The Church of GDP
Washington Post
By Robert J. Samuelson
January 12, 2006
What's the dominant religion of the past 100 years? The answer isn't
Christianity with its 2.1 billion followers, or Islam with its 1.3 billion.
It's the idea of economic growth, the Church of GDP. Countless countries have
embraced rapid growth as a cure to their ills. Getting richer is now an almost
universal craving. And yet the worship of growth inspires enormous ambivalence.
It is widely seen -- especially in already wealthy societies -- as morally
corrupting: the mindless pursuit of empty materialism (do flat-panel TVs really
make us better off?) that drains life of spiritual meaning and also wrecks the
environment.
Exactly wrong, says Benjamin Friedman.
Friedman, a Harvard economist, has written a hugely provocative book ("The
Moral Consequences of Economic Growth") arguing that rapid growth is morally
uplifting. "Economic growth -- meaning a rising standard of living for the
clear majority of citizens -- more often than not fosters greater opportunity,
tolerance of diversity, social mobility, commitment to fairness, and dedication
to democracy," he writes. Further, the opposite is true. Poor growth feeds
prejudice, class conflict and antidemocratic tendencies.
Look at history, he says. In the United States, exploding economic growth
after World War II coincided with a broad expansion of rights for women, blacks
and the poor. During the prosperous Progressive Era, from roughly 1895 to 1919,
the "idea of mass high school education first took hold." In 1912 the federal
government created a Children's Bureau to discourage child labor. The same
year, Congress passed the 17th Amendment, switching the election of senators
from state legislatures to popular vote. In 1919 it passed the 19th Amendment,
giving women the vote.
Good times often played out similarly in Europe. From 1850 to 1870,
Britain's per capita income rose 35 percent. In 1870 the government opened
civil service jobs -- until then reserved "for candidates with family
connections" -- to competitive testing. Comparable reforms broadened the
military's officer corps. Religious tolerance improved; no longer was
membership in the Church of England required to teach at Oxford and Cambridge.
After the Franco-Prussian War of 1870, France also prospered: In 1875 it
adopted universal male voting; in 1881 and 1882 it embraced compulsory
schooling up to age 13.
Nazi Germany is, of course, the classic case of the converse: that growth's
absence is morally destructive. From 1929 to 1932, German industrial production
dropped 42 percent; in 1932 unemployment was 44 percent. The rest is history.
Friedman offers other examples. The Ku Klux Klan (anti-Catholic and anti-Jewish
as well as anti-black) flourished in the 1920s, which he describes as a period
of disappointing growth.
People, Friedman argues, instinctively compare themselves to "two separate
benchmarks: their own (or their family's) past experience, and how they see
people around them living." When living standards rise rapidly, more people
feel optimistic, unthreatened and tolerant. Friedman also cites Adam Smith's
insight that commerce fosters trust, civility, mutual dependence and legal
protections (contracts, property rights). Economic growth isn't mainly about
greed and exploitation.
Case closed? Well, not exactly.
One problem with Friedman is Friedman. His meticulous scholarship unearths
much contrary evidence. In the United States, the Great Depression didn't
diminish democracy; instead, it "fostered a broader commitment to opportunity
and mobility for all citizens." Britain passed momentous reforms (unemployment
insurance, old-age pensions) from 1908 to 1911, a period of weak growth. Among
poorer countries, many (Chile, South Korea, China) first achieved rapid growth
under authoritarian regimes, though Chile and South Korea are now
democratic.
Friedman's view of the 1920s is also dubious. Agriculture aside, America was
mainly prosperous. The KKK's strength reflected raw prejudice -- and perhaps a
sense of a threat created by economic growth, which left farms and small towns
behind.
Friedman has identified a tendency, not an iron law. Still, his moral case
for economic growth is solid. It's true that growth alone rarely creates
happiness. Beyond a certain income, happiness depends on family relationships,
a sense of belonging, personal beliefs. But growth surely can cure misery. In
the 1700s, life expectancy in France was 25 years, and about 30 percent of
infants died before their first birthday. Now life expectancy in advanced
countries is almost 80 years, and infant mortality is usually less than 1
percent. Anyone who cares about world poverty must favor economic growth.
Another moral plus: Societies whose politics focus on the gaining and
sharing of prosperity can promote their own stability. First, everyone can win.
Second, though remaining economic conflicts can be nasty, they're easier to
mediate than religious or ethnic differences -- where one side must face
eternal damnation or discrimination. It's no accident that the United States
and Britain are the oldest successful democracies.
But Friedman mostly misses the real growth predicament facing most advanced
societies. It's not environmental spoilage. As he notes, most rich societies
protect their environments through tougher antipollution regulations. In the
past two decades, U.S. emissions of sulfur dioxide are down 54 percent, he
reports. Whether global warming will break this environmental truce remains to
be seen.
The immediate dilemma involves the welfare state. It requires fast economic
growth to generate the income and government revenue to pay all the promised
benefits. But the mounting costs of those benefits -- especially as populations
age in the United States, Europe and Japan -- may stifle growth through higher
taxes and budget deficits. If so, the welfare state may cause the stagnation
and strains against which Friedman warns. The dilemma for most rich societies
is that they are wedded both to advancing materialism and to policies
threatening that advance. Friedman would have strengthened his point by clearly
saying so.
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