Economic Growth not the Panacea

Economic Growth not the Panacea

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Just before the recession hit in 2008, I remember embroiled in a lengthy discussion with my cousin on the financial climate.  He was rolling out hefty number on how business was booming and economy was growing in Pakistan. The telecommunication sector in particular, grew several folds in the last decade, he quipped. The overall size of the economy in Pakistan doubled during that time.

I somehow remained unconvinced about this progress. One big reason was the disparity in wealth accumulation that did little to pull masses above the poverty line. Furthermore, even with economic upsurge the growing social anxiety was palpable. More people had lesser time on their hands than they did before. The growth in the number of cars on the road may have been a healthy economic index but the increased traffic depreciated the quality of life. Nonetheless, I was not able to counter his barrage of figures as my own ideas were un-fermented at that point in time.

It wasn’t until I came across a book in Edinburgh Book Festival by Andrew Simms, that I finally found the missing cog that kick-started my stunted thought process. In his book Apocalypse: the New Path to Prosperity (2013) [1], Simms has attempted to demystify the hidden connotations in the term “growth” and has decoupled the myth of economic growth being axiomatic to prosperity.  And so he deduces that the propagation of the term “growth” as the panacea and the silver bullet is ill contrived.

In building up his case, Simms refers to a report by UNDP (United Nations Development Program) published in 1996, which spoke of the tendency of both socialist and capitalist economies to sacrifice their people on the altar of increased accumulation. The report identifies five types of negative economic growth, namely:

  • Jobless Growth
  • Voiceless Growth
  • Ruthless Growth
  • Rootless Growth
  • Futureless Growth

It would be worthwhile exploring each of these terms.

Jobless Growth is when an economy gets bigger with more goods being traded and more services being offered but without creating more jobs. One example is India, where the economic growth has been unparalleled but the employment growth has risen only slightly [2].

Voiceless Growth is when an economy grows at the expense of civil liberty. It is not uncommon to see growth in dictatorial regimes. Pakistan, North Korea, Libya and Latin American countries have all enjoyed economic growth in despotic eras. In many times the growth during repressive form of government may surpass the growth during democratic reign in the same country.

Ruthless Growth is the growth experience at the expense of equality. The phenomenon is just not limited to Anglo-Saxon economies but is also creating crevasses in India, China and South Africa.  The divide it creates is also demographic i.e. young people face a dis-proportionally high risk of poverty and unemployment.

Rootless Growth comes at the expense of cultural diversity. It is part and parcel of economic globalization. It is the flooding of McDonalds, Starbucks and Coca-Cola that sweep away indigenous businesses. It is not just limited to food and drink or consumables. Many independent artist would confirm that few giant labels also dominate our aesthetic tastes as they have to power to define them.

Future-less Growth is the growth that comes at the cost of sustainability. It is the growth that steals resources to be utilized in the future, for over-consumption today. Industries such as Oil and Gas, Fisheries and Forestry are most obvious players that carry this temporal myopic vision. Even unsustainable farming has resulted in depreciating levels of utilizable top-soil.

 

The many facets of negative economic growth are identifiable in today’s world. All five are a result of wealth and power accumulating in fewer hands. The path to prosperity goes through delegation of economic activity and proportional distribution of resources and earnings. Above all, in the pursuit of prosperity, accumulation of wealth should not be the sole focus of any government.

 

[1] http://www.theguardian.com/books/2013/feb/28/cancel-apocalypse-andrew-simms-review

[2]http://en.wikipedia.org/wiki/Jobless_recovery

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