Economic numbers and growth prospects seem to make few people happy these days. But unless we are among the desperately poor or unemployed with few prospects of changing our lot, perhaps we should not feel bad.
There are many reasons for this. Just look at the reports on China's air and water pollution after more than two decades of growth averaging more than 10% per year. Isn't air quality in some cities more stifling than the Los Angeles Basin a few decades ago, before it was cleaned up? Isn't the water quality of some rivers worse than the Cuyahoga River in Ohio that was made famous — or rather notorious — by a sign warning that it was flammable and the fire that broke out in 1969 after materials were thrown into it?
The impact on the environment resulting from China's relentless growth is, of course, not confined to its borders. Air has no borders and, once dumped into the sea, polluted water can go anywhere. In other parts of the world, the damage resulting from mining raw materials such as coal, copper and iron ore, or clearing forests to supply China with what it needs to support its growth could be as severe.
China's growth is projected to be lower in the next few years, perhaps below 6% per year. Although low by China's record of the past two decades, it is still very high compared to other major economies and will continue to impact the environment significantly.
Lest we forget, the trouble that Greece is in now results from the pursuit of high growth. The government spent relentlessly, part of its spending was to finance populist policies of hiring unnecessary people and paying them high wages and benefits. The expenditure boosted growth, while large government budget deficits were covered by borrowings and the government accounts were doctored so that the deficit level appeared to meet the European Union's stipulation of being no higher than 3% of GDP. But Greece is now suffering for the sins of its government.
When we mention Greece, one should think of Cyprus as well, for the two are in so many ways closely linked and the Cypriot economy went bankrupt soon after Greece did. Cyprus pursued growth by opening its banks for external deposits, especially targeting money from countries created after the collapse of the Soviet Union in 1991. That money was more that it needed to finance growth, especially in real-estate speculation; much of what was left went to Greece. When Greece could not service its debt, one of the two major banks in Cyprus became insolvent and had to be closed. As in the case of Greece, the Cypriot economy had to be bailed out by the EU and the IMF, with many strings attached.
There is also Yemen, perhaps the saddest story of all. This country has now become a failed state, due fundamentally to the fighting among various tribes for its meagre resources, in particular water.
Because the region is mostly arid, Yemen depends a great deal on artisan water drawn from various aquifers. As more capital became available when a great many Yemenis went to work in Saudi Arabia and other countries enjoying rapid growth financed by the oil boom, Yemen could pursue higher growth. That capital and growth, plus a high population growth rate in the region of 3% annually, led to rapid pumping of the aquifers. But the pumping was not only for drinking, domestic use and growing food, but also for cultivating the mildly addictive plant called khat, whose leaves Yemenis chew. As their incomes rose, Yemenis chewed more of the higher-quality leaves, which came from irrigated plants. More investment went into deeper bore holes and more powerful pumps; some aquifers which had survived hand-dug wells for centuries have now dried up.
Amidst the gloom, the United States is the shining light on the hill as it continues to recover from the Great Recession, so much so that President Obama bragged about it during his recent State of the Union Address. Indeed, the growth rate is up, but one should look at other numbers as well. This is not about the number of the homeless in Washington, DC, which is on the rise during this fierce winter. Rather, it is about broader issues, as pointed out by these two numbers released around Mr Obama's address: more than half of the children attending public schools from kindergarten to Grade 12 come from families whose incomes are low enough to qualify for subsidised meals. And, 20% of all American children depend on food stamps, an increase from about 12% before the onset of the Great Recession.
Certainly, the economy has recovered, but the growth has largely gone to the rich, further aggravating income inequality, which is among the chief causes of conflict in various parts of the world today.
With the impact of recent growth not at all that positive, lower growth perhaps should be regarded as a blessing, for it will give us a breather to think clearly how to go about achieving growth in a more sustainable, less damaging way.
Sawai Boonma has worked as a development economist for more than two decades. He can be reached at sboonma@msn.com.