In Utah’s Governor race, Jon Huntsman has advocated growth as the solution to Utah’s Economic problems. Growth, no doubt, is good in a lot of ways and will help in the short-term. I have to ask, though, if we are going to continue to rely on growth to solve our budget and economic problems? I believe this question is not only valid for Utah, but for the nation as a whole, as we try to dig ourselves out of a massive deficit.

Why growth can’t be our only tool for fighting deficits

1. Resources are not infinite

This may be somewhat hard to believe at times, but the Earth’s resources are not infinite. This fact alone tells us we cannot rely on growth alone to fix our problems, in the long run. Some may say, “Growth is a temporary issue, we can worry about resources once we have caught up.” We’ve had 200+ years as a country and seem to be only digging ourselves in deeper, despite relatively high growth rates.

We can reduce and reuse resources, but the availability of new resources will be a constraint on growth in the future.

2. Infrasctructure Costs Rise With Growth

Growth does not come magically. You have to attract new businesses and new residents. These, in turn, raise the infrastructure costs of a region. Rising infrastructure costs require even more growth, leading us to a death spiral of growth.

Further, growth is often attracted by tax breaks, which means tax revenue from businesses often takes a long time to offset infrastructure costs.

3. Aging Population

An aging population throughout much of the industrialized world, including the United States, will make it much harder to sustain growth.

Other tools we can use

1. Modifying tax structures

Too many tax authorities are taxing the ‘old economy’. Much of our economy now revolves around services, which are not taxed, and Internet sales which are only taxed in limited amounts. Practically every state and local government has taken a hit from this. We need to have the guts to modify our tax codes to deal more effectively with our new economy.

2. Better Fiscal Policy

On many levels, too much money is wasted in the Government. Sooner or later, we are going to have to deal with this waste.