Should Growth in Economy Be Desirable and Is It Sustainable?

Economic growth is evidenced by rise of real output of an economy over time subsequently resulting to a positive impact on the material standards of living of the people. Desirability of economic growth is based on its impact on the standards of living of the people, as well as the possible impact to the future generations. Sustainable economic growth refers to the rate of growth that an economy can be able to maintain without aggravating other big economic problems that could affect both the current and future generations. 

According to Opp (2012), the dominant view is that economic growth is both desirable and sustainable. It is considered to be desirable as it acts as the best means to enhance social welfare, which is a rational objective of both the public and their governments. Social welfare within the society is ensured by greater material abundance that results in higher standards of living that are desirable to a majority of the public. This is just a facade!

There exist a clear relationship between rapid economic growth in the current time, and economic growth in the upcoming times. Swift economic growth today may lead to exhaustion of resources that may lead to detrimental environmental issues to the future generations. In this light, the desirability of economic growth and its sustainability act as a contrasting issue in today’s societies. 

Rising incomes and productivity that are associated with economic growth, allow the society to develop better means of tapping resources that further improves the welfare of the public. Higher standards of living in turn increase the amount of time and ability to enjoy leisure, which is a desired aspect by the public (Jain & Ohri, 2012). These are common aspects of economic growth that contribute to the happiness and general welfare of the public. Economic growth is also desirable since it is perceived as a realistic way of reducing poverty.

Improving the economic welfare of the poor among the public through increasing their incomes and enhancing activities to boost productivity by design spurs economic growth. Hess (2013) also argues that economic growth is sustainable and has great concern for the welfare of future generations. He also points out that economic growth involves development in key sectors of the economy related to knowledge and information and that such advancement leads to the discovery of better and more efficient means of increasing productivity. 

This is achieved through the innovation and invention of alternate and more efficient resources. Economic growth therefore leads to the discovery of more resources. Creation of alternative means and materials for production rather than depletion of the existing resources supports the sustainability of growth. In this light, human discovery can be deduced to be the only limit to sustainable economic growth. 

On the contrast, many critics have expressed that desirable economic growth is not sustainable. They argue that since economic growth is better enhanced through more exploitation of the existing resources, it results to their depletion. In this sense, it does not have a caring concern for future generations which is not the desire by a majority of the current generation. The main drivers of economic growth include industrialization, which emits harmful by-products and wastes to the environment. Such emissions into the environment are the contributors of today’s global concerns of ozone depletion, pollution, and global warming. 

All major economies have almost depleted their natural resources and developing countries suffer exploitation in the race to cover deficits in the first world countries. It is a fact that the United States consumes close to 28% of the world’s resources with only 5% of the global population. This and more similar factors have by design brought a wide disparity between growing economies and the developed world keeping the developing countries in eternal debt. This is not to say that the developed countries do not have debts, far from it, these countries such as the UK and the US have had a constant rise in national economic debt.

These negative externalities of economic growth occur because the resource inputs used in the production processes make a second entry into the environment as toxic wastes. The assumption in this case is that the higher the rate of economic growth and the deemed standards of living, the more toxic wastes are absorbed by the environment. This eventually leads to a wide range of health and environmental impacts on the current and future generations (Jha & Murthy, 2013). 

Economic growth may thus, prove to be unsustainable due to its underlying negative impacts. In addition, there is little evidence that it helps to solve widespread sociological problems related to poverty, discrimination and homelessness in the society. It is evident that societal issues such as poverty apply only to a portion of the public and may be presumed to be an issue of resources’ distribution and not production. This is the case in different parts of the globe. The most effective solution to raise the society’s standard of living would be commitment to ensured equitable redistribution of income and wealth as opposed to directly aiming at increasing the output. A good example of this can be demonstrated through the following demonstration: 

Two equally productive laborers one from a third world country and another from a developed country get paid $1 and $10 per hour respectively for the same type of work like say in the automobile production industry. If both like the other’s car and decide to buy them then (using the labor production cost) we can see that the third world laborer will have to work for ten hours to be able to afford one car made by the developed country’s worker. On the other hand if the developed country’s worker decides to buy the car made by the third world worker then they can buy 100 cars with the wages they get for working the same ten hours.

 Following this example, we can conclude that the advantages of accumulating capital wealth differ greatly with salary differential for equally productive work. If the differential in wages was 5 ($10 to $2) then the advantage in wealth accumulation would be 25:1 and if it were 2 ($10 to $5) then the accumulation of wealth advantage would be 4:1. This means if both laborers had access to the same markets and technology with equal salaries for equally productive labor, then the wealth retained after considering both factors of consumption and accumulation by each of the above laborers would be equal.

In conclusion, there are underlying questions about the relationship between sustainable economic growth and increasing social welfare. This is partly due to the different costs and impacts of economic growth on social welfare. It is of essence to consider a benefit-cost analysis of economic growth in coming up with a conclusion on whether it is desirable and sustainable or not. The costs and issues that do not change the welfare of the public may be evaluated through a process of ensuring the use of socialchoices. The society needs to be consulted on its view of economic growth-related activities and their tastes and preferences concerning them. Both the objective and subjective aspects of the desirability and sustainability of economic growth should be determined by the overall society, which enjoys the benefits and bears the burden of such growth.

References

Hess, P. (2013). Economic Growth and Sustainable Development. Durban: Routledge.

Jain, T., & Ohri, V. (2012). Introductory Microeconomics and Macroeconomics. New York: FK Publications.

Jha, R., & Murthy, B. (2013). Environmental Sustainability: A Consumption Approach. Amsterdam: Routledge.

Opp, S. (2012). Local Sustainable Urban Development in a Globalized World. New York: Ashgate Publishing, Ltd.