Is Economic Growth Always What We Need?

This last week the financial world was buzzing about the decision by the Bank of Japan (BoJ) to start printing enormous amounts of money and use the money to buy financial assets in financial markets.   The BoJ's plan is a lot like what the Federal Reserve has been doing in this country, only supersized.  The BoJ goal is to jump start growth in gdp.

Growth is all economist's ever talk about.  Nothing, in economic jargon, transcends the importance of growth.  I think some people have lost sight of the purpose and true meaning of growth in their obsession with the buzz word.

Growth is the pursuit of more material wealth.  Quality of life issues aren't really factored into growth.  GDP doesn't consider how healthy people are, how happy people are, how nutritional thier food is, how safe their environment is.

Japan's new prime minister is obsessed with generating growth, hence the new policy.  Is this what is good for Japan?

Some simple facts about Japan.  It is a country with an aging, and shrinking population, who have one of the highest living standards in the world.  The Bank of Japan's goal is largely to generate inflation.  It's result will be to drive down the value of the Japanese yen.  So the aging, shrinking population of Japan will not have the purchasing power they would have had otherwise.

But the BoJ's policy will drive up stock and bond prices, so lots of financial professionals will make tons of money.  Business will be happy because a lower Yen means they can sell their products to other countries at lower prices.  In essence the policy will be taking money out of japanese workers paychecks so business can offer their products to consumers in other countries at lower prices.

As has characterized the last couple decades in the west, Japan's Government policy favors the wealthy at the expense of the majority of citizens.

Growth is crucial to pull a poor country with a rapidly expanding population out of poverty.  For a developed country, growth's benefits are more nuanced.  Growth often produces environmental damage, encourages unhealthy behavior and often does more to make rich folks richer than to bring to neediest up to a reasonable standard of living.

Oh, and incidently, the BoJ action could set of the 21st century version of a 1930's trade war.  In which case everyone will suffer.