Governments and growth: the real threat to global recovery.

• Author: Brittan, Samuel

A favorite game at this stage of the business cycle is to ask "Where will growth come from?" The American version is to ask where the extra demand will come from when the fiscal stimulus has worn off and real interest rates, hitherto only slightly above zero, return to normal. These questions keep analysts from the breadline. But they are as futile as they are unanswerable.

Indeed they go back centuries. So-called wise men used to ask where the growth would come from after every family was equipped with an automobile and after that when most families had two of these vehicles. Then they asked what would happen after everyone was computerized. Earlier on they no doubt asked what would happen when every household was equipped with a horse and buggy.

The real answer to such pondering is "no such luck." If all human wants could be satisfied by a few hours labor with the aid of modern technology, we would have a Utopia rather than a slump. For it would mean that the age-old problem of scarcity had gone, that we could have as many material goods as we desired, and we would be back to the other old chestnut: How will people spend their leisure in a era of abundance?

The English philosopher and economist John Stuart Mill was one of the first to see that a so-called "stationary state" could be a state of bliss rather than a hell on earth. Not only would there be the material advantage of all of us having enough, but the life would no longer consist of elbowing other people out of the way to secure an advantage; and attention could shift to more worthwhile matters. This is "all discussed very clearly in Mill's Principles of Political Economy (published in the middle of the 19th century, but just as relevant today).

The reason why the age of abundance has not arrived even in the developed Western world is that human wants seem insatiable. No sooner is one desire satisfied than others emerge. People want a second home, a swimming pool, or a flashier car than their neighbors. Some of the new desires represent people's emulation of their neighbors; but some are more positive. To take a cliched example: Despite all the moans about the decline of interest in classical music, millions more people are able to listen to symphony concerts than ever before in human history because of developments in broadcasting and recording technology.

It is certainly possible and in my view desirable that the push for output and income expansion at all costs may slow down. It would not really be so tragic if either the national income per capita or people's personal incomes were to grow at an average of a zero to one percent rather than two, three or four percent. This would arise if there were a change of tastes in favor of leisure or a less hectic form of working life. The policy problem would then be to distinguish between a genuine change of tastes and a temporary failure of the economic system of the kind that occurs in recessions when idle hands sit side by side with unsatisfied wants. A sign of such a fundamental change in tastes might be a slowdown in GDP growth arising from a voluntary reduction in...