Economic Objectives of the Government

Economic Objectives of the Government

Introduction

In recent years economic growth has come to occupy an exalted position in hierarchy of goals of government policy, both in United States and abroad, both in advanced and in less developed countries, both in centrally controlled and decentralized economies. National governments proclaim target growth rates for such diverse economies as Soviet Union, Yugoslavia, India, Sweden, France, and Japan and even for United Kingdom and United States, where targets indicate dissatisfaction with past performance. Growth is an international goal, too. Organization for Economic Cooperation and Development aims at the 50% increase in collective gross output of Atlantic Community over current decade. Growth has become the good word. And better the word becomes, more it is invoked to bless the variety of causes and more it loses specific meaning. At least in professional economic discussion, we need to give the definite and distinctive meaning to growth as the policy objective. Let it be neither the new synonym for good things in general nor the fashionable way to describe other economic objectives. Let growth be something it is possible to oppose as well as to favor, depending on judgments of social priorities and opportunities.

Objectivity of Government

In essence question of growth is nothing new, but the new disguise for an age old issue, one which has always intrigued and preoccupied economists: present versus future. How should society divide its resources between current needs and pleasures and those of next year, next decade, next generation? choice can be formalized in the way that makes clear what is essentially at stake. THE consumption path or program for an economy describes its rate of consumption at every time point beginning now and extending indefinitely into future. Not all imaginable consumption paths are feasible. At any moment future possibilities are limited by our inherited stocks of productive resources and technological knowledge and by our prospects for autonomous future increase in these stocks. Of feasible paths, some dominate others; i.e., path that dominates B if consumption along path that exceeds consumption along path B at every point of time. I hope I will incur no one's wrath by asserting that in almost everyone's value scheme more is better than less (or certainly not worse), at least if we are careful to specify more or less of what. If this assertion is accepted, interesting choices are between non-dominated or efficient feasible paths; e.g., between the pair the and C where THE promises more consumption at some points in time but less at others. See Figure 1. In particular, I take growth to be advocacy of paths that promise more consumption later in return for less earlier. But growth means more than that. Growth is usually willing to throw weight of government on to scales in order to tip balance in favor of future. Here they fly in face of the doctrinal tradition of considerable strength both in economics and in popular ideology. Does not market so coordinate free, decentralized decisions of individuals ...