The Moral Consequences of Economic Growth

Recently I read this book review by Joseph E. Stiglitz on Benjamin M. Friedman’s book “The moral consequences of economic growth” . I find some of his views contrasting each other.

For example, he recognizes that there are priority and trade-off in setting targets. I agree.

“Brazil, for example, must choose whether to use its limited health budget to pay full-market price for AIDS drugs; some AIDS victims may live as a result, but people in need of other health care will die, because money that could have been spent on their needs is simply not there.”

But then when he criticize Friedman, he forgot what he has just said

“There are three fundamental flaws in this analysis. The first relates to the definition of poverty. As the World Bank has emphasized at various points, poverty is not just a matter of income; insecurity and voicelessness are also part of its profile. Friedman's analysis completely ignores these other dimensions.”

Hey, certainly dignity is important for poor people too, but when they are starving, they want food more than preaching from Prof. Stiglitz. Do you still remember the Brazil example you just used?

He then wants to tell us that GDP per capita is not important.

“Consider the following thought experiment: If you could choose which country to live in but would be assigned an income randomly from within that country's income distribution, would you choose the country with the highest GDP per capita? No. More relevant to that decision is median income (the income level that 50 percent of the population is below and 50 percent is above).”

I like this thought experiment, I always cite it too. But the example he gives exactly contradict his theory. GDP per capita is not important? I bet no one will prefer born in Uganda than in the United States. People from Uganda will find slums in America looks like heaven. Average level of living standard is still important after all.

And then he cites the declining median income in America to show that growth may not benefit the poor. I saw this number in many blogs recently. I don’t have any sympathy toward this.

“As the income distribution becomes increasingly skewed, with an increasing share of the wealth and income in the hands of those at the top, the median falls further and further below the mean. That is why, even as per capita GDP has been increasing in the United States, U.S.median household income has actually been falling”

Eh, lazy people,  don’t blame others, if you keep skipping schools, if you keep spending more time watching MTV channel than reading your science textbook, if your life goal is to act very “cool”,  why do you think you deserve much higher pay than your counterparts in developing countries who are more "boring" than you are? When you are fooling around, other people are studying, other people are working hard; the society is very fair to you. No pain, no gain, that's always true!