Should We Stop Worrying About Economic Growth?

February 25, 2013 in Daily Bulletin

Both Democrats and Republicans agree that low growth rates in the United States are a concern. They’re wrong writes Scott Winship:

  • As a country becomes wealthier it becomes harder to maintain high growth rates, because the initial base that is growing has become larger.
  • Rather than growth rates what we should actually think about is the absolute economic gain that we see each year.
  • For example from 1959-1969 the economy grew at 3% a year, leading to an absolute (inflation adjusted) increase in income of $600 per person. From 2000-2007 the economy grew at 1.4% – less than half the rate – but led to income gains of $650 per person. From this perspective then America’s economic growth is doing just fine.
  • Moreover there are intangible gains we now have that aren’t measured by GDP. We have air conditioning, air travel, and smartphones – once considered absolute luxuries now available to the common man.
  • The focus on growth also takes away focus from the problems of income inequality within the United States.

The full article is a lot longer and goes into much more detail. You can find it here.

Source: The Breakthrough

Via: Marginal Revolution