[财经英语角区] A Post-Growth World? [推广有奖]

In a provocative recent paper, Robert Gordon of NorthwesternUniversity concludes that the rate of technological progress has slowedsharply, and that the rise in standards of living (at least in the world’s richcountries) is thus set to decelerate. In thetwentieth century, he says, per capita income in the United States doubled about every25-30 years. But the next doubling will likely occur only over 100 years, apace last seen in the nineteenth century.
Long-term growth considerations, while recognized ascrucial, seem distant from the here and now of financial repair and restorationof confidence. So the commentary on Gordon’spaper has been largely dissociated from thepolicy discussions addressing the ongoing Great Recession.
But a realistic assessment of growth prospects is preciselywhat is needed right now to design appropriate and feasible policies. Gordon’spoint is not that growth will decelerate in the future, but rather thatunderlying productivity growth moved to a sharply lower trajectory around theyear 2000. We lived the better part of the subsequent decade with a misguided sense of extended prosperity and inflated afinancial bubble. Worse, we are treating the present as if the bubbly growth from 2000 to 2007 will return.
Consider the International Monetary Fund’s regularprojections of world growth. In April 2010, about 18 months after the LehmanBrothers meltdown, the crisis seemed over. The forecast was for world GDP to grow at about 4.5%annually until 2015, which is slightly higher than the pace during thepre-crisis decade, while the average annual inflation rate was projected to belower, at 2.9%. The future looked bright.
Instead, after successive revisions, world GDP in 2012 is now expected to grow by only 3.3%while inflation is forecast to reach 4%, signaling much weaker global economicmomentum than was anticipated. Lower-than-expected growth andhigher-than-expected inflation have affected most economies. In 2011 and 2012,the United Kingdom stood out among the advancedeconomies in this regard; but the pattern holds even for Germany. The shine has similarly worn offthe BRICs (Brazil, Russia, India, and China).
Although projections by the IMF and others have beenpersistently optimistic, each setback has been treated as a temporarydeviation, associated with its own unique cause: the Greek bailout, the tragictsunami in Japan, the spike in volatility following Standard & Poor’sdowngrade of US debt, and so on. The return to 4.5% world growth has merelybeen pushed back – in the latest forecasts to 2015.
Faith in renewed growth is an ill-advised policy strategy.At its core, the global economic crisis is a growth crisis. Financial institutions andmarkets assumed productivity would continue to grow at the pace of the late1990’s, which fostered an asset-price boom that conveyedan illusion of well-being; those not directly involved in the financial bubblewere coopted through buoyantinternational trade. European growth, with its heavy dependence on trade, received a special boost, as did emerging markets.
once the Great Recession began, this process operated inreverse, unwinding the excesses.But policymakers continued to benchmark recovery prospects to pre-crisis growthperformance. When reality proved otherwise, thereturn of the past was not abandoned, but merely postponed. Continuing toassume the resumption of pre-crisis growth was necessary to justify postponinghard decisions.
For example, a growth rebound underpinsthe expectation that the European periphery will not restructure or inflate away its sovereign debt. The assumption thatthe German economy will accelerate out of its current crawl is essential toconfidence in Europe’s financial safety net, and to a banking union thatcredibly shares risks across the eurozone. Resumption of robust world economicgrowth is the basis for delaying the implementation of the Basel III bankrules. And, if the BRICs slow down, they may be more prone to debt and currencycrises.
What is to be done? Because the elixirof growth in policymakers’ forecasts cannot be counted on to solve theproblems, dealing with financial excesses becomes even more urgent. That meansmore debt restructuring and more bank closuresnow, rather than watering down proposals to reinin freewheeling markets. Looking ahead, as RobertShiller of Yale University has repeatedly emphasized, public policy musthelp to forge futures markets that hedge risks better and more reliably alignincentives.
There is no magical path to higher productivity growth. Evenif Gordon’s pessimism is excessive, the timing of the next breakthrough intechnology is impossible to predict. So-called “structural” reforms may help,but the likely gains are small and uncertain. It may simply be time to learnhow to live with less.