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Population, Environment, and Economics

 

The Biggest Obstacle to a Future of Universal Prosperity

By David Sirkin

September 2005

 

The technological advances that humans have made in the last several decades, including advances that have vastly increased worker productivity, should be moving us towards a utopian world in which everyone has a comfortable standard of living and adequate leisure time.  Why do we not seem to be getting there quickly?  There are many problems to be overcome, but the single biggest obstacle to achieving such a utopia is population growth, and, soon, if not already, population size.  The decades of technological explosion have also been decades of population explosion.  So far, at least one of Thomas Malthus’s gloomy predictions continues to be fulfilled: As the world population grows, the total number of people living in abject poverty grows also. There are today more people on the planet living in poverty than at any time in the past.

 

As economic growth and population growth proceed together in a global competitive market economy, we have had two simultaneous processes opposing each other with regard to the prosperity of the mass of the people.  There is the “trickle-down” of prosperity, much talked about during the Reagan years—as the rich get richer, their economic activity generates growth that brings some benefit to ordinary people; and there is the not-so-talked-about “percolate-up” of poverty—as the population grows and the masses of unemployed and under-employed swell, the poor compete with each other for resources and also cause downward pressure on wages and other compensation of ordinary workers.  This effect can percolate up even to professional levels.

 

A casualty of “percolate-up” is the French work week:  Like other western European countries, France seemed to be on the road towards a utopia, with an increasingly high standard of living along with mandated short work hours and long vacations. Recently the French were forced to take a step backward and increase work hours to compete with cheap labor in a global market—they were faced with a choice between lower income or longer hours—either way would have been a step back towards a more impoverished life.  (With immigrants also coming into France, one would think that the French would want to decrease rather than increase work hours, in order to assimilate more people into the workforce.  But the effects of an increase in immigrants are complex. To the extent that it contributes to a net population growth, it contributes to a downward pressure on wages, and also causes an increase in demand of goods, services and infrastructure, all of which requires more work, as well as an overall decrease in per-capita wealth—see A Surprising Fact.)

 

Until now, it could be argued that the trickle-down of prosperity fueled by advances in technology has been winning the battle against the percolate-up of poverty.  Although the absolute number of people living in poverty is greater than ever before, the average standard of living of people in the whole world has been steadily increasing.  However, there are signs that trickle-down is starting to lose.  Particularly ominous is news that population growth may be beginning to overtake food production growth for the first time since the “green revolution” of increased agricultural productivity (see Worldwatch Institute data).

 

As the human population grows, it eventually reaches sizes that deplete natural resources and otherwise stress the environment, ultimately being another cause of poverty.  In other words, population growth theoretically can have effects not only by being too rapid, but also by reaching a size that is too large. Economists love to scoff particularly at this second type of effect, the so-called “limits to growth” (see Regarding Limits to Growth).    Gloomy predictions repeatedly have been avoided by human ingenuity.  However, natural scientists almost unanimously agree that there are ultimately limits.  Human activity in the form of greenhouse emissions and deforestation is almost certainly contributing to global warming.  And renewable resources, such as water, soil, and fisheries, may be being depleted faster than they can be replenished.  Another effect is inarguable: We are responsible for the current mass extinction of species, one of the five or six biggest such extinctions in the history of the planet.  This loss is causing for all of us today and for future generations an impoverishment that is difficult to measure in dollars.

 

We may be able to extend the period of human population growth, and dramatically increase the total number of people the world can support, by such advances as implementing conservation measures, redistributing wealth among people, moving towards universal vegetarianism, discovering a way to harness nuclear fusion--and then using cheap energy, for example, to implement large scale desalination of ocean water, and discovering ways to use genetic engineering to increase greatly the productivity of agricultural land.  Still, there ultimately will be a limit.  Furthermore, all other things being equal, as population grows beyond the ideal range (and it most likely has already), the quality of life and the richness of the planet and its wildlife and other environmental resources, will be progressively less.

 

Given that a fairly speedy leveling off of human population size is good for the economic health as well as the environmental health of the globe in the long run, the big challenge for economists is to discover a way to maintain economic health with a non-growing population, and ultimately a non-growing, or minimally growing economy. The current policy of some European and Asian governments to encourage fertility among their people is wrongheaded and shortsighted.  These countries are already over-populated.  They are sabotaging their chances of moving closer to utopian states.  New economic models are needed soon.  They will probably demand more powerful redistribution mechanisms—“trickle-down” becomes more untenable in a non-growing economy; it is more imperative that the pie be divided more fairly when it is not growing.

 

 

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