Summer Article #2: Global Growth; hao bu hao?

Global growth not dollar boosting U.S.: Paulson

Secretary of treasury says strong growth outside U.S. is behind increase in U.S. economy: interview.

July 27 2007: 10:35 AM EDT

WASHINGTON (Reuters) -- The U.S. economy's strong performance in the second quarter, particularly in exports, is being driven by strong growth outside the United States, not the weak dollar, U.S. Treasury Secretary Henry Paulson said on Friday.

"I'm very much for a strong dollar, that's very important," Paulson said in a television interview.

Growth picks up, inflation tame

"Now I believe what we're seeing is a strong global economy. This is the strongest global economy I've seen in 32 years. The growth rate in Europe has doubled. We've got growth throughout Asia. Japan is now growing, so I think this is being driven by strong growth outside of the U.S.," he told CNBC Television.

The Commerce Department said earlier that U.S. economic growth rebounded to 3.4 percent during the second quarter, its strongest pace since the beginning of last year on a surge in business investment, increased government spending and improved trade performance.

The data marked a big turnaround from anemic 0.6 percent growth in the first quarter, a figure previously reported as 0.7 percent.

_____________________________________________________________________________________ According to this article, our global economy is "the strongest global economy [we've seen] in 32 years." There is a total of six factors which are usually considered when analyzing economic growth; however, only several are relevant to our growing world today. First of all is an increase in the quantity and quality of human resources. As education throughout the world is on the rise, the 'quality', (i.e. the brains) of the working force is increasing. Furthermore, as farmers and inhabitants of rural areas migrate over to big cities to find work, the quantity of human resources (i.e. labor) has been on the rise as well. A second factor contributing to the strong global economy is the fact that there are constant improvements in technology. Improvements in technology refer not only to new production techniques such as machines or capital goods, but also to new ways of management and organization. Technology also allows for our increasingly scarce resources to be used as efficiently as possible without any loss of possibly useful 'waste'. Both of these factors are part of the supply-side of the economy. Correspondingly, in order for economic growth to occur, demand must be high in order to 'eat up' the high supply resulting from technological advances and a larger and better human work force.
When reading the statement made by Paulson, it is easy to assume that such growth is desirable. However, several economics claim that economic growth--especially such drastic economic growth--is far from enviable. These economics tend to be more aware of environmental issues and social problems such as poverty and injustice. For example, increased capital goods can only occur if new factories are built. Such industrialization doubtlessly contributes to the growing problem of global warming and pollution in our world. Also, the constant concern and need for economic growth leads to less attention being paid to underdeveloped countries which require a lot of aid and help.

Everyone always seems to believe that economic growth is what the world needs. But what does it matter if countless cities are underwater when Antarctica melts from global warming? Time to think again.