November 26, 2006

THINGS HAVE NEVER BEEN BETTER, BUT...:

Would a drop in population be a positive or a negative? (Jonathan Last, 11/26/06, Philadelphia Inquirer)

The Danish economist Ester Boserup upended the classical Malthusian model of agriculture in 1965 by proposing that population increase fosters agricultural innovation, which, in turn, spurs leaps in production. Her theories have been borne out.

What about overcrowding? Everywhere you go today, you find traffic jams and sprawl, with people packed into condominiums and crowded malls. But this is a problem of density, not population. There's plenty of land available out there. The problem is that people who used to live in the countryside have relocated to cities: There are fewer people living in the Great Plains today than there were in the 1920s.

Environmental concerns are more interesting. However, such end-of-the-world warnings are not new. In the 1970s, many scientists were concerned about a new Ice Age. But leave aside global warming, on which science is conflicted, and take the other concern principally cited by environmentalists: that the Earth has a finite supply of resources that we shall surely soon deplete.

This, too, is an argument we have heard before. As Massimo Livi-Bacci explains in his Concise History of World Population, more than 100 years ago, economists "feared that coal supplies would be used up, and about 30 years ago the Club of Rome made similar predictions regarding other raw materials." Instead, markets and human innovation stepped in to provide greater efficiency.

For instance, in the America of 1850, you needed an average of 4.6 tons of petroleum equivalent to produce $1,000 of goods and services. By 1950, you needed only 1.8 tons, and, by 1978, 1.5 tons. Markets are exceptional engines of conservation.

Which leaves us with the economy. In 1971, Simon Smith Kuznets won the Nobel Prize in economics for his theory of "tested knowledge." As Kuznets explained: "More population means more creators and producers, both of goods along established production patterns and of new knowledge and inventions."

Kuznets was codifying what others had noticed before. Adam Smith remarked that "the most decisive mark of the prosperity of any country is the increase of the number of its inhabitants." As Livi-Bacci observes, "All things being equal, population increase leads to increased per capita production."

So the proposed "benefits" of population decline are, at the very least, suspect.

On the other hand, there are worrying potential costs of population decline. Of course, this worry is theoretical because we've never seen population decline on the massive scale that's coming our way. Or rather, we've never seen it in the modern world. There are, however, two historical examples.

Between 400 B.C. and the birth of Jesus, world population increased from about 153 million to 252 million. For the next 200 years, growth slowed almost to a halt. Then, between A.D. 200 and 600, population shrank from 257 million to 208 million. It took 400 more years for the population to recover to the level it had attained in Jesus' time.

The other drop in population occurred between 1340 and 1400, when the Black Death ravaged the world. Global population fell from 442 million to 375 million. Neither of these moments were particularly pleasant periods in human history.

Or, as Mark Steyn notes in America Alone, "There is no precedent in human history for economic growth on declining human capital."


...only Americans will be around to enjoy them.


Posted by Orrin Judd at November 26, 2006 8:17 PM
Comments

Using the example of the Great Plains, the Census Bureau has also noted that the Great Plains states (led by South Dakota) have had the highest rate of increase in average/median wages these past 20 years.

While it may be too soon to declare a global trend, every economist and social scientist should keep Mark Steyn's last phrase in the article close to the vest. For we may be seeing the beginnings of the world disproving that statement.

Posted by: Brad S at November 26, 2006 9:53 PM
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