Moral Consequences of Economic Growth

Source: NYTimes, Nov 2005
<original paper, 2005>

Benjamin Friedman, a professor of economics at Harvard University, in “The Moral Consequences of Economic Growth.”

Friedman argues that economic growth is essential to “greater opportunity, tolerance of diversity, social mobility, commitment to fairness and dedication to democracy.”

During times of expansion, he writes, nations tend to liberalize — increasing rights, reducing restrictions, expanding benefits for the needy. During times of stagnation, they veer toward authoritarianism. Economic growth not only raises living standards and makes liberal social policies possible, it causes people to be optimistic about the future, which improves human happiness.

“It is simply not true that moral considerations argue wholly against economic growth,” Friedman contends. Instead, moral considerations argue that large-scale growth must continue at least for several generations, both in the West and the developing world.

in the last two centuries, periods of growth have in most nations coincided with progress toward fairness, social mobility, openness and other desirable goals, while periods of stagnation have coincided with retreat from progressive goals.

he contends that economic expansion must remain the world’s goal, at least for the next few generations.

Related Resource: Journal of Socio-Economics, Feb 2013

In The Moral Consequences of Economic Growth, Benjamin Friedman argues that growth reduces the strength of interpersonal income comparisons, and thereby tends to increases the desire for pro-social legislation, a position he supports by drawing on the historical records of the US and several Western European countries. We test this hypothesis using a variable from the World Values Survey that measures an individual’s taste for government responsibility, which we interpret as a measure of the demand for egalitarian social policy. Our results provide support for a modified version of Friedman’s hypothesis.

We find support for a modified hypothesis: the taste for egalitarian policy is high when growth is rising, not high.  The modified Friedman hypothesis is not particular to industrial or Western countries.  Indeed, it holds more strongly among less developed than more developed countries.  In rich countries, policy preferences depend more on the change inequality than the change in growth rates.


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