In this week’s column at Interest.co.nz, I reprise part of the argument that Jenesa and I made in our Case for Economic Growth while reviewing our recent panel discussion. Here’s a snippet:
It’s easy to get reasonable people to agree that economic growth is a good thing, at least in principle.
The New Zealand Initiative hosted a panel discussion on its recent report, by Jenesa Jeram and me, outlining the case for economic growth and dispelling a few myths around growth. With me were MPs Chris Bishop (National), Dr David Clark (Labour) and James Shaw (Greens).
And since they’re all reasonable people, they all agreed that economic growth is a good thing.
It’s when the rubber hits the road that maintaining support for economic growth gets harder. Every time that government passes a policy or implements regulation that fails cost-benefit assessment, or without adequate consideration of costs and benefits, it is effectively saying that economic growth does not matter that much. No party has covered itself in glory on this front.
And growth does matter.
Had New Zealand’s economic growth rate been only a percentage point higher since 1970, the country would today have higher per-capita GDP than Australia and be fourth in the OECD instead of languishing below the median.
Further, economic growth is the single best way we can prepare against the range of natural calamities to which New Zealand can be subject. In our report on the merits of economic growth, we found that wealthier countries are better protected against even earthquakes. Richer places can afford safer buildings. Over the next twenty years, a 1% growth rate would reduce the number of deaths in a substantial Wellington earthquake by about twelve percent. But at a 4% growth rate, the number of fatalities could be cut by over 60%.