Growth does not ease poverty if inequality is allowed to rise

Tim Jackson provides figures showing there is no correlation between GDP and standards of living, health, life expectancy and happiness once national income rises above $15,000 (£9000) per capita.

While there are ways governments could restore some growth in the short term, the evidence of six decades of overall massive economic growth since 1945 is that no amount of economic growth reduces poverty if inequality is allowed to rise at the same time. Instead we have deregulated markets allowing a constant flow of money from the vast majority to a tiny minority, taking both existing wealth and any new wealth created in periods of economic growth and accompanied by rising unemployment. This redistribution of wealth from the majority to the minority by deregulated markets can only be countered by government regulation and redistribution of some of it back to the majority. So, even if infinite growth were possible, it will never reduce poverty without government action.

Infinite growth is not possible though. We have finite supplies of fuels for energy, finite supplies of rare metals required for all kinds of technology – and emissions from fossil fuels are reaching levels that could lead to disastrous and irreversible climate change causing flooding and droughts worldwide that will cost lives and reduce living standards.

Economic growth may still benefit developing countries, provided the benefits are fairly distributed; and provided it doesn't use methods that cost so much in pollution that it wipes out much of the benefit. For instance, China's economic development through coal-powered power stations has polluted so much farmland that it now has to import large amounts of food from Brazil, which is deforesting the Amazon forest carbon sinks to produce it, accelerating climate change and so causing more flooding and droughts worldwide, including in China, reducing Chinese food production further.

Duncan McFarlane,

Beanshields Farm,

Braidwood, Carluke.

James A Findlay rightly says that with a steady-state economy we would never have achieved our present standard of living, including universal education and health care (Letters, December 7). I do not agree that a steady state-economy would necessarily mean redistribution of wealth from the affluent to the needy. That did not happen in the past. Plantation owners did not share their wealth with slaves.

Are we too obsessed with growth? The Letters Pages of December 7 may give that impression. Mr Findlay mentions The Limits to Growth by Denis Meadows of MIT, who wrote it in 1972 in a project for The Club of Rome, a group of 100 concerned scientists. About the same time Ernst Schumacher in his book Small is Beautiful: Economics as if People Mattered (1973), argued for a reduced rate of growth. We can have as much growth as we want if resources are available because the technology is there, but it comes at a price.

Growth depends on converting more energy and delivers what people want, more luxuries and better services. It is only available to a fraction of the world's population. If we continue to demand economic growth, what message are we sending to countries like China and India with 25% of the world population? The message could be that the way to go is to consume fossil fuels at the same rate as Western industrial countries. They can do that if they wish because China has more coal than any other country. It would be unreasonable to expect them to await green energy, because that would take too long.

Economists distinguish between goods and assets, goods being material things such as washing machines, computers, cars and the like, that we acquire to use. Assets are acquired in the hope of selling at a profit or generating an income. Goods and assets react differently to market pressures. If many people are persuaded that a particular item is desirable many people will buy it and the price will fall: nowhere has that been more obvious than in electronics. Now for a few hundred pounds you can buy a PC that is much more powerful, is very much faster, has vastly more memory, and is more user friendly, than a main-frame that cost £1 million a generation ago.

Unlike goods, shares tipped by financial columnists rise in price because shares are limited in number. The investors are happy, which is not considered greed, just making the best use of your assets. The recent problem is not that we have failed to invest, but we have invested in the wrong assets. You will get a much better return if you invest in debt such as credit card companies or other loan providers than if you invest in a car producer. We see that now when the number of people getting short-term payday loans at very high interest rates makes headlines ("Concern as struggling consumers turn to payday loan deals", The Herald, December 8). So profitable are these loans that lenders from the United States are moving in.

Bank traders are not interested in the wider economy, just whether the numbers on their computer screens are red or black, their aim being to make a profit on each of many transactions. How much have we learned since Nick Leeson brought down Barings Bank? House owners may try to do something similar by remortgaging their houses to become lenders. These transactions are fine until you find your house is repossessed because it has lost much of its equity, and you are homeless. A properly-run economy will grow without generating too many toxic assets, or blowing large financial bubbles that burst.

Chris Parton,

40 Bellshill Road, Uddingston.

The challenge that Harry Reid threw down is pertinent. The answer is simple: ensure that the price of carbon emissions is included in the goods we buy.

If that were done, we would be substantially poorer which, as he says, is our fate anyway.

However, if we retain our nuclear reactors and invest in other renewables, we would be able to reclaim some manufacturing industries. This would lead to jobs and some recovering prosperity in the foreseeable future.

Such a move would have to be at a European level and may have increasing support in other countries. One can only try.

Michael Boulton-Jones,

5, Glassford Street

Milngavie.

The recent budget in the Republic of Ireland was a tragedy for ordinary people.

They are having to suffer cuts to disability allowance, a new £50 charge to register at a doctor, massive increases in car tax and petrol tax, a new property tax being introduced and the raising of VAT to 23%.

Yet despite this Ireland will not raise corporation tax on the big banks, energy suppliers and supermarkets. Is it any wonder that even despite 2000 people emigrating every week, unemployment is still more than double that of Britain at 15%?

Why does big business keep getting tax cuts when it clearly does not create jobs, just higher bonuses and salaries for those at the top?

M Smythe,

11 Dalry Road,

Edinburgh.

Earlier this week I purchased a couple of bags of chocolate coins as stocking- fillers only to discover that alongside the coins there are now little chocolate bank notes of £5, £10 and £20 denomination. Is this a sign that we will soon only be dealing with notes and the traditional chocolate pennies will be a thing of the past?

Gill Craig,

12 Drive,

Glasgow.