In a previous question, the economic growth has been explained to be a rise of the GDP as a function of time. The answers to the said question discusses the mechanisms or parameters which influence the GDP, and which can contribute to its rise.
First let's clear the situation of the inflation away from the remainder of the discussion. Then we will try to see the advantages for a society of an economic growth, and finally we will discuss the pertinence of those perceived advantage, and some alternative theories.
The measure of the GDP is based on the prices of products and services. As such, it is very dependent on the inflation. Indeed, everything else being equal, the increase in GDP should be exactly the inflation rate.
Effect of the inflation on the society
The inflation corresponds to the overall increase of prices within a country, typically from one year to the next. There are various effects on the inflation, and here is not the place to discuss all of them. We will just mention two
Debts: due to the inflation, the relative value of debts decreases. So people or countries who have debts benefit from the inflation, as they are required to pay conparatively less. That is a way in which
Transfers Money from Savers and Investors to Debtors (source)
which make the capital more active for the economy.
Lower acquisition power: if the income stays constant, one gets less of one month's work. This is argued to be a natural adjustment of income, as it can effectively be reduced, without actually reducing it.
Thus, some inflation might be wanted, and this, in consequence, favours an increase of the GDP.
But most of the time, the economic growth is corrected for the inflation. And so will we discuss in the rest of the post.
Now that we are inflation free, what are the advantages of an growth?
One has to keep in mind that a growth is a consequence of changes in the economy, not the cause. Without trying to be fully exhaustive, one can the following points which would explain the growth:
- lower unemployment: with more people working, the government needs to spend less on social helps, collects more taxes and thus can spend more in public contracts, or any other public investment. Furthermore, it means more people have more money to consume.
- higher salaries: similar to above, higher salaries mean more consumption and investment.
- Improved public finances: either less debt, or more savings, which in turn mean more spending (e.g. improving services or reducing taxes).
Higher salaries, richer state and lower unemployment, mean a reduction of poverty, and has been associated to increase the happiness of the population and even to improved quality of life. This is understood by having better services and health system, changing to a primarily agricultural economy to one based on services, improved the health condition, and combined with an improve wealth, is associated with happiness and better life quality.
Politicians who are (at least indirectly1) concerned with their citizens happiness and life quality, strives to create economic growth. Even without the relation to happiness and life quality, policies which aims at reducing the unemployment are perceived as positive by the voters.
However all those benefits of growth are subject to debate. I don't want to give too many details, as many points are given in Wikipedia and the references therein.
- a strict relation between the GDP and happiness is a subject of discussion;
- the quality of life isn't directly related to the spendings by the state, or the perceived income;
- poverty isn't necessarily positively affected by rise of GDP;
and even the most direct factors are not necessarily included in an ecoomic growth, namely lower unemployment and higher salaries. For most of those to actually take place, the generated extra revenue (growth ca be seen as a revenue), isn't necessarily equally distributed.
To put it in a simple way, if the rich become richer, they won't be fundamentally much more happy. But the poor will at best stay as unhappy as before.
In a previous answer, I already discussed why GDP is not a good measure.
Furthermore, the economic growth is also associated to negative effects, mostly related to ecological issues. As a consequence, some claim that we should strive for a degrowth, due to the claim of unsustainability of a continuous economic growth.
1. Indirectly: if the voters are happier, they are more likely to vote for them, and thus for them to stay in power.