Why do we need economic growth?

The short answer is, we don’t!

We don’t need economic growth, at least not in the United States. Some countries do need growing economies, and some of them need them desperately. But we already have more than enough of everything that we need in the U.S., at least everything of economic value. It’s just that some people have far more than they need, while others don’t have enough.

The GDP, or total value of goods and services, has more than doubled since the 1970s, even after adjusting for inflation.[i] However, the percentage of people living in poverty in the U.S. has remained stagnant in the range of 11% to 15%.[ii] Increases in the GDP have increased the cost of living as much or more than they have increased incomes for most people. Some have become richer, others have been made poorer, but most people have worked harder and longer trying to stay about the same. Economic growth has increased the disparity between the top 1%, even 10%, and the rest of us, leaving even the stagnating middle class feeling poorer than before.

There are many countries where people live in abject poverty. They need economic growth. The current World Bank benchmark for severe poverty is $3.00 per day, and nearly a billion people in the world live in poverty, on less than $25.00 per week.[iii] People in these countries survive by doing things for themselves, doing things for each other, doing without some things they need, and in some cases, relying on government welfare programs. The GDP only counts what people get through economic transactions, earning, buying, and selling, not what they get through personal relationships.

Economic transactions enable us to get paid for providing goods and services to people we don’t know, and then use the money to purchase things produced by people we don’t know. Economic transactions greatly expand our opportunities to benefit by doing things for other people that they can’t do as well as we can and having other people do things for us that we can’t do as well as they can—in economic jargon, to benefit from specialization and trade. People in many countries of the world could benefit from greater opportunities to participate in economic transactions, which would contribute to a growing GDP.

However, an increasing GDP also means greater reliance on the economy to meet basic needs, which increases the cost of living as well as incomes. People benefit from economic growth only if their incomes rise faster than their costs of living. As nations globally have become increasingly reliant on economic transactions, the World Bank has raised its poverty level from $1.00 per day in 1990 to $3.00 per day in 2025—reflecting a tripling in the economic cost of living. People in the so-called economically developed nations of the world, including the U.S., couldn’t survive on $3.00 per day. The current poverty line in the U.S. is more than $40 per day. Since the 1970s, increases in the essential cost of living have wiped out most, if not all, of increased incomes, particularly for the bottom 50% of U.S. wage earners.

In addition, as people rely more on impersonal economic transactions, social relationships tend to weaken, families and communities become less interdependent, the social and cultural fabric of communities and nations becomes more fragile, and people suffer from isolation and loneliness. At some point, the sacrifices of social relationships and cultural identity tend to offset any further contributions of economic growth to the overall quality of life. The United States is a prime example of a nation that has been systematically weakened and ripped apart—socially, culturally, economically, and politically—by a relentless pursuit of economic growth.

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Regardless, the economic, social, and political mantra that “economic growth is good” continues to dominate public perceptions and economic policies in the United States. The success or failure of presidential administrations is reassessed after each quarterly GDP report. If the GDP declines for two consecutive quarters, the economy is widely considered to be in “recession,” and the administration is in trouble. If the economy is growing, everything is okay. Regardless of social or environmental consequences, the government is expected to keep the economy growing, and the faster the better.

Even prominent economists who are concerned about the negative environmental and social impacts of economic growth seem to believe that continued growth is essential. It just needs to be a less extractive and exploitative form of growth.[iv] The concept of “sustainable development” is reinterpreted as “sustainable economic growth,” which is impossible, unwittingly equating growth with development. It is often argued that economic growth is essential to provide funding for environmental protection and social equity. This is true, but only up to the point where the economy begins to extract more than it conserves or renews, and exploit more than it equates and protects.

The U.S. has had one of the strongest, fastest-growing economies in the world, but it has arguably contributed more to environmental degradation and economic inequity than any other nation. Continued growth in the U.S. economy has been sustained not only by domestic extraction of resources and exploitation of workers but also by extracting and exploiting the resources and people of economically depressed nations around the world. The wealthy have benefited at the expense of the poor.

Others have argued that economic growth is necessary to cover the cost of interest charged on borrowed money. If the economy doesn’t grow, borrowers will not be able to make interest payments in addition to paying off their loans. Again, this is not true. If someone owes 5% interest on borrowed money, they need to earn at least 5% on their investment to cover the interest costs. However, some borrowers routinely earn far more from their investments than they pay in interest, and others earn less, and some go broke—every day of every year.

Lower interest rates make it easier to make money by borrowing, but the government has no obligation to ensure that borrowers can cover their interest costs. Neither does the economy need to grow to cover speculative investments in the corporate stock and financial derivatives markets. Current stock and derivative prices reflect expectations of continued economic growth, but the government is under no obligation to grow the economy to ensure that investors and speculators don’t lose money.

“Anything that isn’t growing is dying.” This remains an article of faith in our culture. It simply is not true! Healthy living organisms, including humans, are conceived, born, and grow until they reach maturity and become adults. They then stop growing, but they continue to be productive members of their communities as they conceive, birth, and nurture new generations. They continue to contribute to the well-being of their natural environments or communities as they age and eventually die. Living things are no more in the process of dying after they reach maturity than when they were growing. Some organisms and organizations don’t stop growing until they destroy the things that enable, feed, and support their growth. They include parasites, cancers, and unrestrained capitalist economies.

The U.S. government continues to promote cancerous economic growth by refusing to tax the rich, dismantling regulations that protect the environment, and cutting government programs that ensure political and economic equality of opportunity. These actions are defended by the basic political and economic arguments that they are essential for economic growth and that economic growth ultimately benefits everyone. This is not true.

For example, those with incomes in the top 10% currently receive about 60% of all income in the U.S. The remaining 90% receive only 40% of the total. This currently amounts to about $13.8 trillion for the 10% and $9.2 trillion for the rest of us. If economic growth results in income increases of 4% per year for both the 10% and the 90% over the next ten years, the growth will be about $4.4 trillion for the 90% and $6.6 trillion for the 10%. The increases in incomes “per person” over the next ten years would be only $14,026 per person for 90% of the people in the U.S., but $189,353 per person for the top 10%.

The rich get richer while the rest of us struggle to cover the increasing costs of living. This would be the case if the top 10% were taxed at the same percentage rate as the remaining 90%, which is currently not true. The lower tax rate on capital gains, which is defended as necessary to promote economic growth, gives those who already have money to invest a tax advantage over those who don’t. In the previous example, more than 80% of the growth, or year-to-year increases, in income of the top 10% would need to be taxed away to fund benefits for the rest of society to equitably share the gains from the economic growth made possible by investors, workers, consumers, and society as a whole.

Unrestrained economic growth ultimately leads to extraction, exploitation, and a growing disparity between the rich and the rest of society. This is the way capitalist economies function, if they are not restrained and regulated by government to ensure they function for the benefit of the societies that create them, rather than those who manipulate them to accumulate individual wealth. The recognition of this inconvenient truth is growing globally, while policymakers in the U.S. seem oblivious to the root cause of the growing environmental, political, and economic problems that threaten the survival of the nation. The nation is killing itself by trying to keep its economy growing.

“Degrowth” is a growing global movement that advocates for a voluntary, planned reduction in economic production and consumption and the reestablishment of a balance of economic, social, and ecological well-being.[v] It challenges the concept that economic growth, or the GDP, is an accurate indicator of human progress and well-being. Instead, degrowth prioritizes environmental sustainability, social justice, and the equitable distribution of access to natural resources and economic opportunities.

Degrowth’s main argument is that infinite economic growth on a planet with finite economic resources is impossible. It argues that the GDP should be replaced by multiple economic and social measures, such as life expectancy, health, education, housing, meaningful employment, and “sustainable economic development” as indicators of both ecosystems and human well-being. The degrowth movement recognizes that people in many countries still need economic growth, but not at the expense of their overall quality of life. Degrowth policies would be administered by governments but freely chosen by the people, as they begin to understand the high cost of unbridled economic growth and the social and environmental benefits of a sustainable quality of life.

We don’t need economic growth in the United States. We need to grow in our commitment to care for the less fortunate and to take care of our common home, the Earth. The economic, social, and ecological are inseparable dimensions of the growing problems that confront us and are inseparable dimensions of the opportunities for a better quality of life before us. No one grows or lives forever, but everyone has an opportunity to leave their communities, societies, and the world a bit better than when they were born into it. We will continue to create more problems and miss more opportunities as long as we equate success with continuing economic growth.

John Ikerd

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[i] https://www.multpl.com/us-gdp-inflation-adjusted/table/by-year#:~:text

[ii] https://aspe.hhs.gov/sites/default/files/private/pdf/154286/50YearTrends.pdf

[iii] https://www.worldbank.org/en/news/factsheet/2025/06/05/june-2025-update-to-global-poverty-lines

[iv] https://www.abacademies.org/articles/sustainable-development-balancing-economic-prosperity-and-environmental-concerns-16224.html#:~:text

[v] https://en.wikipedia.org/w/index.php?title=Degrowth&oldid=1300087754

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