all the good that economic growth can achieve.
Moreover, the report argues that not only is the constant denunciation of growth unfounded, it can be downright dangerous.
The first thing that needs to be realised is that the very ability to challenge economic growth is due to our privileged position.
For a vast majority of human existence, living conditions stayed pretty much the same.
Looking at economist Robin Hanson’s study on very long term economic growth, there was very little technological change or growth for about two million years. That means children, grandchildren, great grandchildren and so on, pretty much lived the same lives.
Today, it is fair to say that siblings born more than 10 years apart will be raised under very different conditions.
In fact, real economic growth as we know it – a steady improvement in people's lives from generation to generation – really only took off around 1820. It’s a relatively new phenomenon, and one too easily taken for granted if we don’t look back at history.
So what has growth afforded us?
Well, contrary to popular belief, it hasn’t just provided the opportunity to acquire more stuff for the sake of having more stuff.
Sure, the improvements in the quality and variety of consumer goods and services are a positive consequence, but it doesn’t end there.
There have been vast advancements in our health, wealth, and wellbeing as some benefits. And if that’s not satisfactory, we can always point to improved environment and greater equality as other positive consequences.
One of the most comprehensive accounts of improvements in physical wellbeing came from Robert W Fogel. His study documented improvements in health and mortality over the centuries (starting from 1700), and came to the conclusion that the changes consequent to industrialisation are so great that we have effectively undergone “a form of evolution that is unique not only to humankind, but unique among the 7000 or so generations of humans who have ever inhabited the earth”.
Anyone who has opened a history book will be able to point to their own observations of how far we have come.
However, not everyone has been able to make the connection that these improvements would not have been possible if it was not for economic growth.
Growth has been necessary to afford improvements in medicine and medical technology. Moreover, economic growth spurs the widespread dispersion of medicine and technology, so better health and mortality rates are achievable not just for the privileged elite but across society as a whole.
Growth has also improved our lifestyles, where technology has made many occupations less labour-intensive, and therefore less physically straining. The same could be said about everyday tasks around the home, which are similarly less labour-intensive and time consuming.
Statistician Hans Rosling refers to the washing machine as just one historical example of how this technology transformed the lives of women, saving them both time and physical anguish. Like the development of medicine and medical technology, growth is the mechanism that allows the widespread dispersion of these discoveries from the elite to the masses.
Of course, an obvious objection to economic growth today is that while it has undoubtedly brought improvements in the past, it is time for society and policymakers to focus our efforts elsewhere. But this assumes that society has reached the epitome of our creative capacity and improvement. It assumes that things are so good now, economic growth could not possibly make our lives any better.
The truth is, we still have a long way to go before declaring growth has achieved “enough”.
As long as there are people living in poverty, diseases to treat, children to receive a world class education, natural disasters to guard against and recover from, people in need of affordable housing, and alternative resources to be discovered to guard against depletion of the non-renewable, we will need economic growth.
Nobody knew this better than Edmund Burke, widely regarded as the philosophical founder of conservatism. Conservatism’s very essence is the primacy of conserving all that society needs to flourish, including a clean environment, strong community ties, and a sense of responsibility to future generations. He said that people will not look forward to posterity, who never look backward to their ancestors.
To push economic growth to the side now ignores all that our ancestors have achieved in enhancing the living conditions we have today, and the triumphs of human creativity and entrepreneurship that are still to be achieved.
*Jenesa Jeram is a research assistant at the New Zealand Initiative. This is this week's NZ Initiative weekly column for interest.co.nz.