Blinkered growth discussion

The prevalence of growth scepticism does not mean there is no discussion of economic growth. It is hard for mainstream politicians or pundits to avoid any examination of at least the potential for increased prosperity.

Instead it means that growth is seen in a blinkered way or as subject to constraints of various types. A clear example of the first type was apparent in last weekend’s speech by Dominique Strauss-Kahn, the managing director of the International Monetary Fund, to a meeting of the Group of 20 (G20) finance ministers and central bankers in Busan, South Korea.

The main thrust of his speech was on how continued international coordination can help the world economy growth faster. It is certainly true that an outbreak of protectionism would be damaging to economic growth. But the continuation of cooperation is hardly a strategy for achieving greater prosperity.

He also placed much emphasis on financial reform including greater transparency by banks, stronger capital adequacy standards and global accounting standards. None of this is inherently wrong but neither do any of the proposals get to the nub of the problem of low growth.

Any discussion of the productive sector was conspicuous by its absence. There was nothing, at least in the edited account of his speech, on promoting innovation or restructuring the real economy.