A recent headline in the Guardian calls for an economic reckoning: “We economists have done the maths: ‘growth’ is a doomed strategy.”
More than 350 signatories, including economists Joseph Stiglitz, Thomas Piketty, Kate Raworth, and anthropologist Jason Hickel, have endorsed an over 100-page “Roadmap for Eradicating Poverty Beyond Growth” that provides a path to end extreme poverty — not by growing the economic pie, but through a global redistribution. While an admirable goal, the analysis is severely misguided and proposes policies that will hurt the poor.
The op-ed column starts with the blatantly false assertion that “we live in an age of manufactured scarcity” (emphasis added). Scarcity is simply the idea that we have limited resources in a world of unlimited wants.
But precisely because of economic growth, we live in a world with less relative scarcity that has eradicated poverty. Two hundred years ago, 80% of the world lived in extreme poverty. Now, less than 10%. And countries that become richer have much lower poverty levels.
The Roadmap itself acknowledges that the share of people in extreme poverty fell dramatically, even over the last three decades, while also recognizing that this progress was historically unprecedented. What it buries is the mechanism: This reduction was driven overwhelmingly by economic growth in areas such as East and South Asia, where hundreds of millions have escaped poverty precisely because of globalization and market liberalization.
The admission that poverty reduction has largely stalled in sub-Saharan Africa runs counter to their claim that “the promise that economic growth would ‘lift all boats’ has not been kept.” Many countries in sub-Saharan Africa have not seen poverty reduction because those countries have not experienced much economic growth relative to the rest of the world.
The boats that were lifted most dramatically were the ones at the bottom. This “post-growth” movement consistently conflates distributional effects in rich countries with the different development successes and challenges of much of the Global South.
This logical error infects the entire document. The authors identify four failures of growth: It is increasingly jobless, its fiscal dividends are insufficient, its gains are captured by elites, and it produces social complexities like inequality. The proposed remedy — eliminating dependency on growth — is a non sequitur. We can quibble with the various solutions to these issues, but none of them require abandoning the mechanism that generates the resources to be redistributed in the first place.
Lant Pritchett and Addison Lewis make this point nicely: All measures of human well-being have a strong relationship with economic prosperity, and no high-income countries score low on these measures. It is why growth in average income correlates very strongly with growth at the bottom, suggesting that economic growth in general helps fight poverty.
Furthermore, the call in the Roadmap for “democratic planning,” nationalization of pension funds, and central banks that finance public spending has an epistemic problem. All of these issues require governments to know almost perfectly the preferences and productive possibilities that central planners have never reliably known. The call for “democratic planning” but also mandates from federal and international bureaucracies is itself an inconsistency.
While introducing admirable goals, the Roadmap has mistaken the vehicle for the destination. It treats economic growth as the pathology rather than the most powerful instrument in generating the very resources that fund all of its lofty goals. As countries grow, they provide more resources toward many of the goods and services that are called for in this document: Education, healthcare, poverty-guided welfare structures, and environmental protection.
IN DEFENSE OF ‘SWEATSHOPS’: PATH TO END POVERTY RUNS THROUGH CHEAP LABOR
The Roadmap’s most revealing moment comes in its final pages, where it warns against “pessimism.” However, the choice between a growth-oriented development agenda and a 100-page wish list of post-growth policies is not one between optimism and pessimism. It’s a debate about what actually works in providing the best outcomes for all, especially those at the bottom of the income ladder. The world’s poor deserve the debate to be grounded in evidence, rather than one founded in ideological manifestation.
To the extent poverty is manufactured, it is so by political choices that strangle economic growth and restrict the pathways the poor can take to escape poverty. The most consequential political choice is whether or not to build the institutional foundations that have allowed for widespread well-being and the alleviation of poverty.
Justin Callais, Ph.D., is chief economist at the Archbridge Institute. Vincent Geloso, Ph.D., is assistant professor of economics and fellow at the Archbridge Institute.