IS POPULATION GROWTH A DRAG ON ECONOMIC DEVELOPMENT? Julian L. Simon1 This is the economic history of humanity in a nutshell: From 2 million or 200,000 or 20,000 or 2,000 years ago until the 18th Century there was slow growth in population, almost no increase in health or decrease in mortality, slow growth in the availability of natural resources (but not increased scarcity), increase in wealth for a few, and mixed effects on the environment. Since then there has been rapid growth in population due to spectacular decreases in the death rate, rapid growth in resources, widespread increases in wealth, and an unprecedently clean and beautiful living environment in many parts of the world along with a degraded environment in the poor and socialist parts of the world. That is, more people and more wealth has correlated with more (rather than less) resources and a cleaner environment - just the opposite of what Malthusian theory leads one to believe. For many years until recently, it was thought by "development economists" that population growth is a drag upon economic development in poor countries. And even after a considerable shift in professional opinion in the 1980s, population growth is commonly believed to hinder development. This belief was the underlying assumption at the United Nations' World Population Conference in Cairo in 1994 just as it was at previous World Population Conferences and as it probably will be again at the World Population Conference in 2004, irrespective of respectable scientific opinion. In accord with the earlier professional opinion, since the early 1960's official institutions such as the U.S. State Depart- ment's Agency for International Development (AID), the World Bank, and the United Nations Fund for Population Activities (UNFPA), have acted on the assumption that population growth is the key determinant of economic development. This belief has misdirected attention away from the central factor in a country's economic development: its economic and political system. This misplaced attention has resulted in unsound economic advice being given to developing nations. It also has caused (or allowed) the misdiagnosis of such world development problems as supplies of natural resources, starving children, illiteracy, pollution, and slow growth. From the 1970s through the date of this publication, the U.S. government directly and indirectly has been spending hundreds of milions of dollars annually in foreign assistance for family planning and other programs aimed at slowing population growth in the poorer countries. Not only could these funds have been put to other purposes, but in some cases, the population control programs funded by U.S. taxpayers have involved coercive policies designed to reduce birth rates in LDCs. One reason that population growth has been viewed as a villain is that poor countries tend to have a high birth rate. And it seems "common sense" that if fewer babies were born, there would be more of the supposedly fixed quantities of food and housing to go around. Furthermore, in earlier decades most economists did not have another persuasive explanation of growth and wealth. Population growth became the villain by default. The belief that population growth slows economic development is not a wrong but harmless idea. Rather, it has been the basis for inhumane programs of coercion and the denial of personal liberty in one of the most valued choices a family can make -- the number of children that it wishes to bear and raise. Also, harm has been done to the U. S. as donor of foreign aid, over and beyond the funds themselves, by way of money laundered through international organizations that comes back to finance domestic population propaganda organizations, and so on. This topic has been addressed in detail elsewhere (Simon, 1981, Chapters 21, 22) This paper makes two points. First, there is persuasive explanation for why some countries grow faster than others, and the explanation has nothing to do with population growth. This factor leaves little room for population growth to be the cause of slow growth. Second, there is persuasive direct statistical evidence that population growth is not associated negatively with economic development in the short or intermediate run, and may well be a positive influence in the long run. A corollary is that a more dense population does not hamper population growth. In the very short run, additional people are an added burden. But under conditions of freedom, population growth poses less of a problem in the short run, and brings many more benefits in the long run, than under conditions of government control. THE ROLE OF THE SOCIO-ECONOMIC SYSTEM IN ECONOMIC PROGRESS If there is another convincing explanation for the bulk of differences among countries in economic growth, then the likelihood that population growth is an important drag on development is logically diminished. The most powerful evidence explaining the rate of economic progress is found in the aggregate statistics which relate economic-political systems to their rates of economic growth. Raymond Gastil (annual) categorizes the systems. He grades each nation on three measures of liberty: political, civil, and economic. Economic liberty comprises two sub-measures -- the extent of government intervention in markets, and the level of personal economic liberty. Gerald Scully (1988) related Gastil's data to economic results. Allowing for other relevant factors, he finds a strong relationship between each of the three liberty variables and the rate of economic growth during 1960 to 1980 among 115 nations. And when he folds all three measures of liberty into a single variable, he finds that nations characterized as "politically open, individual rights, and free market" had an average growth rate per capita of 2.73 percent, whereas those characterized as "politically closed, state rights, and command [economy]" had an average growth rate of 0.91 percent. This is a huge difference in performance. Gary Becker (1989) deepens confidence in Scully's result with a study along the same lines which finds that "political democracy" is positively related to economic growth. And using a somewhat different methods, Keith Marsden arrived at much the same now-solid conclusion. The results in China's agricultural sector before and after the 1979-1981 period are an important illustration of the decisive effect of the political and economic structure upon economic development. Under a system of collective production where there was little incentive for farmers to work hard and take risks, but great incentive for them to loaf on the job, food production stagnated in the years before 1979. The combination of bad weather and The Great Leap Forward during the years 1959 to 1961 caused production to fall so drastically that 30 million people died of starvation. This was certainly the worst food- production performance of any country in modern times, and perhaps the worst ever. Then the Chinese government undertook the largest and fastest social movement of all time. Within a period of three years, the 700 million people in the agricultural sector shifted from collective enterprise to individual enterprise, and agriculture became the largest "private" sector in the world, by far. And since then Chinese agricultural production has skyrocketed. Per capita food production showed almost no increase from 1950 to 1978. But starting with the reform in 1979, per capita production almost doubled by 1985, a truly incredible increase, with continued growth since then and no limit in sight. The visitor to China is confronted with bounteous appetizing food on every streetcorner, it seems, in the sharpest contrast to the situation in the former Soviet Union. One may wonder whether the Chinese agricultural turnaround was "just" an isolated event, and could have other causes than the shift in social system. We may therefore consult a wider range of experience, though using prose accounts rather than statistical analysis. Sven Rydenfelt analyzed the experience of fifteen socialist countries on four continents and finds a pervasive pattern of economic failure. However, each of these cases also can be "explained" on the basis of its individual culture rather than its socialist system. Most vivid is the eyeball evidence. One need only travel by bus across the Karelian peninsula which was wholly within Finland until World War II. The part that is still within Finland has incomparably better roads and more modern shops and facilities than the part that is now within the Soviet Union. Or drive from West Berlin to East Berlin. Or take the train from the mainland portion of Hong Kong across the border to China. The differences in favor of a free-enterprise private-property society are literally unmistakable for all who are not entirely masked by ideological blinders. Evidence that is both dramatic and powerful statistically arises from the unique experiment that the world's political system created following World War II. Three nations - Germany, Korea, and China - were split into socialist and non-socialist parts, producing three pairs of countries whose members began with the same culture and language and history. The members of the pairs also had much the same standard of living when they split apart, and the same birth rates. Their subsequent histories enable us to determine the effect of economic system, because it is the only relevant variable that differs between the elements of each pair. These comparisons constitute a useful combination of scientific rigor with ease of communication and understanding. (Similar comparisons can be made with such neighboring countries, one socialist and one capitalist, such as Austria with Czechoslovakia.) Other than the case of Korea, which will provide a continuing laboratory example, the results are now in and are known to all. (For a full display of the data, please see the predecessor to this essay, Simon, 1990). Standard measures of development that show the huge differences in results with different socio-economic systems include: Output Per Person Whether per person is measured by either the exchange-rate method or the purchasing-power-parity method, the result of the comparison is the same. The pairs began with roughly-equal incomes after World War II. In each case, by the 1990s the communist country had a much lower income. Taiwan's income is three or four times as high as China's, S. Korea's about twice as N. Korea's, and W. Germany's was vastly higher than E. Germany's. Differences in product quality are not reflected in the standard statisticaly comparisons, but are important. In East Germany the four-cylinder primitive Trabant was almost the only car one can buy. A person had to work 3,807 hours to earn enough to purchase a Trabant, whereas in West Germany 607 hours work paid for a much better car. And people had to wait in line for ten years to get a car in East Germany. A refrigerator required 293 hours of work in East Germany, but only 40 hours in West Germany; a suit required 67 hours of work, versus 13 hours in West Germany. Only 36 percent of housing facilities in East Germany hadcentral heating, 60 percent an indoor toilet, and 68 percent a bath or shower. In West Germany the corresponding percentages were 70 percent, 95 percent, and 92 percent. Life and Health Goods only have value if one is alive to enjoy them. Concerning the number of years that a newly-born person could expect to live, the free-enterprise countries did better in each pair, though each pair started out with much the same life- expectancy after World War II. The same is true of the results for infant mortality. These results are particularly interesting because public health had been one of the more-successful activities of socialized countries. And indeed, for a while the differences between the members of pairs were small. But throughout Eastern Europe, life expectancy actually fell in the last decades of the socialist experiment, and infant mortality has increased. This reversal is not yet well-understood, but it certainly stemmed from a congeries of characteristics of a publicly-run health system, and from the general poverty of socialized economies. Proportion of the Labor Force in Agriculutre The best long-run indicator of the extent of development of a society is the proportion of the labor force that is employed in agriculture. The fewer the people that are needed to feed the population, the larger the number of people that can be employed in providing other goods. The countries with freer markets -- including freer labor markets and freer agriculture -- needed fewer people to feed the rest. Economic Infra-structure The number of telephones is a good measure of the development of a country's infra-structure, and more particularly its crucial communications infra-structure. The communist countries lagged behind the development of the market-oriented countries. These data for the paired-country experiments in political and economic systems provide evidence that is well-grounded scientifically as well as dramatic and easily-understood. They prove that the socio-economic system is the main determinant of economic growth. There is little other variation in developmental rates that might be explained by population growth. POPULATION GROWTH AND DENSITY AS INFLUENCES ON DEVELOPMENT The paired-country data corroborate a larger body of other scientific studies which show that population growth and density do not hamper development. The first line in Table 1 shows that in each split-country case the centrally-planned communist country began with less population "pressure," as measured by density per square kilometer, compared to the paired market- directed non-communist country. And the communist and non- communist countries in each pair also started with much the same birth rates and population growth rates. There is certainly no evidence here which suggests that population growth or density influences the rate of economic development. Contrary to the idea that population growth necessarily inhibits economic growth, the free market countries, each with faster expansion in population, experienced more rapid development -- on a per capita basis -- than their neighboring socialist nations. If anything, the data show that more people have a positive effect on development. The most powerful evidence on the relationship between the rate of population growth and the rate of economic growth are the global correlations. There now exist perhaps a score of competent statistical studies, beginning in 1967 with an analysis by Simon Kuznets covering the few countries for which data are available over the past century, and also analyses by Kuznets (1967) and Richard Easterlin (1967) of the data covering many countries since World War II. The basic method is to gather data on each country's rate of population growth and its rate of economic growth, and then to examine whether -- looking at all the data in the sample together -- the countries with high population growth rates have economic growth rates lower than average, and countries with low population growth rates have economic growth rates higher than average. Various writers have used a variety of samples of countries, and they have employed an impressive battery of ingenious statistical techniques to allow for other factors that might also be affecting the outcome. The clear-cut consensus of this body of research is that faster population growth is not associated with slower economic growth. Of course one can adduce cases of countries that seemingly are exceptions to the pattern. It is the genius of statistical inference, however, to enable us to draw valid generalizations from samples that contain such wide variations in behavior. The exceptions can be useful in alerting us to possible avenues for further analysis, but as long as they are only exceptions, they do not prove that the generalization is not meaningful or useful. It has been suggested (e.g. by Roger Conner, 1984) that the studies showing the absence of a relationship between the population rate and the economic growth rate also demonstrate that additional people do not imply a higher standard of living in the long run. That is, because these studies do not show a positive correlation, one is said to make claims beyond the evidence if one says that over the very long sweep of human history a larger population in the world (or perhaps, in what is the developed part of the world at any moment) has meant faster rates of increase of technology and the standard of living. It is indeed the case that the existing body of empirical studies does not prove that fast population growth in the more- developed world as a whole increases per person income. But this is not inconsistent with the proposition that more people do raise the standard of living in the long run. Recall that the studies mentioned above do not refer to the very long run, but rather usually cover only a quarter of a century, or a century at most. The main negative effects of population growth occur during perhaps the first quarter or half of a century so that, if these effects are important, the empirical studies referred to should reveal them. These shorter-run effects upon the standard of living include the public costs of raising children -- schools and hospitals are the main examples -- and the costs of providing additional production capital for the additional persons in the work force. The absence of an observed negative effect upon economic growth in the statistical measures therefore is enough to imply that in the very long run more people have a positive net effect. This is because the most important positive effects of additional people -- improvement of productivity through both the contribution of new ideas, and also the learning-by-doing consequent upon increased production volume -- happen in the long run, and are cumulative. To put it differently, the statistical measurements of the relationship of population growth to economic growth are biased in favor of showing the shorter-run effects, which tend to be negative, and not showing the longer-run effects, which tend to be positive. If such negative effects do not appear, one may assume that an unbiased measure of the total effect would reveal a positive effect of population growth upon economic growth. There is still another reason why the studies mentioned above do not imply an absence of positive effect in the long run: They focus on the process of population growth. If we look instead at the attained level of population -- that is, the population density as measured by the number of persons per square mile, say -- we see a somewhat different result. Studies of MDC's are lacking. But Everett Hagen (l975) and Charles Kindleberger (l965) show visually, and Simon and Roy Gobin (l979) show in multivariate regressions, that in LDC's higher population density is associated with higher rates of economic growth; this effect may be strongest at low densities, but there is no evidence that the effect reverses at high densities. Again, the statistical evidence directly contradicts the common-sense conventional wisdom. That is, if you make a chart with population density on the horizontal axis and either the income level or the rate of change of income on the vertical axis, you will see that higher density is associated with better rather than poorer economic results. The data showing a positive effect of density upon economic growth constitute indirect proof of a positive long-run effect of population growth upon economic growth, because density changes occur very slowly, and therefore the data pick up the very-long- run effects as well as the short run effects.3 Hong Kong is a vivid example of this phenomenon. In the 1940's and 1950's, it seemed impossible for Hong Kong to surmount its problems -- huge masses of impoverished people without jobs, total lack of exploitable natural resources, more refugees pouring across the border each day. Today, Hong Kong enjoys high living standards, low unemployment, an astounding collection of modern high-rise apartments and office buildings, and one of the world's most modern transportation systems. Hong Kong starkly demonstrates that a very dense concentration of human beings does not prevent comfortable existence and exciting economic expansion, as long as the economic system gives individuals the freedom to exercise their talents and to take advantage of opportunities. And the experience of Singapore demonstrates that Hong Kong is not unique. Check for yourself: Fly over Hong Kong -- just a few decades ago a place seemingly without prospects because of insoluble resource problems -- and you will marvel at the skyline of buildings. Take a ride on its excellent smooth-flowing highways for an hour or two, and you will realize that a very dense concentration of human beings does not prevent comfortable existence and a rapid rate of economic growth.2 At this point the question frequently arises: If more people cause there to be more ideas and knowledge, and hence higher productivity and income, why are not India and China the richest nations in the world? Let us put aside the matter that size in terms of population within national boundaries was not very meaningful in earlier centuries when national integration was much looser than it is now. There remains the question, however, why so many human beings in those countries produced so little change in the last few hundred years. Yes, low education of most people in China and India prevents them from producing knowledge and change (though we should note the very large, in absolute terms, contemporary scientific establishments in those two countries.) But though education may account for much of the present situation, it does not account nearly as well for the differences between the West and the East over the five centuries or so up to, say, l850. William McNeill (l963), Eric Jones (1981) and others have suggested that over several centuries the relative instability of social and economic life in Europe, compared to China and India, helps account for the emergence of modern growth in the West rather than in the East. Instability implies economic disequilibria, which (as Theodore Schultz [1975] reminds us) imply exploitable opportunities which then lead to augmented effort. (Such disequilibria also cause the production of new knowledge, it would seem.) The hypothesis that the combination of a person's wealth and opportunities affect the person's exertion of effort may go far in explaining the phenomenon at hand. Ceteris paribus, the less wealth a person has, the greater the person's drive to take advantage of economic opportunities. The village millions in India and China certainly have had plenty of poverty to stimulate them. But they have lacked opportunities because of the static and immobile nature of their village life. In contrast, villagers in Western Europe apparently had more mobility, less stability, and more exposure to cross-currents of all kinds. Just why Europe should have been so much more open than India and China is a question that historians answer with conjectures about religion, smallness of countries with consequent competition and instability, and a variety of other special conditions. This matter need not be pursued here. But we should at least mention Lal's 1988 book on India's economic development over thousands of years, which suggests that it was only the rapid population growth starting around 1921 which cracked the "cake of custom" and the Hindu caste system, and caused the mobility which allowed India to begin modern development. Most (if not all) historians of the period (e.g. Nef, 1958/ 1963; Gimpel, 1976) agree that the period of rapid population growth from before AD 1000 to the beginning of the middle of the 1300s was a period of extraordinary intellectual fecundity. It was also a period of great dynamism generally, as seen in the extraordinary cathedral building boom. But during the period of depopulation due to the plague (starting with the Black Death cataclysm) and perhaps to climatic changes from the middle 1300s (though the change apparently began earlier at the time of major famines around 1315-17, and perhaps even earlier, when there also was a slowing or cessation of population growth due to other factors) until perhaps the 1500s, historians agree that intellectual and social vitality waned. Henri Pirenne's magisterial analysis (1925/1969) of this period depends heavily upon population growth and size. Larger absolute numbers were the basis for increased trade and consequent growth in cities, which in turn strongly influenced the creation of a more articulated exchange economy in place of the subsistence economy of the manor. And according to Pirenne, growth in population also loosened the bonds of the serf in the city and thereby contributed to an increase in human liberty (though the causes of the end of serfdom are a subject of much controversy). A corollary, of course, is that once the people in the East lose the shackles of static village life and get some education, their poverty (absolute and relative) will drive them to an extraordinary explosion of creative effort. The happenings in Taiwan and Korea in recent decades suggest that this is already beginning to occur. This explanation would seem more systematic, and more consistent with the large body of economic thought, than are explanations in terms of Confucianism or of particular cultures, just as the Protestant-ethic explanation for the rise of the West (discussion of which goes back at least to David Hume) now seems unpersuasive in the face of religious counter-examples (e.g. the Catholic Ibo in Nigeria) and shifts in behavior of Protestant nations. Though the statistical studies together with the historical analogies would seem to constitute persuasive evidence of the positive long-run effect of additional people, experience shows that it is not convincing. Perhaps a few thought experiments in the form of hypothetical comparisons will add conviction. Therefore, please ask yourself: i) Would the world be in better or worse shape today if all the people who have ever lived in the area now called the Netherlands (or India, or China, or Portugal, or wherever) had never lived at all? ii) If you were colonizing another planet such as the moon or Saturn, would you prefer that ten, or a hundred, or a thousand, or a million, or ten million persons were also colonizing along with you? Under which condition would exploration and mapping of the resources of the moon take place more rapidly? Under which condition would the moon be more rapidly rendered habitable so that one could travel safely and find accommodations and a fast-food outlet? iii) If you were Robinson Crusoe, would you have preferred that the island were not devoid of other humans, but rather contained some or many others? Under which conditions do you think that you would be in less fear of your life, and feel less need to erect fortifications and stand watch at night? Under which conditions would there be a greater pool of useful skills, and of the manpower to build a ship and leave the island? Would the "congestion" of more people outweigh the isolation of none? iv) Were the Pilgrims better or worse off for the the presence of Native Americans in the area when they arrived? CONCLUSION For 25 years our institutions have mis-analyzed such world development problems as starving children, illiteracy, pollution, supplies of natural resources and slow growth. The World Bank, the State Department's Aid to International Development (AID), The United Nations Fund for Population Activities (UNFPA) and the environmental organizations have asserted that the cause is population growth -- the population "explosion" or "bomb" or "plague." This error has cost dearly. It has directed our attention away from the factor that we now know is central in a country's economic development, its economic and political system. It suggests that attention be paid to population growth rather than to fighting tyranny and working for economic freedom. This error also has led to Westerners condoning and abetting inhumane programs of coercion of couples to prevent them having children in China and elsewhere. Perhaps the events in Eastern Europe in 1989 and 1990 will open minds to the irrelevance of population growth for intermediate-run economic development, and to the all-importance of the social and economic system. page 1/article0 catonew/July 3, 1995 REFERENCES Bauer, P.T., Reality and Rhetoric, (Studies in the Economics of Development) (Cambridge: Harvard University Press, 1984). Becker, Gary, "An Environment for Economic Growth", The Wall Street Journal, Jan. 19, 1989, p. A8 Easterlin Conner, Roger, "How Immigrants Affect Americans' Living Standard," A Debate Between Julian Simon and Roger Conner, The Heritage Foundation, May 30, 1984. Easterlin, Richard A. 1967. Effects of population growth in the economic development of of developing countries. The Annals of the American Academy of Political and Social Science 369:98- 108. Gastil, Raymond D., Freedom in the World (Westport, Conn: Greenwood, yearly ), cited by Scully Hagen Hagen, Everett E. 1975. The economics of development. Home- wood, Ill.: Irwin. Jones, Eric L., The European Miracle (New York: Cambridge UP, 1981). Kasun, Jacqueline R., The War Against Population: The Economics and Ideology of World Population Control (Ottawa, Ill: Jameson Books, 1986). Kelley, Allen, and Robert Schmidt, "Population and Income Change", World Bank Discussion Paper 249, 1994. Kindleberger, Charles P. Economic Development. 2nd Edition (New York: McGraw-Hill, 1965) Krueger, Anne O., "Aid in the Development Process," The World Bank Research Observer, l, January, 1986. Kuznets, Simon, "Population and economic growth". Proceedings of the American Philosophical Society 11:, 1967. 170-93. Lal, Deepak, The Hindue Equilibrium: Cultural Stability and Economic Stagnation: India 1500 BC-1980 AD (New York: Oxford: Clarendon Press, 1988). Keith Marsden, "Why Asia Boomed and Africa Busted," WSJ, June 3, 1985, op ed page. McNeill, W. H., The Rise of the West - A History of the Human Community (Chicago: The University of Chicago Press, 1963). Nef, John V., Western Civilization Since the Renaissance (New York: Harper and Row, 1950/1963). Pirenne, Henri, Medieval Cities (Princeton: Princeton University Press, 1925/1969). Repetto, Robert, "Why Doesn't Julian Simon Believe His Own Research?", Letter to the Editor, The Washington Post, Nov. 2, 1985, p. A 21. Schultz, Theodore W., "The Value of the Ability to Deal with Disequilibria'," in Journal of Economic Literature, 1975, pp. 827-46. Schultz, Theodore W., Investing in People (Chicago: U. of Chicago Press, 1981) Scully, Gerald W., "Liberty and Economic Progress", Journal of Economic Growth, Vol 3, Nov., 1988, pp. 3-10; Scully, Gerald W., "The Institutional Framework and Economic Development", Journal of Political Economy, Vol 96, June, 1988, pp. 652-662.] Rydenfelt, Sven, A Pattern for Failure (New York: Harcourt Brace Jovanovich, 1983) Simon, Julian L., "The Concept of Causality in Economics," Kyklos, Vol. 23, Fasc. 2, 1970, pp. 226-254. Simon, Julian L., The Ultimate Resource (Princeton; PUP, 1981, second edition forthcoming) Simon, Julian L., Population and Development Review, June, 1989 Simon, Julian L., , and Roy Gobin. "The relationship between population and economic growth in LDC's. In Julian L. Simon and Julie deVanzo, eds., Research in Population Economics. Vol. 2. (Greenwich, Conn.: JAI Press, 1979) page 2/article0 catonew/July 3, 1995 FOOTNOTES 1In this paper I draw freely upon a variety of Simon's other writings that have touched upon the subjects at hand, especially "Why Do We Still Think Babies Create Poverty", Washington Post, October 12, 1985; and "The War on People", Challenge, March- April, 1985, pp. 50-53. I appreciate comments by Jim Dorn, David Boaz and Theodore W. Schultz. Stephen Moore helped prepare the tabular material. 2Hong Kong is a special thrill for me because I first saw it in 1955 when I went ashore from a U.S. Navy destroyer. At the time I felt great pity for the thousands of people who slept every night on the sidewalks or on small boats. It then seemed clear to me, as it must have to almost every observer, that it would be impossible for Hong Kong to surmount its problems -- huge masses of impoverished people without jobs, total lack of exploitable natural resources, more refugees pouring across the border each day. And it is this sort of picture that has convinced many persons that a place is "overpopulated" and should cut its birth rate (e.g. Ehrlich at the beginning of The Population Bomb). But upon returning in 1983, I saw bustling crowds of healthy, vital people full of hope and energy. No cause for pity now. 3It may at first seem preposterous that greater population density might lead to better economic results. This is the equivalent of saying that if all Americans moved east of the Mississippi, we might not be the poorer for it. Upon reflection, this proposition is not as unlikely as it sounds. The main loss involved in such a move would be huge amounts of farmland, and though the United States is a massive producer and exporter of farm goods, agriculture is not crucial to the economy. Less than 3% of U.S. income comes from agriculture, and less than 3% of the U. S. working population is engaged in that industry. The capitalized value of all U.S. farm land is just a bit more than a tenth of just one year's national income, so even if the U.S. were to lose all of it, the loss would equal only about one year's expenditures upon liquor, cigarettes, and the like. On the other hand, such a change would bring about major benefits in shortening transportation and communication distances, a factor which has been important in Japan's ability to closely coordinate its industrial operations in such a fashion as to reduce costs of inventory and transportation. Additionally, greater population concentration forces social changes in the direction of a greater degree of organization, changes which may be costly in the short run but in the long run increase a society's ability to reach its economic and social objectives. If we were still living at the population density of, say, ten thousand years ago, we would have none of the vital complex social and economic apparatuses that are the backbone of our society. page 3/article0 catonew/July 3, 1995 Wall Street Journal, Sept 4, 1987, p. 1, re the two Germanies On mark exchange rate: Wash Post, Nov 15, 89 p. A26 page 4/article0 catonew/July 3, 1995