Two Cheers for Matthew Yglesias
In response to which Matthew says:The importance of the growth rate increases, the further into the future we look. If a country grows at two percent, as opposed to growing at one percent, the difference in welfare in a single year is relatively small. But over time the difference becomes very large. For instance, had America grown one percentage point less per year, between 1870 and 1990, the America of 1990 would be no richer than the Mexico of 1990. At a growth rate of five percent per annum, it takes just over eighty years for a country to move from a per capita income of $500 to a per capita income of $25,000, defining both in terms of constant real dollars. At a growth rate of one percent, such an improvement takes 393 years.... If I had to explain, in one sentence, the reason I am not on the political left, I would cite the enormous long-run benefits of economic growth. Of course it still can be argued that various left-wing policies, properly understood, will contribute to long-term growth. But in my view, if you are not supporting growth-maximizing economic policies, you better had a pretty good reason in your pocket.
Well, I agree that if you are not supporting growth-maximizing economic policies, you had better have a pretty good reason in your pocket. I am, therefore, in an important sense not "on the political left" in any especially strong sense. On the other hand, I don't live in the abstract world of political theory where "the political left" denotes an especially left-wing point of view, I live in the United States of America in the early 21st century and see no reason to believe that the policy program of the Republican Party is more conducive to growth than that of the Democratic Party. On the whole, I would argue that the reverse is true. Most prominently, though, there are an awful lot of pro-growth reforms (especially with regard to the tax code) that neither party supports in practice, both organizations being essentially brokers for a variety of interest groups none of which are especially interest in doing the heavy lifting that would be involved in ironing out the wrinkles there.A refreshing break with the far more typical obsession with equality über alles on the left side of the political divide. One could cavil by noting that it's entirely possible that what Matthew and I regard as "pro-growth reforms" are unlikely to be the same things, but that's really a minor issue: the important thing is that he understands the relentless arithmetic of compounded annual growth, which most people on the left seem not to, and for this he is to be commended.
But if the time ever comes when we get the straight up-and-down choice between more equality and more growth that one finds in a lot of abstract political philosophy discussions, I'd be pretty darn sympathetic to the forces of growth.
UPDATE: Mats Lind responds in the best possible manner where economics is concerned, by cooking up an explicit, formal mathematical model and seeing what conclusions it leads one to. If only all economic debate could occur in such a fashion: why do so many people imagine that the Negri and Hardt school of nebulous "thinking" provides the right way to reason about economic issues?