Why growth alone is not enough: The importance of task-oriented economic policy

Why growth alone is not enough: The importance of task-oriented economic policy

Concern about economic growth is omnipresent – ​​from high-level policy debates and policy manifestos to daily news coverage. In Germany, the federal government's latest budget made stronger growth a top priority. In India, leaders are striving to make their country the world's fastest-growing economy again. In China, where the threat of deflation looms, the government is undoubtedly worried about meeting its five percent growth target for this year. In the UK, the leader of the opposition Labor Party, Keir Starmer, has vowed to deliver the highest levels of sustainable growth in the G7 if he comes to power, and the ruling Conservatives are expressing similar ambitions (recall former Prime Minister Liz Truss's now infamous mantra: “Growth, growth, growth”).

Concern about economic growth is a central theme in political debates and also in everyday reporting. It is clear that governments around the world are striving to advance their country economically and achieve higher growth. However, this article emphasizes the need not to see growth itself as the sole goal. Rather, economic policy should focus on the direction of the economy to ensure that growth is sustainable and inclusive.

The author argues that it is not enough to simply focus on high growth without considering the impact on working conditions or the environment. She points to successful examples where striving for other goals ultimately led to economic growth. For example, NASA's mission to land a man on the moon produced numerous technological innovations that later had significant economic value. The author also emphasizes the importance of digitalization for growth and calls for closing the digital divide to ensure that growth is not based on the abuse of market power by large technology companies.

The article also argues that financialization of economic activity should be avoided. The author criticizes that companies invest too much in share buybacks and dividend distributions instead of in human capital, machinery and research and development. She emphasizes the need to reinvest in the real economy and provide the means to improve the situation of workers. She also argues that governments should play a more active role and set clear goals to promote inclusive and sustainable growth.

The article ends with the appeal that governments should use their potential as value creators to shape the economy. It emphasizes that refocusing public institutions on ambitious missions rather than narrow growth targets can help address the major challenges of the 21st century and ensure that the economy grows in the right direction.

Source:According to a report by www.project-syndicate.org