On The Tiger's Back

The problem with riding a tiger is that it is hard to dismount without peril.

I have often wondered if our insistence on continuous, significant economic growth isn't a case of riding the tiger. It reminds me a bit of Lake Wobegon, where "the children are all above average." Clearly, we all can't be above average.

More to the point, we measure economic activity by "gross national product," which correlates very closely to how many resources we expend. Some of those resources are finite. Logically, we can't increase our use of finite resources forever. Malthus figured that out two centuries ago.

Kenneth Rogoff, Harvard economics professor and former chief economist of the IMF, raises the question today in an article entitled "Rethinking the Growth Imperative."

"Modern macroeconomics," Rogoff points out, "often seems to treat rapid and stable economic growth as the be-all and end-all of policy. That message is echoed in political debates, central-bank boardrooms, and front-page headlines." And then he asks: "But does it really make sense to take growth as the main social objective in perpetuity, as economics textbooks implicitly assume?"

After examining a number of possible explanations for the emphasis on growth as well as statistical examples of the effect of growth, Rogoff closes by observing: "In a period of great economic uncertainty, it may seem inappropriate to question the growth imperative. But, then again, perhaps a crisis is exactly the occasion to rethink the longer-term goals of global economic policy."

Good point. Can we figure out a way to get off of the tiger without doing too much damage to ourselves.