Economic Growth: Prerequisites, Limits, Benefits and Costs

One of the reasons for growing populist sentiment is the fact that many households have been struggling on the economic front for several decades. Those who favour limited government argue against attempts to redistribute from rich to poor as a response to this concern. They argue that the main effect of these attempts is to limit the incentive for businesses to create jobs and to produce the goods that people need and want – leaving rich and poor to fight over a smaller total amount of material welfare. The recommendation from this school of thought is that we should simply pursue faster economic growth. The presumption is that all households – including poorer ones – will benefit. This talk evaluates this view – examining what leads to growth, how the benefits and costs are distributed, and whether further growth is even feasible – given the limits on our non-renewable resources. This talk sets the stage for the following one that focuses on how tax reform and our environmental concerns fit into the growth picture, and for the later lectures that consider a number of government policies that attempt to address inequality directly.