onsdag 9 april 2008

Sustained economic growth

One concern that is surfacing as a result of the credit crisis is that growth will slow. I have always wondered what it was that we were going to grow into? The reality seems to be more pollution, more waste, and an increase in traffic to the point that it is difficult to walk round many towns, so clogged with cars have the streets become.

By “growth” is meant the Gross National Product, a figure which has replaced the balance of payements as the target to which government economic policy is aligned. But GNP has nothing whatsoever to do with people’s well being; indeed, the opposite is true, as it encourages policies which lead to all sorts of developments which damage the environment and lead to a decline in real wealth. Unfortunately, good environments do not carry a price tag that is measured by the statistics, and so it is deemed to be of no value and ignored, or fought over by what are seen as marginal pressure groups.

In reality, people do put a price tag on the environment: it is measured in land values. A view of wild nature, or an urban park, or a clean river, or a quiet location, have values which turn up as enhanced land values. Conversely, a rubbish dump, or a noisy or polluting factory, or a motorway, will depress land values. This is not the whole story, of course, because a noisy polluting airport or a motorway junction will enhance land values in and around the areas served, and these things are necessary if we are not content to live in rustic simplicity. And so land value also measures the summation of benefits and disbenefits of things that are both good and bad, and in this way, if they were measured systematically, the data would help politicians to make decisions when conflicting requirements had to be balanced.

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