15 June 2008

G8: Commodity Prices threaten Economic Growth

Had to laugh at this headline: Commodity prices threaten economic growth, warns G8.

Group of Eight finance ministers said surging commodity prices threaten to end years of robust global economic growth, stoke inflation and force millions of the world's most vulnerable people deeper into poverty.

The ministers pledged after a meeting Saturday to remain “vigilant” amid economic uncertainty and promised to take “appropriate actions, individually and collectively, in order to secure stability and growth in our economies and globally.”

Why is it so hard for the financial sector to understand that we cannot have perpetual growth? Our natural resources are finite, given that we've only one Earth.

Yes, higher prices hurt the poor the most; they always do. But we need something to curb growth and to challenge the concept that growth should be the measure of human advancement and flourishing. There are alternative measures to the GDP and we should be using them. Such measures can far better suggest the types of policies required to address issues such as income disparities, voter apathy, and challenges to health.

Organizations like the G8, the WTO, and the supporters of free trade agreements, argue that economic growth, as indicated by the rise and fall of GDP, should be the one measure that matters.

They're dead wrong - and I suspect they know it.

The G8 after all, is comprised of politicians; and one would be hard-pressed to find a politician who thinks beyond two or three years into the future, to the next election campaign.

In the short term, economic growth serves governments well. In the long term, it hurts the governed. Clearly, the latter is irrelevant to those in power or who seek power.

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