Wilkinson, Rogoff, and the Presumption in Favor of Economic Growth
By Bryan Caplan
“Economic growth seems like an extremely good thing. But growth could have undesirable side effects so severe that growth is actually bad.” This position is totally reasonable – and totally uninteresting. Could? Could?! If something seems extremely good, you need a let more than “coulds” to counter it. Indeed, you need strong evidence that side effects of the seemingly-extremely good-thing are on balance extremely bad.
All this seems pretty obvious. But Will Wilkinson still takes my old macro teacher Ken Rogoff to task on this very point. Rogoff:
[A]sk yourself how much you really care if it takes 100, 200, or even
1,000 years for welfare to increase eight-fold. Wouldn’t it make more
sense to worry about the long-term sustainability and durability of
global growth? Wouldn’t it make more sense to worry whether conflict or
global warming might produce a catastrophe that derails society for
centuries or more?
If Rogoff immediately added compelling evidence that faster growth on balance increased the probability of a catastrophe, this would be a great point. But read the whole piece. He doesn’t. So I’m afraid Will’s quite right to respond with incredulity:
Well, tell me how much a growth rate of n% increases or decreases
the probability of conflict or global warming of such and such severity
and how much that warming or conflict would ding welfare, and then I’ll
tell you if it makes more sense to worry about it. The rhetorical
implication here is that high ongoing growth rates increase the
likelihood of some sort of catastrophe, but this is just empty
bluster–just Rogoff flapping his arms and hunching over like Quasimodo
and growling and shouting “Oh no! Look out! The scary growth monster!”
for no apparent reason at all.
What if a quick octupling of world welfare produces a lot more
global warming faster, but simultaneously produces the capacity to
adapt to exactly that amount of global warming? What if the welfare
damage of global warming is greater the flatter the global growth path? Wouldn’t it make more sense to worry about that? Maybe! Also, is there less conflict or more conflict as people get richer? We know the answer: less conflict.
Of course, maybe Rogoff will do better in round two, if there is a round two. Wait and see.