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November 22, 2005

Comments

phil jones

Hmmm. But we have to put this up against Malthus and peak oil. Growth increasingly demands more resources (and energy). Do we want to instigate ever increasing consumption of resources on the moral grounds that it helps everyone feel happier, if we don't have any reason to believe this is sustainable over even the near term future?

John Robb

Improvement in standard of living might require more energy, but the limits have more to do with how we get that energy than how much we use.

Brice Tebbs

I think the relative argument is exactly right but for individuals to be happier the benefits of growth eventually have to flow to them individually. If the increase in wealth becomes more concentrated into a small group, then we have to ask ourselves what kind of success is that?

To put it another way:
What % of the people in the US have health care plans that are better than they had last year?
What % of people have more job security/opportunity in general than last year?
etc.

In the aggregate I agree that growth is good and I believe the market will at some point correct for things like energy use etc. but nothing really guarantees that the opportunities created in a Globalized economy will flow out evenly within each state.

There is also the question of what is the "Moral" use for the increasing wealth and should we be wanting something more than a larger TV set. But that's really a different kind of question...

Bill Lazar

An interesting hypothesis but one which does not seem to me to have any possibility of being more than a thought experiment. How can Freidman's assertion not fail simply because no human society has reached a sufficient level where a steady state would be generally satisfactory? In fact, I would argue that there is no basis for comparison at all as no society has existed in a true, equally distributed no growth state.

mark safranski

"Mr Friedman's explanation is that people's sense of well-being is essentially relative. They become accustomed to any fixed standard of living, rich or poor. They are happiest if they feel their standard of living is rising (something that, in principle, all members of a society can experience at once), or if they feel that they are better off than their peers"

Flip this and you have Richard Hofstadter's " status anxiety". Fear of socioeconomic regression creates a " paranoid style" of politics in those who have advanced and face slipping backwards. Examples:

Bourgeois lawyers in ancien regime France who turned Jacobin

Ex-yeomen farmers turned Populists and Alliancemen

Lower middle class Germans turning to the Nazi Party

Positive economic policies spur more positive politics and vice-versa

Moral Growth

Very interesting...

"Do we want to instigate ever increasing consumption of resources on the moral grounds that it helps everyone feel happier"

Growth is drive by production, not consumption - hince the differnce in happiness between the culture with a higher standard of and the one with a higher growth rate.

In the context of Globalization, it further shows that productions CANNOT be at the loss of another culture and must be sustainable all around.

"In the aggregate I agree that growth is good and I believe the market will at some point correct for things like energy use etc. but nothing really guarantees that the opportunities created in a Globalized economy will flow out evenly within each state."

It does not, a Globalized economy will likely mirror the present NOT another form. The only way to morph into it is to start small via boot straping... or this will happen as people start to live longer and realize the benefit of symbiotic relationships.

"There is also the question of what is the "Moral" use for the increasing wealth and should we be wanting something more than a larger TV set. But that's really a different kind of question..."

TV is not moral unless it lefts the morale of a culture... which in turn impacts production.

By the way, it might be more true to say "The Economic Consequences of Moral Growth"...

John Robb

Brice, I agree. Macro indicators like GDP growth that don't translate into across the board increases in standard of living aren't valuable. In fact, they may be harmful since it provides for unfavorable forms of relative movement.

Bill, you may be right. It would be interesting to read how Ben supports this premise in his book.

Mark, that's the potential problem. It happened in Iraq. In regards to us, a bad financial crisis after a period of stagnant and declining standards of living would cause some very ugly outcomes.

Robert Cassidy

Hmm.

Only the US necessarily equates economic growth with consumption. In most parts of the world, advances in mass transit, durability, efficiency are viewed as economic advances, but not here. An economic advance to an American is a bigger TV, a bigger car, a longer commute, a boat that won't get used.

Society assigns value to advances, but the US is a consumption society. In my opinion, it's totally unsustainable. With the American publics consumption mindset, we're either heading for a situation where the resources simply aren't available to meet the public's notion of economic growth, or that mindset will change - but the change will require a crisis.

dennis

"Left to their own devices, market forces will therefore provide too little growth."...maybe so, but the real question is whether interfering with market forces will increase or decrease growth.

In a situation like post-war Japan, the answer seems to be yes...ie., where the path ahead is clearly mapped by others. But when you're close to the leading edge, it takes entrepreneurs, and top-down direction is liable to go the wrong direction. Back in the 80's, when everybody thought Japan was going to dominate the world economy, I read a book arguing that Japan's government-directed investment and lack of an entrepreneurial culture would soon hamper their growth, since they were past the "catch-up" phase...of course, that turned out to be right.

Ie., the decentralized approach applied by global guerrillas works in the market, too.

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