12 Mar 2014

Is GDP Growth Always Good?

Liqian Zeng writes:*

After taking Economics of Natural Resources with Dr. Zetland this semester, I started thinking of a question, “Is it always good to have a high GDP growth?”

I have been working at a restaurant which tends to heap huge portions of food on their plates to attract customers. This has created a lot of food waste! I have observed it constantly that people always have food remaining on the plates. The servers would then dispose of any unwanted leftovers directly into the garbage bin. As a result, there is a lot of well cooked food being wasted. We see it as a kind of wasted resources but the restaurant sees it as a way to increase sales. Someone might suggest that they could pack the leftovers home, however, it triggers another problem -- plastic pollution! To minimize cost, some restaurants still use relatively cheaper, non-degradable plastic containers for takeout food. Everyone knows that the non-degradable plastic is very dangerous to our environment. These non-degradable plastic have killed huge amount of sea species, which is a big lost to the environment! It is a negative externality.

On the economics perspective, sales in a restaurant, production and sales of those non-degradable plastic containers all contribute to GDP growth, but are they good growth? These contributions are all based on the wastes and environmental pollutions. They are not good for sustainable development.

Bottom Line: GDP growth is not always a good thing for human society. When we pursue high GDP growth, we should also be concerned about the negative externality that the growth will bring us.

* These guest posts are from students in my resource economics class at Simon Fraser University. Please leave feedback on their logic, ideas and style and suggestions of how to improve.