books growth

Book review: The Growth Delusion, by David Pilling

A few years ago books that were sceptical of economic growth were written by environmentalists or maverick economists, and issued by specialist presses and academic publishers. The Growth Delusion shows how things have shifted. It’s written by David Pilling, Africa editor for the Financial Times. And it’s published by Bloomsbury – the home of Harry Potter. That’s got to make this the most mainstream postgrowth book yet.

There are good reasons why growth scepticism is on the rise. When the economy was ticking along nicely, there was no need to ask questions about it. And then when the economy tanked, everyone was talking about the crisis. It’s only now, ten years on, that we can look at growth and think critically about it. We desperately wanted growth after the recession. But has it done us any good?

As Pilling says in the introduction: “If your country’s economy is growing solely because the rich are getting richer and you are working harder and harder just to maintain your living standard, then you are entitled to ask what, precisely, is all this growth for?”

It’s those sorts of questions that The Growth Delusion addresses. It’s not of the degrowth school. It’s sceptical rather than anti-growth, interested in the things that GDP can’t count properly. That includes services, inequality, wealth (as opposed to income) the internet, and much else besides – a real problem in advanced economies with a large service sector.

It’s also a problem in developing countries, in different ways. Subsistence farmers, hunter gatherers and pastoralists contribute very little, if anything, to the formal economy. It gets slightly ridiculous when you consider that, by the UN’s estimation, there are 2 billion such people. That’s over 25% of the world’s population that is invisible to GDP.

Pilling explores various topics around GDP, basing each one on a country. Iceland demonstrates how a country can experience rapid but entirely empty growth. China is a platform for talking about how growth comes at the expense of the environment, India is a case study in how growth is political. The author reports from each place, meeting relevant experts who can shed light on the different aspects of GDP. We get snippets of descriptive detail, just enough set the scene without hiving off into personal travelogue.

One thing that I particularly appreciate here is that the book includes voices that are underrepresented in the postgrowth debate: the statisticians. We might occasionally hear from them, but not these ones. Being a journalist, Pilling likes to go and talk to people in person. So we get to meet the head of Kenya’s statistics bureau, and the guy who compiles Maryland’s Genuine Progress Indicator. Or Niu Wenyuan, who has spent years trying to encourage the Chinese government to adopt a revised methodology that he calls ‘green GDP’. They bring a useful perspective, because they know the limits of GDP as a number. They’re under no illusions, and it makes it clear that the problem isn’t necessarily GDP itself. It’s the over-reliance on it as a guide to policy, the one metric to rule them all. The real issue is with policy-makers.

I also appreciated that Pilling sees the difference between growth in rich and poor countries. “If you are poor, economic growth can be transformative” he writes. “In the richer world the whole idea of growth – at least as conventionally measured – may need to be overhauled.” He suggests that those of us in the latter category could be looking more at quality rather than quantity, something I explore in my own forthcoming book.

The final sections of the book investigate complementary metrics of various kinds. We meet Lord Layard, author and chief spokesperson for HappinessThe Human Development Index and Genuine Progress Index are explained, and some of the ways that countries have calculated wellbeing. As far as Pilling is concerned these should be used alongside GDP, not as a replacement. We should use a variety of quality statistics to guide policy. “Sometimes more income will help us achieve what we want. Sometimes it will not. But more income – more GDP – should never itself be the goal.”

I’ve read dozens of books about growth and GDP by now, but this one stands out. It’s written with a healthy journalistic scepticism, with courage and with wit. It clips along at a good pace, and has more fun with the topic than it has any right to. If you’ve never read a book on growth, maybe this is the one you’ve been waiting for.

15 comments

    1. Politicians talk about it constantly. Every government department filters every decision through a growth filter, as a matter of policy. It’s just nonsense to say that ‘no one actually looks at it’.

      1. Nice try but no cigar. I wrote “no one actually ONLY JUST looks at GDP”. Are you capable of anything other than a strawman argument?

        1. Don’t get hung up on the actual metric of GDP. It’s just the chief signifier for the growth obsession which is the deeper issue.

          Every decision gets framed in terms of growth – see the government’s 25 year plan for the environment, for example. It locks us into certain patterns of behaviour before we even start. The government isn’t so much interested in how to stop climate change, but how to “deliver the clean, green growth needed to combat global warming.”

          This isn’t a straw man argument about how GDP is constructed. It’s about what we value as a society, what our priorities are.

          1. Mischaracterising statements like a poundshop Kathy Newman is the definition of strawman.

            GDP is an important metric for governments since it measure the resources they have to mobilise. As the ONS says it shows how sustainable public finances are and is important in managing the economy. But it is only one of many (inflation, balance of payments, value of the currency are just a few other).

            You want more. More government action to do this, more money to poorer people around the world. That needs growth or to make people actively poorer. I have noticed that the people campaigners want to make poorer are never themselves. It is those richer and more successful, or working class who don’t share metropolitan values who can make the sacrifice. But as you say, its about priorities.

          2. You endlessly talk about ‘making people poorer’, but that’s a bizarre framing of what Oxfam are calling for. Does ending tax havens make people poorer? Does paying fair wages make people poorer?

            Since nobody’s talking about taking away billionaires’ money, we’re talking about sharing future growth better, nothing more.

            The actual definition of a straw man being “an intentionally misrepresented proposition that is set up because it is easier to defeat than an opponent’s real argument”, what am I supposed to make of your endless assertions that I and Oxfam are out to ‘make people poorer’?

          3. Does ending tax havens make people poorer? Yes if it makes it harder for investment in poorer countries. One of the reasons why there have been so few prosecutions from the Panama and Paradise papers is that there are legitimate uses for off shore financial centres. One being so that investors from different jurisdictions can invest under the same trusted neutral conditions, particularly if they are investing in poorer countries with less developed and possible capricious legal systems. Closing ‘tax havens’ makes that harder so less investment in poorer countries. Less investment means fewer factories and jobs.

            Does paying fair wages make people poorer? Yes if it makes them too expensive to employ for the value they are creating. Bad job beats no job. Especially if as Oxfam advocate you should dramatically reduce investment returns to do so, such that there is less incentive to invest in those countries. Less investment means fewer factories and jobs.

            ‘nobody’s talking about taking away billionaires’ money’. Yes they are. Page 55 of ‘Reward Work, Not Wealth’: “Governments should use regulation and taxation to radically reduce levels of extreme wealth”. That is taking away billionaires’ money. Clearly Oxfam are out to make these people poorer. You seem to support that. Hardly a strawman.

            I have never said Oxfam intend to make poor people poorer. I accept they have good intentions. But good intentions do not compensate for flawed policies. Many horrors and disasters have been caused by those with good intentions.

          4. I’m taking them at their world, not wishful thinking.

            I’m representing the fairly standard view of most mainstream economists. High minimum wages cost jobs. Reducing returns lowers investment.

          5. Again, you leap to ‘high wages’ when I said a ‘fair’ wage. So you’re for unfair wages and tax havens. It’s your prerogative to be part of the problem if you so choose.

            I’m not going to start an argument about whether or not most mainstream economists are actually with you or not. You have more time than I do. Have the last word if you must, I have other things to do.

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