So, as it happens, we live in a world which is rather funny in its way of accounting for growth.
The main policy target these days is probably GDP growth.
GDP, as you probably know measures the flow of things we consume, the investments we make, as well as the impact of government spending, net of the taxes (plus the net exportations of the country).
However, it presents many well known defects.
So for example, if you have 2 young mothers taking care of their children they do not contribute to GDP.
If each woman goes to work 10 hours a day as a nanny for the other woman their salaries will contribute to GDP growth.
Another often cited example is war (and how it can boost economies). But that's a long topic for another day.
There are many aspects which produce negative collective effects but positive GDP impact.
Quite clearly GDP is not a decent target variable for growth, for let's look at what a decent target variable should look like if the "powers that be" should one day feel enlightened.
Targeting the right kind of growth.
Economic growth should be about improving access to needed goods and services, while minimising costs (broadly defined to include social and environmental costs). Growth should also be about growth in jobs, and in job productivity, to allow the gradual reduction in worked hours, without the need to reduce real wages. In fact, the real hourly wages growth could be a good variable to target.
The Industrial and IT revolutions have hugely increased labour productivity and made it possible to the west to never have to worry anymore about food or basic needs. We've moved to a service based economy. Mechanised Agriculture and Robotics, can and do produce, with very limited human labour, most of the physical goods we today consume, and computers and the internet are profoundly changing the logistics and services sectors.
The question is: can we stop growing our desires? Can we just maintain things as they are but employ the benefits of technology to work less? The other questions is, of course, do we want to?
The main policy target these days is probably GDP growth.
GDP, as you probably know measures the flow of things we consume, the investments we make, as well as the impact of government spending, net of the taxes (plus the net exportations of the country).
However, it presents many well known defects.
So for example, if you have 2 young mothers taking care of their children they do not contribute to GDP.
If each woman goes to work 10 hours a day as a nanny for the other woman their salaries will contribute to GDP growth.
Another often cited example is war (and how it can boost economies). But that's a long topic for another day.
There are many aspects which produce negative collective effects but positive GDP impact.
Quite clearly GDP is not a decent target variable for growth, for let's look at what a decent target variable should look like if the "powers that be" should one day feel enlightened.
Targeting the right kind of growth.
Economic growth should be about improving access to needed goods and services, while minimising costs (broadly defined to include social and environmental costs). Growth should also be about growth in jobs, and in job productivity, to allow the gradual reduction in worked hours, without the need to reduce real wages. In fact, the real hourly wages growth could be a good variable to target.
The Industrial and IT revolutions have hugely increased labour productivity and made it possible to the west to never have to worry anymore about food or basic needs. We've moved to a service based economy. Mechanised Agriculture and Robotics, can and do produce, with very limited human labour, most of the physical goods we today consume, and computers and the internet are profoundly changing the logistics and services sectors.
The question is: can we stop growing our desires? Can we just maintain things as they are but employ the benefits of technology to work less? The other questions is, of course, do we want to?
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