What “Growth” Actually Means

Economic growth is a phenomenon that benefits mostly businesses and their owners. The effect on individuals is often negative.

Increased productivity means more productivity per worker, and that commonly means fewer workers doing the same work, because of better technology, or simply because of wage theft. This is a large part of what is commonly called “growth”: the company grows because the workforce shrinks. The company benefits from this “increased productivity” with increased profit. But the profit does not go to the workers whose productivity increased. It goes instead to the owners and bosses. The lives of workers whose jobs became redundant because of “increased productivity” can be ruined.

More productivity per worker or
fewer workers 
is what is called “growth”.
Growth itself is of little importance to the worker.

It follows, then, that “growth” itself doesn’t help the worker, because the end result of increased productivity is that fewer workers are needed, putting some out of work, and the remainder may have to work harder. The original Luddites, whose jobs were displaced by automatic weaving machines in the 18th century, realized that such advances were their enemy, not their friend.

But “increased productivity” is inevitable, particularly in today’s world of that ubiquitous time saver, the computer. The computer, in fact, is destroying record numbers of jobs. What workers should be fighting for is not their old jobs, which is a lost cause, but for fair treatment. The conflict here is that fair treatment will reduce profit for the bosses and owners, so they will prefer to opt for unfair treatment. Government help is valuable, but even government doesn’t have the deep pockets to support workers who have been displaced forever.

The quantum change we will be seeing as a result of displacement by computers means that very few suitable jobs will be available for this large cohort being displaced by technology. They are already having great difficulty finding work. New technology is, in fact, creating a whole new class of people who will never again be employed, or employed only at sharply reduced pay.

Very few suitable jobs will be available
for the large cohort being displaced by technology.

The conservative mega-rich, who are the ones who gain from workers’ improved productivity and the inequality it generates, think this is as it should be. (They also believe that the 47%, or 30%—depending on which Republican candidate you ask—are displaced and unemployed because they are lazy.) They would prefer that this trend continue indefinitely. If it did, however, it would eventually end in a plutocracy, with a very small number of the infinitely rich, and a vast population of undereducated, underemployed, very angry people. Virtually the opposite of what our society is supposed to be.

Therefore, a Herculean task lies before us, one that will only be accomplished by overcoming the effects of all the power and money that the mega-rich have wielded for their own benefit, including control over the very government that is supposed to represent us all.

What must happen is for a work week of fewer hours to become the norm, so that it is possible for every worker to find a job. Also, every worker must be paid the full value of his contribution to society, which is not at all true with today’s inequality, and is particularly obvious at the low end of the income scale. No one should earn poverty pay, which in the end probably costs us more than simply paying a living wage. We need living wage, but society also needs a shorter work week so everyone can work. These two things are requisite for a society of balanced equality. Conservatives, please note: nobody has said anything about everyone having the same amount of money.

A living wage, and a reduced work week
must be accomplished at the same time.

The obvious difficulty is that these two things must be done at the same time: a living wage, and a reduced work week. Not only must the average worker be paid a living wage (so he can live), but he must earn this living wage with fewer hours of work (so everyone can work). It’s been done before, but the adjustment will be difficult, and will have major effects on our economy.

Perhaps the most important element is a return to more balanced income distribution. This miracle income growth for the mega-rich came not from any imagined improvement of their social contribution, but from a whole panoply of laws, regulations, and favoritism they controlled with their money. But this is pure selfish manipulation; they have done nothing to earn this special treatment, and it has created escalating inequality.

In spite of the fact that the restoration of balance as the social norm would benefit everyone, including the wealthy, the mega-rich can be relied on to oppose it, or any change that might improve our unacceptable inequality. They know that greater equality would spoil the free party they are enjoying at our expense.

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3 CommentsLeave a comment

  1. We have become so damn efficient that we are no longer effective.

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  2. If productivity per worker is increasing, there is a bigger pie to share amongst your country as a whole. Reducing labour would just reduce the pie, and even if it is shared more equitably, would it not be a smaller slice of pie? Perhaps, instead what is needed is that all workers are paid rents equivalent to their share of output profit. As long as everybody is paid according to what they can provide as input, not only will the pie continue to grow, but it would be more fairly divided. Perhaps the real problem is the distribution of wealth. Maybe America needs a tax review?

    In the long run, all productivity growth is good, the labour force will reshape to the jobs that are needed. Frictional unemployment is a necessary evil as jobs change. Rather than advocating less work, maybe there should be education programs, retraining redundant workers to make them useful again.

    Plus,i think you would need to take into account. If people had more time due to a shorter working week, they would need a lower living wage to counteract the opportunity cost of the forgone working time. They now have additional time to partake in cost saving initiatives such as growing their own food, baking, shopping around for bargains, sewing etc.

    Correct me if i am wrong, these are just my thoughts. Probably not super well formed at present.

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    • Thank you for your thoughtful comment. You are right that productivity growth is good, or at least inevitable, and also that distribution of wealth is a crucial factor. Retraining redundant workers is the standard effort. The new problem is that there are too many of them for the few jobs available. It’s certainly undesirable to have unemployed people receiving assistance other than temporarily. If we had Living Wage and a shorter work week, everyone would be productive and paying taxes. There would be significant adjustment problems, but we managed to go from a 72-hour week in the 19th century to a 40-hour week in the 20th.

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