The ludicrous concept of growth

Image thanks to videoblocks

I am a proud member of the anti-growth coalition. So are most of us it seems. Anyone who disagrees with the government’s kamikaze economic plans is in the same boat. It’s not a very exclusive group.

Growth, growth, growth is Truss’ mantra. What she means is GDP growth. The trouble is that this is almost a meaningless concept that has very little to do with our daily lives. 

By way of a very simple example, imagine a very small country of two people (you and me?), both earning £1 a year. GDP is £2. Next year, however, our earnings change with one earning £2 while the other unfortunately earns only 50p. GDP at £2.50 shows good growth but we are left with half the population delighted and the other half miserable.

Now imagine there is some immigration and the population grows by 1, to 3. This person also earns £1. GDP is now £3 yet nobody is better or worse off than before, despite GDP growth. But what happens if immigration causes wage depression and everyone ends up earning 80p in the year. GDP at £2.40 is still showing growth yet at least two thirds of the population will now be miserable.

There are many other situations where you can get GDP growth yet have many people in penury. It is too broad a brush to be relevant to most of us. GDP growth is fine and could be argued that it is good, if not even essential, for the country as a whole. The counter argument is that continued growth is unsustainable as eventually we will consume all that this world has to offer.

On a day to day basis though, people do not need GDP growth, they need enough money to pay the bills, buy the food and heat their homes. GDP will not deliver this in itself, it needs to be balanced with a programme of fairer distribution. Income growth, especially for those that are struggling the most is what is needed. This is where the government’s focus should be.

I’m not holding my breath!

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