Slowing Growth Fuels Grumpiness Across Affluent Economies

Across affluent economies, including New Zealand, Australia, the US, Britain, and much of Europe, there's a sense of restlessness and discontent. This is reflected in the rise of populist parties on both the left and right.

The economy seems to be part of the problem, but it's not just about economic growth. Issues of national identity and attacks on emerging minorities are also contributing factors. Anxiety about social and technological change is another factor at play.

While GDP growth may seem healthy, per capita growth has slowed in recent years. One reason for this slowdown is that the benefits of economic growth are not being evenly distributed. In fact, a significant portion of people may be experiencing stagnant or even declining incomes.

The conventional measure of GDP fails to account for various downsides, such as environmental degradation and the costs associated with outsourcing and technological change. As a result, many people may feel that their economic situation is worse than it actually is.

Using hypothetical data, economist Brian Easton illustrates how a slowdown in economic growth can lead to a significant increase in the number of people who are economically worse off. This can fuel populist sentiment and contribute to social unrest.