SST1772-ABED_2: 5.3.4 Limits to Economic Growth

Does globalization lead to more wealth for everybody?

Is there a limit to growth of the economy? Most of us probably would say that growth is good for the economy. If more money is being earned, then more people are more prosperous. Alberta has experienced several booms over the past decades. The oil boom in the late 1970s was fuelled by the worldwide demand for oil. In general, the Albertan economy has seen continued growth since those days.

Some problems are associated with economic growth all over the world.

Infrastructure: When incomes soar, populations tend to grow. The provision of housing, schools, roads, and hospitals frequently does not keep pace. If you listen to traffic reports from any Alberta city in boom times, you will hear about long waits to get to work because the highways are not designed to handle the traffic. School classrooms are overfull, and hospitals have waiting lists for many necessary services.
Distribution of wealth: Income is almost never evenly distributed in any country, and when the economy is growing, the same is true. People with certain skills can earn high wages. Others, whose jobs are equally in demand, do not receive the same pay benefits. For example, in Fort McMurray, a tradesman may make more than $100 000 per year, but an RCMP officer earns the same wage as anywhere else in Alberta, which might not be enough to live on in Ft. McMurray. People who work in the service sector where wages are much lower are struggling. Unequally distributed incomes can lead to various social problems.

Source: Wikimedia Commons

Social Costs: As you learned in your study of the , when rapid change occurs in society, negative effects often arise.

Schooling: Young people frequently are pressured to work long hours, often at the expense of their schooling. Only 77 of every 100 students in Alberta will graduate from high school, and many believe that it is because young people can get jobs that pay well without an education. People dropping out of high school take jobs that may not be the type of work people want or are able to do for the remainder of their lives.
Employment: When workers are much in demand, shortages of both skilled and unskilled workers occur. Sometimes workers must be brought in from other areas, including other nations.
Social and cultural concerns: Long work hours cause strain on society, including alcoholism, drug abuse, and family breakdown. Often, crime increases in boom times because of income inequality.

Reflect

Environmental costs accompany periods of high economic activity, especially if the economic boom is based on a resource-based or manufacturing economy. F or example, projected development in the Athabasca Oil Sands generates greenhouse gases, uses an incredible amount of water, and results in long-lasting environmental damage. Logging can lead to deforestation, and manufacturing can lead to greenhouse gas emissions and acid rain as well as permanent destruction of freshwater lakes and rivers.

Sustainability is another issue of economic growth. The has natural periods of highs and lows. A booming economy is likely to be followed by more difficult times. If people do not plan ahead, they can face no employment and no savings.