For generations economic growth was seen as good. The benefits of higher real incomes and a higher material standard of living were seen as the primary long-run goal of economic activity. It was not until the 1960's when E.J. Mishan wrote 'The Cost of Economic Growth' that economists began to seriously consider that there was a serious downside to continuous growth.
Today we understand that non-material living standards can be seriously affected by growth (take for example China's atmospheric pollution) often through negative externalities. Also we know that material living standards are are threatened by some elements of growth, such as global warming.
Some economists supported continued economic growth following Mishan's criticism, such as W. Beckerman in his 'In Defence of Economic Growth'. He argued that technical progress would allow society to overcome many of the problems of growth and that the higher real incomes obtained through growth would allow us to devote the necessary resources to deal with the problem.
There had been little to support Beckerman's contention until recently. The article from the New York Times described how growth and CO2 emissions have become 'decoupled' in some advanced economies. This holds out the possibility of economic growth without greater environmental damage. There is a long way to go however, only 21 out of 191 countries have achieved growth without more CO2.
This article is well suited to VCE students as they look at living standards and economic growth in Outcome 2 of Unit 3. It also provides IB students with the opportunity to look at the wider aspects of growth and to evaluate its impact. It provides all of us with the reminder that there are always costs and benefits to consider.
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