Tuesday, 16 February 2021

Positive Money’s latest publication, “The Tragedy of Growth”.

Positive Money, the economics think that that used to concentrate on advocating full reserve banking, is now publishing a lot of stuff which is doubtful quality. The first para of the conclusion of their latest publication “The Tragedy of Growth” says, “This report has shown that continuous GDP growth consistently fails to deliver enhanced life satisfaction, alleviation of poverty, or environmental protection.”

So who ever said that growth or the free market DOES give us “environmental protection”? No one.!! As every introductory economics text book has explained for decades, the free market does not deal well with externalities. For example factories which spew contaminants into nearby rivers normally won’t stop untill the law forces them to stop.

As for the “alleviation of poverty” anyone with half a brain worked out at least a century ago, that the free market, left to its own devices, pays market price for everything and everyone. And the free maket price for people who have physical or mental problems is around zero. So in a totally free market, they’d starve, unless supported by friends or family. And that truism obviously applies regardless of how much growth we have. 

Also, this publication fails to make an important point which is of relevance here, namely that growth in the form of increased productivity to the tune of X% is still desirable as long as that is matched by an X% reduction in the working week. The net environmental effect of that would be zero, all else equal. At least I didn’t spot that point being made. 

The net effect of the latter “X%” point would be that everyone would enjoy the same standard of living but would not need to work so many hours a week to maintain that standard of living.  

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