The Moral Consequences of Economic Growth

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