The case for economic growth

Insights Newsletter
13 March, 2015

When I was interviewed for this job, I was asked what three public policy changes I would make, if I could. They say that people's policy recommendations can reveal a lot about their priorities, and what they value.
 
So what does it reveal when a candidate says their highest policy priority is facilitating economic growth?
 
In certain sectors of society – some intellectuals, environmentalists, anti-consumerists, and the like – economic growth is a dirty term. It is associated with environmental degradation, greed, inequality, and the depletion of finite resources. Even those who don’t see growth as an inherently bad thing will still try and argue that you cannot have infinite growth in a finite world.
 
Maybe opponents of growth would have reason to be concerned if that were true. But there is much more evidence to suggest growth is neither evil, nor limited by resources.
 
Last night, Hon Bill English spoke on economic growth at The New Zealand Initiative’s annual retreat, where we launched our newest publication: The Case for Economic Growth, by Dr Eric Crampton and myself. As the name suggests, the report provides the positive case for growth, highlighting its importance in achieving many of the things society deems valuable.
 
Why advocate for economic growth? First, because too many people believe that the tiny percentage movements in GDP are of little consequence to their everyday lives. The purpose of our report is to illustrate how growth can benefit workers, families, the environment, and businesses.  For example, at a 1 percent growth rate, it takes 70 years for income to double. At 3 percent, that doubling happens in 24 years, and at 5 percent, only 15 years.
 
Second, because if the good story on growth fails to be told, it is vulnerable to opposition.
 
The Case for Economic Growth provides evidence on what we mean when we talk about economic growth, and discusses the very real material improvements that are a consequence of growth.
 
When you prioritise economic growth, you do not just get a more prosperous nation. You also promote a healthier environment, happier citizens, increasing intelligence, technological progress, and greater innovation – to name just a few of the benefits.
 
If that’s the case, then the next natural question is how do we encourage more economic growth?
 
Luckily, The New Zealand Initiative is on the case. In fact, all of our research topics from housing, to education, to localism, to social services, to urban affairs, to trade and investment, to resources ultimately serve the same purpose: to create an environment where the economy can thrive.
 
Because when we talk about economic growth as a priority, what we want to see is a free and prosperous society for all New Zealanders.

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