As the thinking goes, growth of gross domestic product (GDP), which measures the goods and services produced in an economy every year is essential to a country’s stability and prosperity. It is growth that is responsible for each generation being better off than its parents’ generation, economists say. “More growth is better, period,” Robert Gordon, a Northwestern economist, told me.
But some economists are now challenging that view, arguing that it makes more sense to focus on measures of well-being other than growth. After all, despite a growth rate that has averaged three percent over the last 60 years (which is quite robust), there are still 43 million Americans living in poverty, and most people’s wages are essentially unchanged from the end of the Reagan administration. In fact, the median income of households in 2014 was 4 percent lower than it was in 2000, despite positive economic growth in all but two of the years during that time period. For half a century, developed nations have focused on how to make their economies grow faster, hoping that strong growth would improve life for all their populations. But what if growth isn’t the key to raising the standard of living across a society? [...]
An economy not focused on growth may be a place where people don’t need to work as many hours, according to Victor. Workers have gotten more productive over the past few decades, after all, so if GDP growth were to be less of a priority, a society could use the benefits of technological production to reduce working hours, all while producing the same amount. This would allow people to spend more time with their families, or to partake in more leisure activities, which Americans say they increasingly don’t have time for.
A new economy could also focus more on the health of the environment. While the government has put in place polices that express other values, such as environmental protection—those policies are often said to be directly at odds with economic growth, instead of seen as being in concert with a suite of goals that involve trade-offs. After all, growth depends on countries producing more and more goods, often using natural resources to do so. An economy more focused on environmental health than GDP growth could measure the resources it is consuming—like timber, for instance—and make sure it doesn’t extract them at a faster rate than they can be regenerated. “We’ve had this system that has relied on consumption growth to keep people employed over the last 50 years,” said O’Neill, who is also the chief economist at the Center for the Advancement of the Steady State Economy, which advocates for an economy that consumes materials at the same level that they can be replaced.
