Economic Growth and its Inequality

The discourse on economic growth has been one associated with increased wealth and subsequent happiness. The notion of ‘trickle down’ has been used to pursue levels of staggering economic growth over the past century and enabled governments to implement policy initiatives, which have been argued to supposedly benefit the poorest in society. However, this is far from the case with unprecedented levels of global inequality and the questions of whether this increased material wealth for individuals has actually benefitted their lives. Not to mentions the on going conflict between pursuing economic growth and addressing environmental concerns, and whether we can get a balance between them.

Governments traditionally measure economic growth through the GDP per capita of a country. However, this method has been criticised for several reasons, including its failure to account for certain destructive activities that can increase GDP while reducing the quality of life, making it an inaccurate gauge of social welfare. An example of this is illustrated between 1970 and 1980, where the Soviet Union saw a massive increase in GDP (from $430 billion to over $900 billion). This increase was correlated with a decrease in the average life expectancy of a Russian male, as well as widespread alcohol abuse and increased infant morality. Perhaps the Soviet Union had increased production, but the quality of life and overall social welfare decreased, conveying that growth within a county may not necessarily lead to an increased standard of living for its citizens.

The end of World War II saw a turning point in the strategy and importance placed on pursuing growth in the global world. Modern economic values were stated be governments and free-market economics was pursued as a means of attainting increased growth. The planning and setting of legal frameworks by modern Western countries like the US and UK were then transferred to underdeveloped countries, aiming at increasing growth as a means of reducing poverty. However, these development strategies led to increased global inequality. A study by the United Nations Human Development reported that countries with the poorest 20% of the world population decreased their share of the world’s gross national product from 2.4% in 1960 to 1.3% in 1986. The gap between the rich and poor is wider today than in 1914. The gap between rich countries and poor ones is also much greater.

Furthermore, the more developed nations have now reached a state where all reasonable and rational demands for economic goods have been or can be satisfied. As a result, the virtues of added economic growth may be an illusion because growth does not come for free, and the costs of increased growth are rising. Additionally, there is widespread dispute with the argument that that higher living standard, defined as the widespread consumption of large volumes of goods and services, can be sustained. The alternative to further growth and addressing environmental concerns is to move beyond the rhetoric that maintains that having economic growth for the sake of the poor, to a more honest evaluation of what growth is indeed sustainable and equitable, and what growth should be foregone.

The rate of global economic growth over the past century has led to environmental degradation and an inadequate access to safe water and sanitation in the developing world, with less than 3% of the water being safe and drinkable. A fundamental argument against the current strategy of pursuing growth is the unsustainability of our ever-increasing production of goods and services. Unless population growth and economic expansion were halted, the Earth would soon run out of natural resources, drinkable water and breathable air. Therefore, the current rate of growth and strategy pursued by most Western governments is running the risk of depleting the world’s natural resources.

To conclude, the current measurement of growth has failed to account for the citizens’ quality of life. The current strategy for pursuing growth in laissez-faire economics has led to increase inequality, with a lack of social and historical fit for the developing countries. Additionally, the rate of global growth is unsustainable. The over-emphasis on growth, growth and even more growth is therefore one, which needs to be re-evaluated.

“Economic growth without social progress lets the great majority of the people remain in poverty, while a privileged few reap the benefits of rising abundance.” tweet

John F. Kennedy, 196

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