Care and Feeding of Economic Growth Myth

I want to thank Los Angeles Times reporter Jim Puzzanghera for serving up several textbook examples of the pro-growth Kool-Aid that pervades financial reporting. Our case study today is:

U.S. Economy Grows at its Strongest Pace in Two Years

If you’re not a traditional economist or financial reporter, you may be aware that our economy exists within the finite biosphere of Earth. Because of this, it cannot grow indefinitely. You may also know that our current level of human population and economy exceeds a sustainable level. That’s why we’re extinguishing species, depleting aquifers and fertile soil, collapsing fisheries and disrupting our climate.

Most financial reporters ignore this fact, so they characterize faster economic growth as “strong,” “healthy,” etc. And they characterize slow or no growth as “weak,” “disappointing,” or “lackluster. I argue that a “strong” or “healthy” economy would be one that is NOT destroying our life support systems.

Here are a few choice samples of insidious pro-growth word choices provided by Mr. Puzzanghera just this week (I’ve underlined the words that ignore physics and keep the myth of the joys of perpetual economic growth alive):

“The nation’s economic engine revved up this summer after a weak first half of the year, growing at its fastest pace since 2014….”

“The figure beat analyst expectations and was more than twice the lackluster 1.4% annual rate in the second quarter of the year.”

“Growth now has improved for two straight quarters after the year began with an anemic 0.8% figure in the first quarter.”

“Fed officials and economists had expected economic growth to improve in the third quarter. Still, the economy is on pace for another sub-par year in the slow recovery from the Great Recession, with growth so far in 2016 running below 2%.”

Cal State Channel Islands economist Sung Won Sohn also gets in on the act, quoted in this story as saying:

“The economy has gained some altitude from the dismal pace during the first half, but it is too early to celebrate.”

We also got a serving of the pro-growth propaganda from Trump deputy policy director Dan Kowalski:

“Trump deputy policy director Dan Kowalski said the ‘modest growth’ was not good enough to warrant a continuation of Obama administration policies under Clinton.”

He bragged that:

“Trump’s economic plan would produce 4% annual growth….”

Instead of a brag, that should be considered a suicide note.

“Decades of strong economic growth and global leadership have been replaced with low-paying jobs, global chaos and a national debt that has doubled under Obama-Clinton,’ Kowalski said.”

There’s even more, but I can’t bear to repeat it. Classic pro-growth propaganda like this is so insidious because it’s presented as a universal, unquestioned, truth. It must be true, because no one is questioning it. The reporter has not sought out any alternate views, and in fact the reporter’s own language indicates he has bought into the myth. We unknowingly lap up the Kool-Aid and thus we keep worshipping the impossible and electing those who promise it.

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