Economic growth is good: It helps lessens the burden of scarcity and creates more material abundance for all. That’s why economists study it. And it’s why people care whether or not their economy is growing. If the economy is stalled or even shrinking, companies will spend less and lay off workers; consumers will earn less, buy less, and feel worse off.
Economic growth can be measured in many ways, but the most common is by increasing gross domestic product (GDP)—the total value of all the goods and services produced in an economy in a given period. GDP is usually adjusted for inflation so that an increase in production actually represents an increase in the value of what’s produced, not just a general rise in prices.
Increasing the value of production can come from many sources, including technological advances that increase productivity, increases in the amount of capital invested in the economy (including both tangible assets such as machinery and buildings and intangible investments such as research and development), increased resource allocation efficiency, and improvements in labor market conditions that enable more people to work and improve their standard of living through wages.
All of these things are necessary for a country to accelerate out of the slow growth lane and into the fast lane that can deliver the quantity and quality of economic growth that we want. But they will only happen if people can accept the trade-offs that new strategies for boosting growth inevitably entail. That means rebuilding trust in our political systems and building a consensus for the hard choices that will be required.