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2010-08-10

Different meaning of economic growth and population

Comments on Dick Smith “What's the big idea? The answer is not more growth”, 10/08/2010, http://www.theaustralian.com.au/national-affairs/commentary/whats-the-big-idea-the-answer-is-not-more-growth/story-e6frgd0x-1225903163394
Dick Smith has made an interesting point on growth, though that point is a tricky one.

When people talk about growth, some talk about headline GDP growth by how many per cent. Businesses like to talk about that. But that growth includes the effects of population growth in it and does not necessarily mean an improvement in people's wealth or income.

A more meaningful growth is per capita growth without the effect of population growth. It is growth in productivity.

It is this latter growth where population growth including immigration should be considered. But businesses don't like to talk about this growth.

However, Dick Smith is a rare exception in this regard. He is a successful businessman, but has been arguing for constraining or limiting population growth.

Dick's no growth or limit on growth, unfortunately, also ignores this productivity growth.

When efficiency improves and productivity increases, it is possible to have per capita growth without consuming more resources. That is to say, we can have sustainable per capita growth.

We need to be clear about that. Otherwise the argument for a slower population growth will be attacked by unnecessary scare campaign.

In that sense, Dick would be better off to distinguish different growth arguments.

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