Economics, Pethokoukis

Do we care too much about GDP growth?

The New York Times’s Joe Nocera wonders, “What’s the point of economic growth if nobody has a job?” And he lavishes praise on how Brazil’s ($12,000 per capita GDP) admittedly leftist government doesn’t spend a lot of time worrying about growth for its own sake, but rather connects it with alleviating poverty and growing the middle class.”

Unlike GDP-obsessed America ($50,000 per capita GDP). Of course, when you have a debt to pay off, higher nominal GDP is a good thing. Just look at the EU to see what happens to debt sustainability when growth stalls. Beyond that, I would agree that the point of economic growth is to broadly raise living standards and create opportunities for earned success. Arthur Brooks on the latter:

Free enterprise gives the most people the best shot at earning their success and finding enduring happiness in their work. It creates more paths than any other system to use one’s abilities in creative and meaningful ways, from entrepreneurship to teaching to ministry to playing the French horn. This is hardly mere materialism, and it is much more than an economic alternative. Free enterprise is a moral imperative.  … If you can discern your own project and discover the true currency you value, you’ll be earning your success. You will have found the secret to happiness through your work.

And right now we need to do a better jobs of both creating new kinds of meaningful work through product/empowering innovation (vs. efficiency innovation) and equipping Americans to take advantage of such jobs in an age of advancing automation. Andrew McAfee and Erik Brynjolfsson, authors of The Second Machine Age in the FT today:

People will have important roles to play in the second machine age. But the difficulty many companies have in finding the employees they need up and down the skills ladder shows that our education systems are not keeping pace.

Before resigning ourselves to an era of mass unemployment, let us ensure that we are giving our people the skills they need to work alongside the astonishing technologies we are developing. Instead of assuming that human workers are marginalised, or that technology can never destroy jobs, let us instead work to give humans the tools and environment they need to thrive.

Follow James Pethokoukis on Twitter at @JimPethokoukis, and AEIdeas at @AEIdeas.

2 thoughts on “Do we care too much about GDP growth?

  1. “What’s the point of economic growth if nobody has a job?” And he lavishes praise on how Brazil’s ($12,000 per capita GDP) admittedly leftist government doesn’t spend a lot of time worrying about growth for its own sake, but rather connects it with alleviating poverty and growing the middle class.”‘…

    Nocera is either a liar or a clueless, incompetent boob but then again he works for the New York Times

    GDP is a hot political topic during the silly season just like it is in this country…

    In yesterday’s Washington Examiner: Wall Street adviser: Actual unemployment is 37.2%, ‘misery index’ worst in 40 year

  2. Well…in China, GDP is booming, but you cannot see the sun in Beijing for the smog, or even hint at dissent for the threat of prison.
    No, measured GDP is not everything…

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