Why Growth is Good - Essay Example

Download file to see previous pages In the article Why Growth is Good the author asserts that U.S. economy is slowing down but this is not the case of the current times as the nation’s total output of goods and services grew at an annual rate of 2.5 percent from July to September and this rate of growth is double the rate of growth from the last quarter. The economy is not following a brisk pace but showing the signs of take off. But the economic growth of Germany is on the slower side and the government of the concerned country has nearly halved its growth forecasts to one percent. The reason being shocks in exports and the powerhouse of Europe is on the slower side. Government intervention is necessary in cases to push up demand but to a certain extent. Free market is necessary to achieve the equilibrium. Economic growth is the amount of goods and services produced over time. With economic growth, development is creating a healthy environment will come under its purview. Per Capita Income can be taken as a measure to capture economic growth. Let the population of country A and B be 20 and 5 respectively and the average income be $ 200 and $100 respectively. It will appear country A as the economically developed country but it is not the case as PCI of country A is 10 and that of country B is 20. Poor countries are often exploited by the richer ones as industries that cause environmental degradation are shifted in those countries. This tends to pollute the natural resources which have negative effects on the life of the people residing in the poor countries. The open up of new industries has created growth or employment opportunities but the darker side of the coin is the extraction of irreversible natural resources. (Office of the Management and Budget, 2010, p.153). The above pie chart proves that U.S. allocates a large proportion of its capacity in social security. The budget of 2001 allocates $ 17.5 billion to support small business access and 25 billion dollars on microloans which will create employment opportunities. A path that leads to most optimal growth path is the toughest to get recognized. Earlier a school of economists believed in trickle down hypothesis where the benefits of growth will trickle down to the people who form the base of the society. But soon another school of economists began to contradict by arguing that those who are in the higher levels of the society will reap all the benefits and the poor will be confined in a vicious circle. This theory was proved right in the later stages. So growth may not create equal opportunities for all (Basu and Mallik, 2007). The statement of the rich gets richer while the poor gets poorer is well known. The statement that middle class is happy to pay taxes and contribute in the welfare is controversial as all are involved in finding out ways to evade taxes and keep their money in their own pockets. Consider the case of China. China announced to lower the GDP target to 7.5 percent which gave rise to mixed feelings around the globe. This created tremors in the market but some were of the opinion that this strategy will revive China in taking the path of sustainable development. They argue that this would help China to achieve a higher quality and higher level development over a longer time span and all are certain about the amount of welfare sustainable development can bring about (Prasad and Rajan, n.d., p. 1). A recession is followed by recovery. In this phase growth is bound to be slow but this situation is welcomed from every levels of society. ...Download file to see next pagesRead More