« No Change in White House and Fed Relationship Under Bernanke | Main | Saving Capitalism from Catastrophic Meltdown »

Wednesday, January 11, 2006

Growth is Good

Robert Samuelson uses a discussion of Benjamin Friedman's book "The Moral Consequences of Economic Growth" as an excuse to tack a paragraph onto the end of his column making the same the same point he's made again and again recently, that the welfare state will drag us under:

Even Good Growth Can't Satisfy Welfare's Appetite By Robert J. Samuelson, The Washington Post (from the WSJ): ...[E]economic growth ... is widely seen -- especially in wealthy societies -- as morally corrupting: the mindless pursuit of materialism (do flat-panel TVs make us better off?) that drains life of spiritual meaning and also wrecks the environment. Exactly wrong, says Benjamin Friedman.

Mr. Friedman, a Harvard economist, has written a hugely provocative book ("The Moral Consequences of Economic Growth") arguing that rapid growth is morally uplifting. "Economic growth -- meaning a rising standard of living for the clear majority of citizens -- more often than not fosters greater opportunity, tolerance of diversity, social mobility, commitment to fairness, and dedication to democracy," he writes. Further, the opposite is true. Poor growth feeds prejudice, class conflict and anti-democratic tendencies.

Look at history, he says. In the United States, exploding economic growth after World War II coincided with a broad expansion of rights for women, blacks and the poor. In 1919, it passed the 19th Amendment giving women the vote. Good times often played out similarly in Europe. ... People, Mr. Friedman argues, compare themselves to "two separate benchmarks: their own (or their family's) past experience, and how they see people around them living." When living standards rise rapidly, more people feel optimistic, unthreatened and tolerant. Economic growth isn't mainly about greed.

Case closed? Well, not exactly. Mr. Friedman mostly misses the real growth predicament facing most advanced societies. The immediate dilemma involves the welfare state. It requires fast economic growth to generate the income and government revenues to pay all the promised benefits. But the mounting costs of those benefits ... may stifle growth through higher taxes and budget deficits. If so, the welfare state may cause the stagnation and strains against which Mr. Friedman warns.

Saying that well-being is lower when growth is lower, as Friedman does, but not covering every single way one can imagine growth slowing as Samuelson wants him to do, isn't missing the point. Friedman's goal isn't to list the ways growth might slow, the point is to examine how growth affects well-being.

    Posted by on Wednesday, January 11, 2006 at 12:21 AM in Budget Deficit, Economics, Health Care, Social Security | Permalink  TrackBack (0)  Comments (17)

    TrackBack

    TrackBack URL for this entry:
    https://www.typepad.com/services/trackback/6a00d83451b33869e200d8346a933453ef

    Listed below are links to weblogs that reference Growth is Good:


    Comments

    Feed You can follow this conversation by subscribing to the comment feed for this post.