Growth

aje on February 2020

⭐ Required readings:

Activity: Global conditions quiz

Watch: Growth is like an iPhone

Lecture handout: Growth*

Here’s a video showing people in the Netherlands living in poverty before the second world war.

This slide deck helps reveal just how poor people used to be even in countries that are now very rich.

Here is Rutger Bregman arguing that poverty is an economic status, not a character failing:

The city is the foundation of economic growth. You can test your knowledge of the world’s most important cities here:

Activity: Largest cities

Or watch this video:

This slide deck shows some before and after photos of famous landmarks.

In the lecture I argue that infant mortality figures are better proxies for living standards than life expectancy. As Hans Rosling argues, “this measure takes the temperature of the whole society” (p.20). This is because children are fragile, and we require lots of good circumstances in order for children to routinely survive – it tells us about access to basic health care, the literacy of mothers, etc.

If I have time, I like to do this exercise: What reveals most about someone’s life? Their geographical location or their income level?

Activity: Stoves Handout, May 2020 // Here are the Stoves charts

You can read my essay that summarises the key points from this session here:

Here’s my video explaining growth with an iPhone analogy:

I utilise this this framework more thoroughly with my Country Competitiveness Dashboard.

To dig deeper into how to measure economic freedom, and how it illuminates the development stories for several important economies, see:

Activity: Economic Freedom Parlour Game

There has been particular criticism levied at attempts to increase economic freedom in Chile. I try to deal with that with this interactive exercise:

Activity: Free Markets in Chile

Recommended podcasts

️ Recommended articles

Recommended books

  • Koyoma, M., and Rubin, J., 2022, How the world became rich: The historical origins of economic growth, Wiley – Mark and Jared survey the main explanations for economic growth, including geography, institutions, culture and exploitation, with a focus on why the Industrial Revolution occurred in England and how it then spread to other countries across the world.
  • De Long, B., 2022, Slouching towards utopia, Basic books – this is a large tome and covers a lot of ground, but is empirical, readable, and an important work.

 Recommended video

Recommended movies

  • Saltburn (2023) – are we supposed to believe that Oliver “wins”? Or just project into the future with him like Miss Havisham, sitting amidst wreck and ruin because he has no income and can’t afford the upkeep? When I watched it I assumed he’d inherited Saltburn (hence the title) because if he’d inherited the entire family fortune, he wouldn’t be in the house all alone.

Degrowth

Jason Hickel’s book ‘Less is more‘ argues that we need to “shift to a post-capitalist economy that is focused on human well-being and ecological stability rather than on perpetual growth”. Here are my 5 main criticisms of the degrowth movement:

  1. It relies on bad economics. In a seminal article published in a highly prestigious journal, Degrowth can work — here’s how science can help, Nature, December 12th 2022 – Hickel et al claim that economic growth is based on production for its own sake and the necessary depletion of natural resources required to fuel it. But this is a fundamental misconception of economics, which is about increasing utility (i.e. people’s subjective judgment of what improves the quality of their life) in the most efficient way possible. As Sam Bowman said, economic growth is about “innovations that use fewer resources & less labour to produce more wellbeing – the [exact] thing the blurb says we should do”.
  2. Growth is one of the biggest parts of the solution to our environmental problems. We have successfully decoupled a lot of the negative impact of growth and therefore there’s no fixed trade off between material betterment and environmental protection. In fact, rich countries are growing as their environmental footprint falls (see “The shrinking arguments for degrowth” by John Burn-Murdoch, The Financial Times, June 26th 2026). In addition, the best way to fix our environmental problems is through technology – as Hannah Ritchie has argued, recent breakthroughs in the batteries required for electric vehicles, or low cost solar panels, are a result of economic growth (Ritchie 2024, p.35).
  3. Policymakers in rich countries have been prioritising environmental protection over economic growth for over 50 years. Growth rates have become very low in advanced countries (particularly since 2008) and this is because of degrowth arguments. In Degrowth and the Monkey’s paw (by Stian Westlake, Works in Progress, May 15th 2023), Westlake points out that “the UK has been remarkably successful in weaning itself off its growth addiction. I’m surprised that supporters of degrowth don’t celebrate these charts more.”
  4. If the argument is for a more extreme response, then this is not compatible with democracy. Martin Wolf has pointed out that, “The transformation… could only be implemented by a dictatorship, and a global dictatorship at that. No such regime is (happily) in prospect. That is at best unrealistic utopianism. At worst, it is yet another in a long succession of “progressive” calls for tyranny” (Wolf 2023, p. 223).
  5. Much of what passes as the “degrowth” scientific literature is in fact opinion pieces or aspirations. In Savin, I, and van den Bergh, J., 2024, “Reviewing studies of degrowth: Are claims matched by data, methods and policy analysis?“, Ecological Economics, Volume 226, the authors provide a comprehensive survey of 561 articles from the degrowth literature. They find that: “the large majority (almost 90%) of studies are opinions rather than analysis; few studies use… data… most studies offer ad hoc and subjective policy advice… various studies represent a “reverse causality” confusion, i.e. use the term degrowth not for a deliberate strategy but to denote economic decline (in GDP terms) resulting from exogenous factors or public policies; [and] few studies adopt a system-wide perspective – instead most focus on small, local cases without a clear implication for the economy as a whole.”

A desire to overthrow the economic system on environmental grounds is therefore misguided and counter productive.

Plunder

The lecture talks about how countries get rich. One strategy that isn’t mentioned is plunder. The main reason for this is that colonial exploitation and other forms of resource extraction can undoubtedly benefit some groups at the expense of others, but there is no plausible explanation for why this would create wealth. Theft is at best a zero-sum transfer, whereas – and particularly since 1870 – we’ve seen vast swathes of the global population getting richer.

For more on this see:

Or listen to this podcast:

Learning Objectives: Understand the foundations of economic growth. See how economic growth theories inform development economics. 

Cutting edge theory: This session defines cutting edge growth 

Focus on diversity: One of the most widely respected economic historians of the factors that led to industrialisation is Deirdre McCloskey

Spotlight on sustainability: This session defines the sustainable growth rate as the balanced path between capital accumulation and capital consumption.