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What is Growth – “No, I don't know why you're not there, I give you my love, but you don't care, So what is right and what is wrong? Give me a sign” *

rpwills
Introduction
The Government has made it clear in a number of speeches, policy announcements, and media output that its focus is on growth and yet more growth to the exclusion of other aims.  But what is growth, how do we measure it, and how meaningful is more growth?



 
The quote below provides a concise explanation of how economic growth is measured.  “Economic growth is measured using changes in gross domestic product (GDP). GDP measures the monetary value of final goods and services—that is, those that are bought by the final user—produced in a country in a given period of time.[1] GDP can be adjusted for changes in population to give a measure of GDP per person.” [House of Lords, January 2025]. 
 
GDP and its relative Gross Value Added (GVA), data is used to assess how well off we are yet it is flawed in many respects. Robert Kennedy in 1968 said  “ ... it measures everything in short, except that which makes life worthwhile”. So why is output data misleading and growth what implications does it have for the growth rhetoric?
 
The problems
Output captures a range of disparate activities some good some bad. For example the costs of dealing with negative externalities such as flood alleviation or pollution are included. Other activities add to output yet are of dubious benefit – you can drive several miles to buy a takeaway coffee rather than make one at home. It adds to output but is hardly necessary or essential.   We can increase the number of second homes and the associated travel – output rises but is society better off, probably not.  A significant element of economic growth can be attributed to the pursuits of the very wealthy, who account for most flights and a lot of consumption. Higher bankers bonuses are included as output, which is of little benefit to most people.
 
Increasing the population adds to output creating the illusion of growth yet is desirable neither for economic improvement or the environment.  Economic growth invariably fails to capture most of the negative externalities linked to it. Noise pollution reduces people’s quality of life but is excluded from the economic calculus. The value of property is included so that bizarrely rising house prices add to growth!
 
Conclusion
We have therefore a flawed system of measuring economic activity. One, which fails to assess negative externalities, unnecessary consumption and distributional aspects.  Rather than just adding up the figures any realistic and sustainable approach to measuring economic output and growth has to recognise these flaws.  Instead of a mad rush for growth at any cost which will not benefit society we need to devise a policy framework that provides appropriate economic activity to sustain living standards and maintain the environment in the short, medium and long-term.
 
 Sources
* Haddaway, (1993), ‘What is love’. 
 
House of Lords, (2025), Economic growth conditions: Discussion and debate.
 
Kennedy,R., 1968. Kansas.

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