A stimulating discussion

Barbara Ehrenreich makes an unusual analogy when she discusses the American economy in an article on The Nation website (posted 22 January): “With all the talk about how to stimulate it, you’d think that the economy is a giant clitoris.”

Her initial target is the recently announced fiscal stimulus. She makes the fair point that it looks likely to benefit the rich more than the poor. But then she moves on to a broader attack on what she calls “economy fetishism”. She goes on: “If we have learned anything in the last few years, it is that the economy is no longer an effective measure of human well-being. We’ve seen the economy grow without wage gains; we’ve seen productivity grow without wage gains. We’ve even seen unemployment fall without wage gains.”

In her conclusion she argues: “My point is just that our economy–with its dizzying bubbles, wild lending sprees, reckless downsizings and planet-wide hyper-sensitivity–has gotten too far disconnected from ordinary human needs.”

As I have argued before it is a mistake to use the undoubted existence of inequality as an argument against economic growth. If anything there needs to be even more importance attached to the economy and more growth so that everyone can benefit. The problem is not too much emphasis on growth but too little.