Why Low Economic Growth Is So Dangerous: Dambisa Moyo

Long term risk around economic growth in the U.S. will limit job opportunities and access to public goods, says Dambisa Moyo, Baroness of the House of Lords. In this episode of "The Bottom Line," Moyo discusses the risks associated with low economic growth, its lasting effects, why productivity is in decline and the impact of the Ukraine and Russia war.

"I'm worried in particular because both developed and developing economies are struggling to achieve that 3% per year growth rate, which is required in order to double per capita incomes in a generation. So I think that to me would be the key issue that we need to focus on," the "How Boards Work" author explained.

That 3% growth in the economy is crucial to improving livelihood.

"The whole hope is that we're continuing to improve people's livelihoods and people are able to access opportunities, not just in terms of public goods like education and health care and quality infrastructure, but also being able to improve their livelihoods by access to great opportunities. But we're not able to deliver on that. Public policy can't deliver on that and nor can corporations if the economy is not growing," the House of Lords Baroness said.

Related to the decline in GDP is evidence of lower productivity despite advancements in technology.

"Productivity numbers in the U.S. are in decline year over year and a rough estimate that I go by and a lot of evidence has shown that number is very important, about 60% of why one country grows and another one does not is because of productivity. … I think a lot of that right now, we hope, is chalked up to measurement, meaning that there are new sectors and new jobs and new opportunities and new information platforms that have emerged from technology. And unfortunately, our modeling of productivity and economy have actually not kept up," she said.

Moyo also stated that AI is fever pitched in every facet of her work as an investor, economist, board member and public policy advisor.

"At the micro level, it could have a meaningful impact not just on business models and how companies constitute themselves and think about allocating resources like capital and labor. But also, I think it could be incredibly transformative for the role of state if indeed we end up with a lot more people who are out of work," Moyo explained.

Watch the video above to see the full interview.

Correction: At 5:23, we incorrectly displayed the publish date of the article. It should be October 7, 2022.
At 1:36, the text on screen should read GDP.

Chapters:
0:00 Introduction
0:19 Growth
1:58 Productivity
3:31 Artificial intelligence
5:15 Inflation
6:39 Recession
7:39 Advice

Produced, Shot and Edited by: Mark Licea
Supervising Producer: Lindsey Jacobson
Additional Footage: Getty Images

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Why Low Economic Growth Is So Dangerous: Dambisa Moyo

[RsSooke]

What’s dangerous is expecting growth can be infinite

[bryanmiller]

Just imagine if these companies respected, & cared about their employees welfare to give them a 3% raise every year rather than bloat the top 1% of the companies’ personnel with outrageous bonuses, & other perks such as private jets trips, & inside trader tips when given stocks as bonuses. 🤔

Sadly no, the average employee is seen as a necessary evil on a spreadsheet under the best of times, & an acceptable, expendable casualty under the worst climates. Their is no loyalty from above, yet they can’t imagine their employees being anything more than eagerly loyal cattle, who should just be thankful to receive mere table scraps as payment for their labor, as they are sent off to slaughter, by having their hours cut, added responsibilities, impossible expectations, & ultimately, accept their layoffs with grace.

The current “downsized” economy is the result of unadulterated greed, materialism, & dehumanization. It will only end when it becomes too bloated, & collapses in onto itself. Then, people will die, & as a result will rise up in violence, & revolution. We are already seeing such behaviors in big cities from uncontrolled shoplifting to looting, & mass acts of violence, as a result of anger, hopelessness, & disenfranchisement resulting from overwork, underpayment, homelessness, & starvation in our own streets.

To the elite, I advise caution, & self reflection. For when this powder keg finally explodes, you are going to be the primary targets of the citizenry’s ire. Despite what you are accustomed to believing, money, is not bullet proof. Every action, has it consequence. Tread wisely, with compassion, mindfulness, & humility.

[Aziz__]

The system is failing as a result of both government and federal policy. In the next days, the banking crisis would have to be epic and gigantic for the FED to decide not to raise interest rates. This won't happen; an increase and a crash are coming. There will be more negative portfolios this 2nd half of 2023 with markets tumbling, soaring inflation, and banks going out of business. My concern is how can the rapid interest-rate hike be of favor to a value investor, or is it better avoiding stocks for a while?

[skyscraperfan]

Are you sure that economic growth makes the lives of people better and gives them more opportunities? In the past that only worked for people with a high income. Average people saw their lives just get more expensive.

[mikebostic]

Focusing on growth should not be the end all be all for an economy. Macroeconomics is truly a joke.

[ImpreccablePony]

The unsustainable economic system of infinite growth struggles when there's no infinite growth.

[lame]

Slow productivity growth could be caused by high housing prices making people live in areas with fewer job opportunities and settle for jobs they are overskilled for.

[TracySchmidt-smno]

The current economic system contributes to instability, inflation, and poverty. A new Creative Society economic model is required, one that can guarantee everyone's stability, security, and a high standard of living. But unfortunately, whenever the leaders we depend on appear on TV to tell us not to panic that everything is under control, that is actually the time to fear the most! Saddening...

[Comeback]

Low economic growth is bad for the capitalists bottom line but good for the environment.

[maltaconvoy]

Deflation is good for the working class and middle class, but it's bad for Ray Dalio and his asset portfolio. Infinite growth on a finite planet is neither possible nor desirable. The current "we need growth!" paradigm will result in natural resource depletion/exhaustion, lethally toxic levels of pollution, and ultimately, human extinction.

[piku]

You cannot have infinite growth on a finite world with finite resources.

[Erikkurilla]

Despite the prevailing economic turmoil, there is no denying that the current circumstances present an opportune moment for investment.

[dvdragon]

More people need to spend more money that they don't have to buy the goods and services that are more expensive in order to keep this thing going. /s

[Northwest]

Do a video on Degrowth instead. Not everything needs to cater to shareholders

[jimmyliu_youtube]

It is time to talk about degrowth and redistribution, rather than infinite growth, considering the current unsustainable use of resources, inequality, etc.

[SaltySparrow]

Why can't companies just turn a profit and call it a day? Why does growth need to be infinite? Everything has a ceiling. The flaws in capitalism have been really starting to show these last few decades.

[matthewboyd]

America is talking about how low growth is a bad thing

While Europe is talking about degrowth

[philipberthiaume]

Better corporate provided Healthcare?!!! There is a 2007 senate study that shows how GM produces a car at one third less cost in Canada because employee health costs are not a corporate expense. How about removing health costs away from private business and putting it on the tax base where everyone can benefit and the private insurance industry overhead is no longer necessary? This is what everyone else does around the world. Arguing for corporate growth as a benefit to maintaining health care systems is disgusting...

[darinherrick]

Good example: People were laid off and couldn’t afford a car. Business got government contract in my city and hired hundreds of people. The parking lot was full of brand new cars. More work means more stuff made means more taxes to upgrade the city, more jobs, better life for everyone.

[HellaWasted]

This woman didn’t answer a single question directly. She said what she came on here to say. Rehearsed.