The Opportunity Cost of Economic Growth is a question that many economic textbooks and experts have sought to answer. I've long wondered how it is that so many economists and other economic “experts” always seem to ignore this. After all, if everyone is saying that the only cost of economic growth is the increased wealth of the wealthy few, then why does anyone take a basic economics course? After all, isn't that what learning class is for? Here's a quick quiz:
Q. Which came first, wealth creation or economic growth? A. The answer is wealth creation
Now then, I'd like to pose another question: When economists, politicians, and the mass media tell us that economic growth is the only thing that matters in the world, why is there so much bias against capitalism and free-market capitalism as opposed to socialism, social democratic, or public-choice economics? Why are they so anti-capitalism? Why do we hear so much about the opportunity cost of economic growth and wealth creation and yet when it comes to wealth creation and jobs, only unemployment is discussed?
In my view, there is an opportunity cost of economic growth, wealth creation, and wealth creation vs. unemployment. The job loss may hurt the job market temporarily, but as soon as the “workers” get back to work, the “loss” becomes a permanent fixture in the economic environment. There are no skills to be gained because there are no employers to hire. Once the workers go back to school, some of them get good jobs, and others do not. Some people can train to do new jobs, but many just retrain, because the “skills” that they have weren't relevant before.
There is also an opportunity cost of economic growth. While we are seeing wealth creation, we are also seeing deterioration in our infrastructure. We are creating more waste, pollution, and are in danger of losing our natural resources which will reduce the overall quality and quantity of our natural resources. This wealth creation, economic growth, and employment, all of these things will create toxins in the environment, and that will reduce the overall quality and quantity of life.
So, what is it really about economic growth, wealth creation, and employment that create those toxins in the environment? It's really the laws of physics and the laws of attraction. If you think about it, you might realize that when you put more stuff into a container, or when you put more stuff in your pocket, or when you get more stuff out of your pocket, then you are creating more stuff for yourself. You have to realize this, and also realize that the less stuff you have now, the less stuff you will have tomorrow. Therefore, it's sort of a balancing act, where you either want to create more wealth, or you want to create less wealth so that the opportunity cost of economic growth is minimized.
Now then, once you understand the laws of physics, and the first law of thermodynamics, and you understand the second law of thermodynamics, you begin to see the opportunity cost of economic growth, wealth creation, and employment. It is not a bad question, but the question needs to be asked. Why do we spend so much time and energy worrying about economic growth, and job creation? When you look at the actual numbers, it turns out that the unemployment rate is about zero. So the . . . . . . question shouldn't be, why is the unemployment rate so high, because there is no economic growth, and the answer should be, why aren't we spending more money creating wealth, and saving that money so that when the economy does return, we can invest it back into the economy and create more jobs.
Here's the bottom line, and this is something that I'm willing to wager, that most people don't even understand. The real opportunity cost of economic growth is quiet. It is quiet of financial loss. If you lose your job in the current economic environment, you will be a poorer person as a result of that. However, if you have a long term investment plan based on wealth creation and job creation, then you will have both long term personal financial security, and long-term wealth creation as well.