Of the tendencies that are harmful to sound economics, the most seductive, and in my opinion the most poisonous, is to focus on questions of distribution. In this very minute, a child is being born to an American family and another child, equally valued by God, is being born to a family in India. The resources of all kinds that will be at the disposal of this new American will be on the order of 15 times the resources available to his Indian brother. This seems to us a terrible wrong, justifying direct corrective action, and perhaps some actions of this kind can and should be taken. But of the vast increase in the well-being of hundreds of millions of people that has occurred in the 200-year course of the industrial revolution to date, virtually none of it can be attributed to the direct redistribution of resources from rich to poor. The potential for improving the lives of poor people by finding different ways of distributing current production is nothing compared to the apparently limitless potential of increasing production.Robert Lucas (2004). The Industrial Revolution: Past and Future
I’m a true fan of your blog, Frederik, but not of this quote 🙂
Lucas is right in the sense that (neoclassical) economics is not about redistribution. Politics is.
Economists prefer to avoid redistributive topics by hiding behind Pareto-efficiency. Hence they can focus on ‘growing the pie’. The problem is that this may have been relevant in the 19th and some of the 20th century, but in these times the debate that matters is whether unlimited growth on a finite planet is desirable.
Secondly, there is no linear correlation between growth and well-being once a certain treshold of gdp per capita has been reached (and which has been surpassed by far in a.o. Europe and USA). Hence the idea of redistrubution – at least in a global perspective, does become relevant.