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Krugman on economic progress « Previous | |Next »
September 15, 2006

Paul Krugman spells out the issue very clearly in his column in the New York Times.

Consider this: The United States economy is far richer and more productive than it was a generation ago. Statistics on economic growth aside, think of all the technological advances that have made workers more productive over the past generation. In 1973, there were no personal computers, let alone the Internet. Even fax machines were rare, expensive items, and there were no bar-code scanners at checkout counters. Freight containerization was still uncommon. The list goes on and on.

He's right. The Australian economy is much richer and more preductive than it was in the 1990s. Our everyday life is increasingly shaped, and transformed, by technology and we have incorporated more technological goodies into our lives. Krugman then makes a good point:
Yet in spite of all this technological progress, which has allowed the average American worker to produce much more, we’re not sure whether there was any rise in the typical worker’s pay. Only those at the upper end of the income distribution saw clear gains ---- gains that were enormous for the lucky few at the very top.

It's a similar situation in Australia is it not? A decade of growth has not spread the benefits widely as the shift to self-care in the market place deepens. Some argue that some sections of the middle class (public service) have been squeezed.

Krugman then argues that the US debate over whether the middle class is a bit better off or a bit worse off now than a generation ago misses the point. He says:

What we should be debating is why technological and economic progress has done so little for most Americans, and what changes in government policies would spread the benefits of progress more widely. An effort to shore up middle-class health insurance, paid for by a rollback of recent tax cuts for the wealthiest Americans ---something like the plan proposed by John Kerry two years ago, but more ambitious ---would be a good place to start.

We have economic growth but not necessarily happiness is the Australian argument. The insecurity of large mortgages, long work hours, troubled families, lack of free time, etc cause much unhappiness. Those who hold this position---eg. Clive Hamilton---question the neoliberal claim that economic growth and rising personal consumption lead to more happiness. It does not necessarily led to living a fully human life.

| Posted by Gary Sauer-Thompson at 9:33 PM | | Comments (0)