Arnold Kling  


The Productivity Story... Housing Bubble?...

Michael Lind offers an optimistic assessment of the prospects for sustaining a world population of 9 billion.

As affluence grows, the amount of energy and raw materials "consumed" by machinery will escalate even more rapidly than human consumption. But this need not mean an end to the machine age. If manufacturing processes were to imitate the recycling that takes place in the biosphere, then most machine materials might be recycled to make new machines, rather than thrown away. And long before all fossil fuels were exhausted, their rising prices would compel industrial society not only to become more energy efficient but also to find alternative energy sources sufficient for the demands of an advanced technological civilisation - nuclear fission, nuclear fusion, solar energy, chemical photosynthesis, geothermal, biomass or some yet unknown source of energy.

Thanks to Tyler Cowen for the pointer.

For Discussion. If the world has 9 billion people in fifty years, what proportion do you think will achieve an income in today's terms of $15,000 a year for a family of four?

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COMMENTS (8 to date)
Tim Worstall writes:

Dodging the question slightly: 2100 not 2054. I tend to agree with the more optimistic of the IPCC (well, SRES, the economic assumptions behind IPCC) scenarios. That by 2100 the average world living standard will be about what the US is now. So somewhere around $ 25 - $ 30k. And to answer Lind's question, can 9 billion people live at that level of wealth, well, the SRES does try to look at that and finds no resource restriction to stop it. Tehre is the temperature rise, yes, but no resource restriction.
I've always been amused by those who insist that GW will happen and also that there are not enough resources for us all to be rich, when the report that shows the one also disproves the other.

Lawrance George Lux writes:

I have always felt there were other factors than economic which would limit Population expansion--an era of Plagues. Nine Billion is a number which will increase global warming and Food needs substantially. You are talking about three billion more bodies to be fed, clothed, and housed--much emission of gases and heat. These are not unsolvable in context, but the escalating costs of such solutions must be considered. Those benefited by economic development remain approximately the same, while the Losers remain about the same though they lifestyle does improve. Your context does not equate for Inflation by statement of $15,000 per year, so I will state simply that 4-5 Billion people will be accounted to be Poor--earning less than $15,000 per year in Today's dollars. lgl

Harold Brashears writes:

"If the world has 9 billion people in fifty years, what proportion do you think will achieve an income in today's terms of $15,000 a year for a family of four?"

Almost none.

Chaerul writes:

To Tim Worstall:

You sure are confident that there will be no GW and there be enough resources to make very one richer...

But surely one day the Earth will reach its threshold... after all there is a fixed amount of land and resources inside and the earth.. and in the atmosphere too...

If I understand my textbook economics correctly,... limited supply meaans higher prices am I not right..? So it follows that higher prices means less real income...

Perhaps to maintain "an income in today's terms of $15,000 a year for a family of four"...we should look up to outerspace in the future...

Mike writes:

Chaerul wrote:

If I understand my textbook economics correctly,... limited supply meaans higher prices am I not right..? So it follows that higher prices means less real income...

Limited supply only means higher prices when demand is held static. The key factor will be our ability to increase productivity and efficiency to the point that the limited supply of resources becomes irrelevant. Given, the productivity trend of the last 100 years, I think it is quite possible this will work out in our favor.

Really, this question boils down to whether or not you have faith in the power of technology to shape the future in a positive way. That being said, I'm a believer, so I will say that 50% of the world will qualify for the $15000 income level (in constant dollars).

Dezakin writes:

I'm quite suprised at the number of people who believe that 1 billion is somehow sustainable and 9 billion is not; Everyone seems to believe that they're living just before the end when the world has consistantly strayed further from it.

All one needs to do is look at the work of Julian Simon to find reasonable arguments as to why in 2054 a very large proportion of humanity will be living a US 15k per year lifestyle, and probably much higher given the trends in productivity growth acceleration.

There isn't a limit on food: studies in the 1970's indicate the maximum the world can feed using that era of farming techniques is in the range of 30-90 billion; It goes much much higher when using hydroponics and other energy intensive techniques.

There isn't a limit on energy: we have hundreds of millions of years of supply of nuclear fuel providing power that doesn't go above costing more than 1.5 what electricity from a modern coal plant costs. This is with todays technology, so even if no technological marvels come along and extends the horizon further, we still can support trillions of people at a US equivalant consumption rate.

The rate of the effect technological change on economics is accellerating as well. Technological change is determined by the global labor supply in developed regions: more scientists, engineers, and business managers that apply the benifits. With India and China developing, we are bringing people that previously were totally unproductive with respect to technological change (subsistance essentially) into development of new technologies.

Its a giant pollyanna feedback loop that actually exists. Of course its scary and disruptive, and the whole thing can be derailed by a very large nuclear war, but there is no physical limit that we'll run into before being economically powerful enough to expand into space. Progress is sustainable for quite some time.

Steven McMullen writes:

Why I will shy away from a solid answer to the question, it seems that, at least in the next couple hundred years, the question will not be one of global warming, and not be one of resource depletion, but instead be a question of politics.

Can the WTO overcome the current impasse? Will conflict continue to preclude development in parts of Northern Africa? Will we be able to improve the effectiveness of IMF and World Bank initiatives?

Eventually we will perhaps, have to deal with real scarcity of vital resources (though I tend to side with the more optimistic comments in the discussion thus far), but I am far more worried about tyrrany or protectionism than global warming. For what it is worth.

Rick Stewart writes:

Eventually the world population will start to shrink, possibly as early as 2050. When this happens the number of human brains available to solve technology problems will also begin to shrink, suggesting the economic advance of civilization will decelerate.

Getting back to the question, I believe the income distribution of the world in 50 years will be more or less similar to the current income distribution in the United States (constant dollars), except for Africa, where I expect a significant lag, hopefully less than 50 years.

This suggests it will be difficult to find any families of four, anywhere outside of Africa, with incomes less than $15,000 per year.

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