NEW YEAR, more than any other time, is when we ask ourselves whether things could be done better. We question the way the economy is run as well as our own habits and often come to the same conclusion. Our lives, like the economy, might be better if they were not so driven by conspicuous consumption and a need to work more to earn more to satisfy a cultural aspiration to compete with the excesses of the rich.

As all those quickly broken resolutions suggest, change is often painful and impractical for the individual. For the economy, well-meant reform can be disastrous. We can, with determination, stop the world and get off. For the economy, zero growth is not an option.

Just consider the rising numbers of older people, a manic preoccupation of 2005. If the number above retirement age grows at 1 per cent a year but economic output grows more slowly, either the working population or retired people will have to get poorer. Returning to an age when children looked after the elderly may sound attractive but would more likely bring a downward spiral of higher taxes and lower output.

If national income expands on average at more than 2 per cent a year, there need be no conflict between generations. In a country that can provide everyone with the essentials, however. the choices we make for growth often seem trivial. Should we concrete over more fields with runways for the affluent to take more weekend breaks in Prague? Should we build more nuclear power stations, spread more wind turbines across our remaining wild landscapes or import liquid natural gas to vast new terminals to power digital televisions, more body scanners or computerised kitchens? The answer has to be yes, unless the market can think, or be persuaded or bribed to think, of something better.

Cheap flights and more motor cars finance better education and healthier food. Expanding economies have always needed more energy. We have to provide plentiful supplies in the best way we can or develop technologies that can change that relationship.

Closing steelworks or chemical factories in the West and replacing them with plants in developing countries does not help the environment. If only we can think imaginatively, however, there are surely ways to drive economic expansion with something more edifying than competing with each other, than in excesses of spending and waste to ease the boredom of life.

Cultural values have been degraded by the decline of our main religion. Churches took over responsibility for ethics, morality, celebrations of the natural seasons and the great events of life. Their withdrawal to the periphery of national life has left a vacuum that, out of sheer necessity, has been filled by commercial values and idealistic causes that are principally reactions against business.

The rich of earlier generations were as likely to compete with each other in good works, and to earn status by financing parks and libraries or by patronising arts as by buying bigger yachts. City traders competed in their charitable generosity. These values remain but are submerged. Conspicuous consumption, rampant but looked down on in Edwardian times, is the norm by default.

One reason is that the state took over good works and public services, removing them from market demand and market disciplines. As a result, we almost certainly consume far less professional medical treatment and drugs than we would in a free market.

The same is true of security, where the rapid growth of private firms in the sector suggests that there is unsatisfied demand among householders that a police force with many and varied priorities can no longer supply.

Devising ways to push such “free” services into the market sector while maintaining the principles of equal access and supply regardless of income is a challenge to anyone who wants growth to deliver things we really want rather than more expensive exotic cocktails.

Pending some dubious statistical reforms, converting any service, whether unpaid housework or brain surgery, into the market sector automatically boosts the economy’s measured output. Legalising the supply of narcotics, another big issue for reformers, would have the same effect. But it is not just a question of boosting measured output artificially by taking in each others’ washing.

Market disciplines foster efficiency, drive productivity and encourage demand for services rather than suppressing or rationing it. Many more worthwhile economic possibilities would open up, for instance, if the doomed plan for national identity cards was replaced by regulated voluntary private initiatives, which could be achieved quickly and at much lower cost. It is not easy but it is better than platinum taps.

graham.searjeant@thetimes.co.uk

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