Simonizing Economics

I recently interviewed Gary Becker for the Financial Times (the interview won't be published until the new year) and he, too, was of the view that population had major benefits. He is working on a paper to that effect.

A purely selfish reason to oppose population growth: there are a limited number of truly beautiful places in the world, and population growth increases their level of crowding and the price of living there. The supply of natural beauty is not very elastic to economic growth. (Although it is partially elastic -- as technology advances and society gets wealthier industry gets cleaner).

MQ, I suspect the practical effect of economic growth is to increase the effective supply of natural beauty by making more of it accessible via cheaper and more pervasive transport.

Even more economic growth will make the vast and largely unexperienced to date beauty of the oceans and outer space accessible.

Though I await Becker's paper, I'm not sure I follow the economic logic. Per capita income is a fn of capital and labor (and the ethereal multifactor productivity). If k/l rises, in the short run that's a clear victory for per capita income. There is a wealth of economic research on the economic boom following ancient wars/plagues that were costly in life terms, yet didn't destroy capital. There is also pretty strong (in my view) evidence that the increase in worldwide labor following the integration of China/USSR into the world economy has helped keep wages stagnant (until capital returns to long-run equilibrium, a decades-long process). Both these points could be cross-applied to suggest that low population growth + fixed amount of capital is the way to go, could they not?

Julian Simon said that it can be "better to have more people and a lower per capita income", on p.339 of The Ultimate Resource. He argues that we can't use per capita income as a criterion, because that would lead to killing all the poor. This involves numerous contradictions-in-terms, such as how economic success can be set equal to its opposite. How is it to be assumed that a mass-murdering despotism would maximize per capita income? Such a tyranny would restrict production necessarily, doesn't that contradict the assumption of the possibility of maximizing per capita production in that circumstance? Worse, he leaves out of account altogether, whether a given population increase represents an increase in aggression on the net taxpayer.

Simon's other example of a way to increase per capita income, on p. 338, is to suggest that people stop having children for some years. Again, the context of how this is to be imposed is ignored. The tyranny required to bring birth rates down involuntarily would have to involve a restriction of overall production. It doesn't appear to be shown that we can't still use per capita production as a criterion of the economic success of a society. If economists say that we don't have to, but could use population growth instead,they are stepping ouside economics and contradicting it. Mali, Niger and such countries are more like diseconomies, turning potential wealth into suffering; who would want to emulate them?

The world population continues to grow as finite resources dwindle and are used up.

One day there will be too many people and not enough resources, at which point there will be a die off.

Of course that's not my problem.

The only real argument for this is economies of scale, of which there are many. However, we need to distinguish large (or more precisely, dense) populations from those that are rapidly growing. While there is renewed awareness that a declining population is not so good if you want to have a well funded social security system, a too rapidly growing population can cause all kinds of problems. Some cases not mentioned would include Iran and Saudi Arabia, and I shall leave it at that.

Bah, people are missing the real effect of large populations: They are growth multipliers. In ordinary agrarian economies and partially in industrial economies this isn't the case. People can sort of be treated as a form of capital in a linear fasion for extrapolating growth.

But in advanced industrial economies and information/service economies populations are growth multipliers because larger populations support engineers and scientists who develop productivity enhancements at a faster rate than in smaller populations.

This is why I suspect we will continue to see higher average growth rates for the next fifty years than most of the twentieth century. India, China and the rest of the agrarian world are escaping the subsistance lifestyle and developing educated populations that develop new productivity enhancing technologies that will enhance growth for everyone.