I am subscribed to Research Gate, a web-based self-publication journal. Occasionally I visit and today I got engaged in a thread (https://www.researchgate.net/post/What_socio-economic_policy_is_appropriate_for_the_period_of_slowdown_in_economic_growth) that asked
What socio-economic policy is appropriate for the period of slowdown in economic growth? (Dariusz Prokopowicz, Cardinal Stefan Wyszynski University in Warsaw)
In a comment stream with 506 responses, this one by Martha Pantoja is representative:
In a period of economic slowdown, expansionary monetary and fiscal policies should be applied to boost public and private spending and consumption, which in turn stimulates investment.
I do not want to engage the minutia of these macro-economic policy solutions. The argument is inadequate on its face.
While macro policies employed by governments and institutions must be correctly adjusted (the topic of so many comments here), we must take heed of the premise which seems to pervade these analyses. There is very little discussion of how to support individuals, families and communities to utilize these expansionary policies, or indeed how to survive during the downturn, or how to structure the economy, wealth distribution, or resource accessibility. They seem all to suppose that economic growth cures all ills, and that the invisible hand of the market place automatically distributes resources where they are needed.
Since growth is cyclical and constrained by the bio-physical limits of the Earth, there must be downturns and periods during which macro policies have failed and other systems must be in place. Since resources follow wealth, they in fact do not automatically allocate according to need, and the economy must be structured to improve access to resources at all times, including especially non-peak low-growth, non-growth periods.
The idea that growth must be fostered because in growth there is more wealth to be distributed would be valid if in fact the poor were getting richer and the richer were getting poorer. However, even if the bottom incomes are rising some bit, most increases in wealth are allocated to those who are privileged to already control some wealth, and the flow of wealth increases most with the amount of wealth already in possession (due to exponential return on non-encumbered wealth: poor people cannot afford to invest in growth securities and benefit from exponential growth, but those who are already wealthy can). Therefore the remedy of fiscal and monetary stimulus is inadequate. The economy must in the first place be engineered to ensure that money flows to those without market leverage or high demand skills. The goal is not to make everyone rich, but to stabilize and ensure the distribution of goods that are necessary for health and opportunity.
The concept of Carrying Capacity predicts that, in the absence of planning and care, there must be pain as populations increase to the margin of resource availability. This pain is universally experienced by the poor, allowing the already rich and thriving to consume and reduce the resources that could be allocated to the poor, without suffering any consequences. This is highly ironic because the response of all humans to insecurity is to have more children, not fewer (contrary to Malthus; consistent with the demographic transition), resulting in more suffering. Since insecurity, and suffering, are concentrated among the poor, extremes of population growth are also concentrated there. However, strategies such as education and access to contraception are very effective ways to help poor people escape the cycle of suffering that results from having too many children, and focus on economic well being. However these strategies require government and institutional action.
The primary focus of policy makers therefore must be to promote not growth but stability of access to resources. Another view of the stability of access to resources is "justice". In fact these are distributive policies, which seek to "bake in" fairness, to obviate the ages-old pattern of the rich harvesting the bounty of the land while the poor must do the work, without getting the benefit. Growth does not inherently increase access to resources, and therefore policies promoting growth do not either. Policies that promote justice, the distribution of resources, and the security and stability of access to resources are the proper policies to alleviate the effects of downturns.
