The Moral Consequences of Economic Growth [Hardcover]

Benjamin M. Friedman (Author)

Book Description

Release date: October 18, 2005

From the author of Day of Reckoning, the acclaimed critique of Ronald Reagan’s economic policy (“Every citizen should read it,” said The New York Times): a persuasive, wide-ranging argument that broadly distributed economic growth provides benefits far beyond the material, creating and strengthening democratic institutions, establishing political stability, fostering tolerance, and enhancing opportunity.

“Are we right,” Benjamin M. Friedman asks, “to care so much about economic growth as we clearly do?” To answer, Friedman reaches beyond economics. He examines the political and social histories of the large Western democracies—particularly of the United States since the Civil War—distinguishing times of generally rising living standards from those of pervasive stagnation to illustrate how rising incomes render a society more open and democratic. He shows, too, how our attitudes toward economic growth and its consequences have roots in the thinking of prior centuries, especially the Enlightenment, and also include significant strands of religious influence.

Friedman also delineates the role of economic growth in determining which developing nations extend the broadest freedoms to their citizenry. He makes clear that growth, rather than just the level of living standards, is key to effecting political and social liberalization in the third world. But he also warns that the democratic values of countries even as wealthy as our own are at risk whenever incomes stagnate for extended periods. Merely being rich is no protection against a society’s retreat into rigidity and intolerance once enough of its citizens lose the sense that they are getting ahead.

Finally, Friedman shows us why, if America is to strengthen democratic institutions around the world as a bulwark against terrorism and social unrest, we must aggressively pursue growth at home and promote worldwide economic expansion beyond what purely market-driven forces would create. And for the United States, he offers concrete suggestions for policy steps to achieve those objectives.

A major contribution to the ongoing debate on the effects of economic growth and globalization.

Editorial Reviews

Amazon.com Review

Ever feel like you just can't get ahead with the bills? You're not alone. More than half of Americans believe the American dream has become impossible for most people to achieve. And two-thirds think this goal will be even harder for the next generation. (One reason for the gloominess--average full-time income has fallen 15 percent since 1975.) All this has Benjamin Friedman worried. In his hefty, 549-page tome, The Moral Consequences of Economic Growth, the acclaimed Harvard economist and advisor to the Federal Reserve Board says economic stagnation is bad for the moral health of a nation. Friedman, a former chair of Harvard's economics department, argues that economic growth is vital to social and political progress. Witness Hitler's Germany. Without growth, people look for answers in intolerance and fear. And that, Friedman warns, is where the U.S. is headed if the economic stagnation of the past three decades doesn't soon reverse. It's not enough for gross domestic product to rise, he says. Growth also has to be more evenly distributed. The rich shouldn't be the only ones getting richer.

Friedman's arguments are provocative but at times lack rigor. In his comparisons of various countries, he offers no objective data to measure their levels of social progress, relying instead on his own--sometimes selective--interpretation of historical events. He glosses over the fact that China, where the economy has grown sevenfold since 1978, has seen little political change in that time. He also acknowledges that the Great Depression--which brought Americans together to achieve great social and political progress--tends to disprove his theory. Friedman makes a good case that the economy sometimes influences social movements, but the jury is still out on exactly when and how that happens. --Alex Roslin

From Publishers Weekly

Starred Review. This probing study argues that, far from fostering rapacious materialism, economic growth is a prerequisite for the creation of a liberal, open society. Harvard economist Friedman, author of Day of Reckoning: The Consequences of American Economic Policy in the 1980s, contends that periods of robust economic growth, in which most people see their circumstances palpably improving, foster tolerance, democracy and generous public support for the disadvantaged. Economic stagnation and insecurity, by contrast, usher in distrust, retrenchment and reaction, as well as a tightfisted callousness toward the poor and—from the nativism of 19th-century Populists to the white supremacist movement of the 1980s—a scapegoating of immigrants and minorities. Exploring two centuries of historical evidence, from income and unemployment data to period novels, Friedman elucidates connections between economic conditions, social attitudes and public policy throughout the world. He offers a nuanced defense of globalization against claims that it promotes inequality and, less convincingly, remains optimistic that technology will resolve the conflicts between continual growth and environmental degradation. Friedman's progressive attitude doesn't extend to his cautious approach to promoting growth in America; a critic of Bush's tax cuts and deficits, he advocates fiscal discipline to free savings for investment, along with educational initiatives, including "school choice," to boost worker productivity. Its muted conclusion aside, Friedman's is a lucid, judiciously reasoned call for renewed attention to broad-based economic advancement. (Oct. 25)
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Product Details

• Hardcover: 592 pages
• Publisher: Knopf; 1ST edition (October 18, 2005)
• Language: English
• ISBN-10: 0679448918
• ISBN-13: 978-0679448914
• Product Dimensions: 6.7 x 1.8 x 9.5 inches
• Shipping Weight: 2.2 pounds
• Average Customer Review: 3.6 out of 5 stars  See all reviews (18 customer reviews)
• Amazon Best Sellers Rank: #775,814 in Books (See Top 100 in Books)
  • #95 in Books > Business & Investing > Economics > Comparative

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Most Helpful Customer Reviews

60 of 63 people found the following review helpful

5.0 out of 5 stars Gross Domestic Goodness January 7, 2006

By Izaak VanGaalen

Format:Hardcover

Almost everyone can agree that economic growth is good: the material benefits of more jobs, better pay, bigger houses and more money to spend on education and healthcare are indisputable. There may be a few spoilers railing against resource depletion, urban blight, and greenhouse gases, but ultimately those problems can be overcome by growth also. Now Harvard professor Benjamin Friedman argues that in addition to material benefits there are also moral benefits.

Friedmand writes that: "Economic growth - meaning a rising standard of living for a clear majority of citizens - more often than not fosters greater oppurtunity, tolerance of diversity, social mobility, commitment to fairness and dedication to democracy." And conversely, when there is economic stagnation or decline the citizen's "moral character" tends to decline accordingly, there being less tolerance, less openess, and less generosity to the poor and the disadvantaged.

Using the United States as a case in point, Friedman argues that from 1953 to 1973 median family income doubled. As the economy grew and Americans prospered, society became more open and tolerant. During this period, segregation became unconstitutional, the right to vote was guaranteed, racial discrimination was banned, fair housing and equal employment opportunity legislation was enacted. These events made America a more just and equitable society. Then from 1973 to 1995, the average wage in today's dollars declined. The national mood toward progressive social programs began to sour. Indeed these programs were cited by some as being unduly burdensome and being the cause of slow wage growth. Nevertheless, in times of falling incomes, Americans naturally become more concerned with their share of the shrinking economic pie. Friedman also sees here a deterioration of moral character.

It should be fairly obvious by now that Friedman is a liberal and equates morality with social welfare programs - this being the most contentious issue of the book. Conservatives and libertarians will be quick to point out that support for affirmative action, immigration, strong unions, endangered species, etc. have been detrimental to economic growth and are, therefore, by Friedman's definition, immoral. These critics will claim that in order to foster economic growth we must have reduced taxes, less regulation, non-union labor and fewer workplace rules. The resulting economic growth would raise all boats, and would thus be morally correct.

Friedman and his critcs do not disagree that the end result of economic growth - aside from material well-being - should be tolerance, openess, social mobility and dedication to democracy. They disagree on the means of achieving those goals. Friedman favors government intervention on behalf of the poor and the disadvantaged. The big question is whether or not it is in fact helping them. Two other books that have examined this question are Amartya Sen's "Development As Freedom" and Jeffrey Sach's "The End of Poverty." They have concluded that the poor must be provided with at least the basic tools for develpment. This doesn't mean generous welfare programs, but it does mean some public assistance - they need basic capablilites to achieve and contribute to society. Friedman is at his best when he stresses the importance of economic growth in providing these opportunities.

28 of 30 people found the following review helpful

5.0 out of 5 stars a worthwhile read November 19, 2005

By Doc Dave

Format:Hardcover

People who complain that books like Freakonomics are too short, elementary or filled with fluff should take a look at Friedman's Moral Consequences of Economic Growth. Not to say that this is an introduction to economics, gee-whiz or otherwise. This is a different book entirely. Focusing on how economic activity can impact human culture from a moral standpoint instead gives this book an interdisciplinary "bigger picture" authority and appeal. There is a lot to appreciate in this book and while I wouldn't exactly call it an easy read, it is understandable even to a non-economist like myself. I don't agree with all of Friedman's arguments, but in my opinion he does a fine job of choosing and presenting relevant issues. So whether or not you agree with what he has to say, this book will give you plenty of good food for thought.

16 of 17 people found the following review helpful

4.0 out of 5 stars Intolerance Is Bad for Growth December 6, 2005

By Etienne ROLLAND-PIEGUE

Format:Hardcover

What is the link between growth and democracy? In his latest book, The Moral Consequences of Economic Growth, Harvard University Professor Benjamin Friedman argues that economic growth or its absence shapes the moral character of a society. For the broad majority of a country's citizens, whether or not living standards are rising determines whether laws are tolerant of new ideas, supportive of immigrants, or protective of poor people. Throughout history, stagnation and economic decline have been associated with intolerance, while growth has been associated with increased tolerance and democracy.

While much of the evidence covered by Professor Friedman is drawn from the history of western economies, he argues that there is plenty of evidence available from developing economies as well. In that context, his book provides abundant illustrations suggesting that even if rising incomes do not solve all problems, they certainly help significantly improve the moral strength of societies, including their ability to open up to welfare improving reforms.

Consider ethnic disputes. When they often originate in a fight over limited resources, economic growth enables conflicting groups to compromise simply because they become less inclined to suspect that others are doing better at their expense. As long as people see their own income rising, they worry less about doing better than others. This creates an environment favorable to political and social advances. The "moral" gains achieved then further fuel the motivation to work towards growth collectively.

Friedman warns, however, that trying to go too fast on the moral front simply to get ahead on that dimension without delivering on the growth agenda can prove to be a major problem, or even be unsustainable. New democracies tend, indeed, to remain fragile as long as there is a concern by the vast majority of their citizens that growth prospects are not likely or that its gains will not be shared fairly. Improving economic conditions are part of what makes a society able to sustain a democracy.

Without growth, little human progress can be achieved. Conversely, economic growth leads to more open, tolerant, and democratic societies. From a policy perspective, Friedman argues that a more explicit recognition of this externality may be an important addition to public discourse on the importance of growth. The quality of growth matters a great deal as well, as Professor Friedman notes, since basic fairness provides positive incentives for societies to develop.