The Moral Consequences of Economic Growth

link here to article

This interview was published in the spring of 2009. It raises a number of questions and provides some answers that are food for thought.

Some good things happen with the right kind of economic growth. Social mobility is an important consideration. When people feel that they are not limited by accidents of birth, and that they can participate in economic growth, they are happier and more supportive of opportunity for others. They are also more tolerant of diversity. They support racial integration, immigration, gay rights, gender equality etc. etc. They are also more generous to those who have been less lucky. Democracy is also strengthened and nurtured in less developed countries as well as in mature democracies.

The bad news is that economic stagnation produces a retreat from the good things that happen in periods of good economic growth. Support for economic mobility wanes. People are less supportive of diversity. They are less generous toward the poor and the democratic process atrophies. If we look at what is happening in the world today as a result of slower and less equal economic growth, we see a retreat from things that would otherwise be valued.

Rising incomes don't necessarily make us happier. Per capita GDP is much higher than it was 30 years ago but people are not necessarily happier. Well being comes from the feeling that things are getting better for us and for others. We are happier when we are optimistic about the future.

There are also issues around economic growth and the environment. As countries become richer they have more concern for clean air and clean water. Many of the strongest supporters of environmental quality are individuals who feel well off.

Resource depletion is an issue but that is what the market is supposed to be good at fixing. Oil prices will rise as it becomes scarce and the search for new sources of energy will be stimulated as the consumption of oil declines.

Climate change is the most pressing issue that we face and we do not have a governance structure in place to deal with it. There are solutions but each nation has to be willing to give up some of its sovereignty, along with the recognition that we share a common atmosphere. This is easier to do in some countries than in other countries. Rich countries have to be willing to provide leadership since they have more to give up. Poor countries have the opportunity to grow without the burden of legacy costs, and they may point the way toward new forms of growth.

Although this interview was given in the context of the Great Recession, it is important to remember that we had economic stagnation prior to the recession. Rising inequality was obscured by the substitution of debt for income. It is not surprising that the retreat from the good moral consequences of economic growth was started well before the recession. Unlike climate change, however, it can be solved by political actions in the nation state. Whether the retreat continues, and leads to a climate like that in the 1930's, depends upon our political and moral response to stagnation. It is easy to get discouraged about the future, but we can determine the future if we are willing to invest in it.