Growth as Mother of Life, Health, and Contentment
It's fashionable to question whether GDP growth is good, but history says otherwise.
If you’re enjoying Bastiat’s Window, please consider becoming a paid or free subscriber, and by all means, share the site and its articles with friends and colleagues. Today’s essay is a slightly edited version of one that originally appeared in the Dallas Morning News, July 5, 2020. Republished here with thanks.
The most iconic Portuguese word, “saudade,” (saw-DA-ji) has no proper equivalent in English. In music, saudade inspires words and melodies of unrivaled beauty. But applying similar sentiments to economic policy can engender danger, sickness, hunger, illiteracy, monotony and death — most often for people other than the policymakers.
Unfortunately, in fashionable circles worldwide, people who have probably never heard the word unwittingly succumb to its charms and foist saudade-like economic policies on the less fortunate.
Saudade signifies a profound, melancholic longing for something absent — a place, a person, an idea. Generally, that something is irretrievable — a lover, a homeland, the warm days of youth. Quite often, the object of nostalgia never existed.
Today, a trendy and toxic notion leads some to discredit, and in some cases seek to snuff out, economic growth to somehow return to a happy, bygone, but fictional state of bliss. A Google search on “economic growth” and “overrated” in 2020 generated 832,000 hits (708,000 today). The headlines speak loudly:
“Why a new wave of economists are championing slow economic growth”
“Is it time to end our fixation with GDP and growth?”
My long-ago professor, Nobel Prize-winner Edmund Phelps, wrote of such sentiments:
“there is a respectable body of opinion that questions whether growth in productivity beyond the towering levels seen today is of any great value compared to the fearsome costs that are taken as given in most discussion. But, in my thinking and empirical research, this fashionable hypothesis cannot stand.”
Despite genuine wealth disparities, the benefits of economic growth do not consist merely or even primarily of luxury goods for the wealthy. Growth’s benefits include life, health, safety and enjoyment for even the humblest.
To understand growth’s value, especially to the world’s humblest, it’s important to see just how far we’ve come in a short period of time. Luxury goods are but a small part of the story.
Most tellingly, despite the waves of despair one reads, economic growth over the past 25 to 30 years produced a remarkably uplifting occurrence, the largest and swiftest climb out of extreme poverty in human history. In 2018, World Bank President Jim Yong Kim said:
“Over the last 25 years, more than a billion people have lifted themselves out of extreme poverty, and the global poverty rate is now lower than it has ever been in recorded history. This is one of the greatest human achievements of our time.”
His statement was based on data from the World Bank’s, “Poverty and Shared Prosperity 2018: Piecing Together the Poverty Puzzle.” When I first published this article in 2020, I wrote that COVID-19 had the capacity to reverse much of this progress—as could an economic philosophy of saudade.
The late Swedish physician and statistical impresario Hans Rosling produced a small masterpiece of a video: “200 Countries, 200 Years, 4 Minutes.” In those few minutes, the ever-exuberant Rosling tells (and shows) the impact of economic growth between 1810 and 2010 (with a brief downward bump during World War I and the pandemic that followed).
Early in this period, he notes, “All countries were sick and poor.” Average income in the richest countries was less than $2,000 per year in today’s money. In some countries, it was in the range of $300-$400 per person per year. And, as his graphics vividly illustrate, life expectancy was less than 40 years everywhere.
By the mid-20th century, some countries had become many times wealthier. Average life spans in today’s worst-off countries exceed life spans in the best-off countries 200 years ago. Rosling anticipated a not-too-distant future where all countries were in the healthy, wealthy corner of his diagram.
My friend Donald J. Boudreaux developed another excellent video of this topic: “The Hockey Stick of Human Prosperity.” He notes how little the human condition changed between antiquity and the 1700s. Then, it all changed radically. For most of history, life span was around 30. Now, he notes, Americans expect to live beyond 80.
He notes that infant mortality dropped from a soul-crushing 25% to 0.5% in wealthier nations. Even many of the poor among us have full bellies, indoor plumbing, vaccines, air conditioning, television sets, and, in stark contrast to our not-so-distant ancestors, he notes, clean underwear.
Nobel economist Robert Fogel explored the rapid increase in life span and health. In a short, highly readable 1996 presentation, ”New Findings about Trends in Life Expectation and Chronic Diseases,” he described a virtuous circle of events: economic growth led to better nutrition, which led to longer lives and better health, which led to still more economic growth, and so on. In Bourgeois Dignity: Why Economics Can’t Explain the Modern World, economist Deirdre McCloskey explained how respect for commerce brought all of this about. Among her comments:
Two centuries later the world supports more than six-and-half time more souls, [yet] the average person now earns and consumes almost ten times more goods and services than in 1800.”
But one of the greatest benefits of economic growth has been the reduction of monotony and boredom. Growth brought us the internet, which bestowed immeasurable benefits during COVID-19: instantaneous medical information, remote work, distance education, online shopping and banking, communication with distant loved ones, streaming entertainment during the lockdown.
Over the past two centuries, growth allowed us to shunt off the dullest, most deadening, and often dangerous tasks to machines. It brought us safer food, a cleaner environment and far more education. Growth allowed countries to abolish child labor and establish social safety nets.
President John Adams described the virtues of increasing wealth at the family level:
“I must study politics and war that my sons may have liberty to study mathematics and philosophy. My sons ought to study mathematics and philosophy, geography, natural history, naval architecture, navigation, commerce and agriculture, in order to give their children a right to study painting, poetry, music, architecture, statuary, tapestry and porcelain.”
Adams’ words understate growth’s virtues by focusing on its ability to allow the pursuit of esoteric pastimes. But the ability to pursue leisure activities and, for some, earn their livings off of those activities is a remarkable departure from the rest of human history. We can forgive Adams for this slant, as he died just before the unprecedented upward climb described by Rosling, Boudreaux, Fogel, Phelps, and McCloskey.
Sister Irene Kraus, the nun who headed the Daughters of Charity National Health System, famously said of her hospitals’ profitability:
“No margin, no mission.”
The same logic applies to economy-wide growth.
The sirens of saudade ignore the benefits of growth at the peril of mankind’s well-being. The Arcadia they pine for never existed.
The Land of Might-Have-Been
Given the essay above’s focus on the Portuguese word “saudade,” my first inclination was to close here with an appropriate Brazilian song, like “Chega de Saudade,” by Antônio Carlos Jobim and Vinícius de Moraes. But, then, I thought of a 1930s British song—“The Land of Might-Have-Been,” by Ivor Novello. This particular recording was sung by Jeremy Northam to great effect at a pivotal moment in director Robert Altman’s darkly comic drama, Gosford Park. Novello’s poignant lyrics deal with love, not economics, so perhaps a bit unfairly to the composer, I’ll reinterpret them for my own purposes here. Repeating from the above essay:
“Saudade signifies a profound, melancholic longing for something absent — a place, a person, an idea. Generally, that something is irretrievable — a lover, a homeland, the warm days of youth. Quite often, the object of nostalgia never existed.”
While “saudade” may not have any direct equivalents in English, it seems to me that Novello’s lyrics beautifully capture the notion—no matter whether one is talking about love or economics:
“Somewhere there's another land
Different from this world below
Far more mercifully planned
Than the cruel place we know
Innocence and peace are there
All is good that is desired
Faces there are always fair
Love grows never old or tired”
Putting my economic spin on things, it seems to me that when merciful planners collaborate to transport the rest of us from this cruel place to a more elevated land, we always find, but never seem to learn, that:
“We shall never find that lovely land of might-have-been … …”