This paper is a short essay that summarizes the sometimes uncomfortable "facts of life" about growth. It describes the structure behind, and "solutions" to address, our complaints about growth.
It covers the interacting effects of tax policy, infrastructure backlogs, Federal Reserve interest rate policy and also how "The Attractiveness Principle" & "Escalation" systems thinking archetypes affect growth.
I first learned of "The Attractiveness Principle" when I read the paper "Urban dynamics - the first fifty years" by Louis Edward Alfeld from the System Dynamics Review, Volume 11 Issue 3, Fall 1995, p 199-217. Facing the reality of what's described had me depressed for three weeks. "The Attractiveness Principle" structure is described in terms of businesses (rather than economic regions) at Making Strategic Choices.
Growth Facts of Life: Double-column version (6 pages, 112K, best to print)
Growth Facts of Life: Single-column version (7 pages, 111K, easiest to read on line)
See graphs showing "Change in Unemployment" vs "Regional Economic Growth" to see that higher rates of economic growth do not result in a reduced "change in unemployment".
One reader's comment:
"Finally, let me just say this is a brilliant piece of work. I love it.
Nicely done. If only we didn't live in a sound-bite world!"
Added 7/22/09: A little-understood fact about growth is that road building stimulates growth and increases traffic congestion. Those who promote "growth" love road building in rural areas because it opens them up to development. I found this in
Cities Lose Out on Road Funds From Federal Stimulus By MICHAEL COOPER and GRIFF PALMER, 7/8/09
Two-thirds of the country lives in large metropolitan areas, home to the nationís worst traffic jams and some of its oldest roads and bridges. But cities and their surrounding regions are getting far less than two-thirds of federal transportation stimulus money. ...
A study of congestion in urban areas released Wednesday by the Texas Transportation Institute found that traffic jams in 2007 cost urban Americans 2.8 billion gallons of wasted gas and 4.2 billion hours of lost time.
As described in the Growth Facts of Life, building more roads will not correct this; it just draws more traffic and increases congestion. Bummer.
This relatively short paper is based on the thorough treatment in The Tangle of Growth.
Some are fond of saying that economics isn't a zero-sum game. But for jobs it is because Fed policy allows only so many jobs to be created, and so it is a zero-sum game for states to compete by giving incentives to companies to get them to locate in their state. Art Rolnick, an economist at the Federal Reserve Bank of Minneapolis, also points out that Congress Should End the Economic War Among the States. His recommendation instead? Invest in Early Childhood Development on a Large Scale for a better return on investment.
See The State of Colorado Employment for graphs based on more recent data showing that more rapid regional growth does not result in a change in unemployment. Also see There's no "free market" for Labor.