The term “growth” can take many meanings, and it’s often not well defined when used in broad contexts. However, when it’s employed in economic terms, this word usually has a specific meaning. A one-year Master’s program in Economics can be intensely demanding, and in the process has a way of modifying cognitive processes (independently of the sheer acquisition of knowledge). Today, I’m reflecting back on a time during the previous term in which I was lost for answers; or the answers I came up with at the time were not acceptable to me. The question that entered my consciousness, and refused to disappear, was, “when does growth stop; both economic and personal growth?”
This thought arose from my present set of challenges. Mentally and physically, I had the demoralizing sense that I had peaked and that I was approaching the beginning of the end. I felt limited in my ability to retain information at the same rate as I once was capable of, and although I had been consistent in my exercise and conditioning regimen, I felt that, at best, I had begun to plateau. Similarly, taking into account trends in globalization, demographic trends, wealth concentrations, and technological innovations, it seems natural for the global economy to eventually reach a static equilibrium in which net growth (in economic terms) should approach zero. Caught up in the rigorous mindset required to prepare for exams, I was thinking reductionistically, as economists often do.
The answers came to me from combination of two sources which academics knows little about: faith and time. This wisdom clarified for me that I had oversimplified my question as a result of reductionist thinking. One of the biggest challenges people (including economists) face is how to ask the right questions. The right questions are usually not satisfied with the conventional answer. I realized, growth must be redefined. It should be defined, in the case of personal development, not as an index of IQ, memory, economic knowledge, one’s vertical leap, bench press, or 40-yard-dash; or, in the case of economic growth, GDP. These may be markers, but these markers have many limitations in the evaluation of a person or a society, on the whole.
One could name a multitude of other factors that should weigh into a comparative analysis of an individual or a society, other than the conventional measures. In the personal case, it’s essential to evaluate how one lives and treats others (personal flows in economic terms), rather than simply one’s mental, physical, or economic assets (personal stocks). Likewise, economic growth is only relevant in the context of what that “growth” means for members of a society across a plethora of dimensions for all of its citizens such as health, happiness, and social mobility. Also, classically defined “growth” is often accompanied by trade-offs and externalities, which is why I prefer a readjusted or discounted measure of growth in the evaluation process.
This week, as part of an appropriate tribute to the recent passing of the legendary Tarheel basketball coach, Dean Smith, Kenny Smith recited some wisdom he was given by Coach Smith, which I think punctuates more precisely how we should define this ever-present objective we call “growth”. Dean Smith said he doesn’t care so much about winning because sometimes when you win, you actually lose, and sometimes when you lose, you actually win; therefore the goal should be to improve. Improvement is an idea that we should always strive for. It implies only net gains; it has already factored externalities and trade-offs, as well as the present and future consequences. This logic is beautifully simple. On the economic and individual level, I prefer the analysis of improvement which, empirically, is a little bit more difficult to measure, but, by construction, yields better outcomes. So whether it’s economic development or personal human-capital development, I think we should redefine our thinking less in terms of the superficial – which at times can be more readily measured – and more in terms of Coach Smith’s concept of improvement.
Given the fact that we are in a capitalist society, we still do not want to overlook not only what a corporation produces and its profitability but also how it impacts the environment, touches human life and whether it protects or undermines the dignity of the human person.
— Dean Smith
(Image © Benjamin Anderson 2014)