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Economic growth: Does it decrease poverty?

In our society, economic growth is typically portrayed as a good thing. However, this is environmentally problematic, which I’ll discuss in a later column. But there are a number of  reasons why we might assume economic growth is beneficial.

Generally, we draw a connection in our minds between a society that produces more — a society that is growing economically — and a society whose members generally have more. This connection is, to some extent, correct. What we want when we champion people having more access to products, however, is a society whose members are better off in terms of health and psychology.

This means they are able to live longer, more fulfilling lives; pursue their dreams; fulfill their needs; and sustain self-respect. All of these are good goals and all of them are incompatible with poverty. But is having more the same as being less poor? Is poverty defined by not having very much, or is it a matter of having noticeably less than other people have? It might sounds like a silly question at first, so let’s think it through.

Today, with the exception of extremely marginalized populations, most people in our society have materially easier lives than they would have had 100 years ago. I am not saying the way things are is satisfactory. The point is that large improvements in material circumstances have not changed the fact that there are still people we see as poor.

This is not as puzzling as it might seem. We usually do not define poverty in terms of the circumstances of people in other times or places, but in terms of this time and place. The person who has a TV, cellphone, radio and job and eats takeout food might still be disadvantaged in comparison to other people.

Poverty, in other words, seems to be a relative matter. If two people have two different levels of access to goods and services, we call the person with the lower level of access poor, even if what they have is enough to meet their needs.

We also associate all kinds of ills with poverty, from crime to poor health, both at home and abroad. As a cure, we cite economic growth as a way to ensure that everyone has more than they did before and expect that to decrease the ills of economic disadvantage.

The problem is that economic disadvantage is not about how much you have, but how much you have compared to what others have.

It is possible to have more power to buy products than you are used to and actually have less power in your society than you did before — the only thing that is required is for other peoples’ access to products and privileged people to increase even more than yours. International development and corporate investments in Third World countries might, at least sometimes, do exactly what we expect — namely, give more people access to more things. Yet there might be an unintended consequence if they do not increase access equally across the board: They might increase the number of people who consider themselves poor and are seen as poor by other people in their societies.  

Whether it is possible to have equal economic growth in a competition-based economic system is a question for another time. For now, it is enough to realize that even the humanitarian aspects of economic growth often have effects we do not intend. These effects should lead us to pause and consider whether increasing the production and distribution of products is always a good thing. At minimum, it depends on how this production and distribution is done.

 

Zach Wilson is a senior studying philosophy. How do you feel about economic growth? Email him at cw299210@ohiou.edu

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