CHAPTER 2 POPULATION GROWTH IS NOT BAD FOR HUMANITY Once again there is widespread hysteria about the world having too many people, and too many babies being born. But it is now well-established scientifically that population growth is not the bogey that conventional opinion and the press believe it to be. In the 1980's a revolution occurred in scientific views toward the role of population growth in economic development. The economics profession has turned almost completely away from the previous judgment that population growth is a crucial nega- tive factor in economic development. There is still controversy about whether population growth is even a minor negative factor in some cases, or whether it is beneficial in the long run. But there is no longer any scientific support for the earlier view which was the basis for U.S. government policy and then the policies of other countries. Erroneous belief about population growth has cost dearly. In poor countries, it has directed attention away from the factor that we now know is central in a country's economic development, its economic and political system. And in rich countries, misdi- rected attention to population growth and its supposed conse- quence of natural-resource shortages has caused waste through such programs as now-abandoned synthetic fuel programs, and the useless development of airplanes that would be appropriate for an age of greater scarcity. Anti-natalist U.S. foreign policy is dangerous politically, too, because it risks being labeled racist, as happened in India when Indira Ghandi was overthrown because of her sterilization program. Furthermore, misplaced belief that population growth slows economic development provides support for inhumane programs of coercion and the denial of personal liberty in one of the most sacred and valued choices a family can make -- the number of children that it wishes to bear and raise -- in such countries as China, Indonesia, and Vietnam. THE REVOLUTION IN POPULATION ECONOMICS For the view that population growth is a crucial negative factor in economic development, the "official" turning point came in 1986 with the publication of a book by the National Research Council and the National Academy of Sciences entitled Population Growth and Economic Development. This report almost completely reversed the previous report on the same subject from the same agency. The 1971 report said that "[A] reduction in present rates of population growth is highly desirable from many points of view, because high fertility and rapid population growth have seriously adverse social and economic effects (p. 1) ... Rapid population growth slows down the growth of per capital incomes in less developed countries (p. 2)." It then proceeded to list supposed ill effects upon savings, investment, food supplies, unemploy- ment, modernization, technological change, industrialization, social effects, education, health and child development, and the environment. Compare the 1986 NRC-NAS report. On the subject of the greatest worry, raw materials, it concluded: "The scarcity of exhaustible resources is at most a minor constraint on economic growth...the concern about the impact of rapid population growth on resource exhaustion has often been exaggerated." And it was calm about most of the other effects that caused alarm in the 1971 report. The general conclusion goes only as far as "On balance, we reach the qualitative conclusion that slower popula- tion growth would be beneficial to economic development for most developing countries..." That is, 1986 NRC-NAS found forces operating in both positive and negative directions, its conclu- sion does not apply to all countries, and the size of the effect is not known even where it is believed to be present. This is a major break from the past monolithic characterization of addi- tional people as a major drag upon development across the board. And since then the mainstream economic reviews of the subject have moved even further from the old warnings. In fact, for almost as long as the Malthusian idea has been the core of U.S. theory about foreign aid, starting in the 1960s, there has been a solid body of statistical evidence that contra- dicts the conventional wisdom about the effects of population growth -- data which falsify the ideas which support U.S. popula- tion policy toward less-developed countries. By now there have accumulated perhaps two dozen competent statistical studies covering the few countries for which data are available over the past century, and also of the many countries for which data are available since World War II, and almost all are in full agree- ment. The basic method is to gather data on each country's rate of demographic 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 demographic growth rates have economic growth rates lower than average, and countries with low demographic growth have economic growth faster than average. The clear-cut consensus of this body of work is that faster demographic growth is not associated with slower economic growth. On average, countries with whose populations grew faster did not grow slower economically. That is, there is no basis in the statistics for the belief that faster demographic growth causes slower economic growth. Additional strong evidence comes from pairs of countries that have the same culture and history, and had much the same standard of living when they split apart after World War II -- East and West Germany, North and South Korea, and China and Taiwan (see Table 2-1). In each case the centrally-planned communist country began with less population "pressure", as measured by density per square kilometer, than did the market- directed non-communist country. And the communist and non-commu- nist countries in each pair also started with much the same birth rates and population growth rates. Data for other interesting countries are included, also. Table 2-1 Bauer The market-directed economies have performed vastly better economically than the centrally-planned countries. Income per person is higher. Wages have grown faster. Key indicators of infrastructure such as telephones per person show a much higher level of development. And indicators of individual wealth and personal consumption, such as autos and newsprint, show enormous advantages for the market-directed enterprise economies compared to the centrally-planned, centrally-controlled economies. Fur- thermore, birth rates fell at least as early and as fast in the market-directed countries as in the centrally-planned countries, for better or for worse. These comparative data provide solid evidence that an enter- prise system works better than does a planned economy. For our purposes here, this powerful explanation of economic development cuts the ground from under population growth as a likely explana- tion. And under conditions of freedom, demographic growth poses less of a problem in the short run, and brings many more benefits in the long run, than under conditions of government planning of the economy. HOW DOES MALTHUSIANISM GO WRONG? How can the persuasive common sense embodied in the Malthusian theory be wrong? To be sure, in the short run an additional person -- baby or immigrant -- inevitably means a lower standard of living for everyone; every parent knows that. More consumers mean less of the fixed available stock of goods to be divided among more people. And a larger number of workers laboring with the same fixed current stock of capital implies that there will be less output per worker. The latter effect, known as "the law of diminishing returns," is the essence of Malthus's theory as he first set it out. But if the resources with which people work are not fixed over the period being analyzed, then the Malthusian logic of diminishing returns does not apply. And the plain fact is that, given some time to adjust to shortages, the resource base does not remain fixed. People create more resources of all kinds. When horse-powered transportation became a major problem, the railroad and the motor car were developed. When schoolhouses become crowded, we build new schools -- more modern than the old ones. Extraordinary as it seems, natural-resource scarcity -- that is, the cost of raw materials, which is the relevant economic measure of scarcity -- has tended to decrease rather than to increase over the entire sweep of history, as we saw in Figures 1-3 and 1-4. This trend is at least as reliable as any other trend observed in human history. And demographic growth has speeded the process rather than hindered it. The most extraordinary aspect of the resource-creation process is that temporary or expected shortages -- whether due to population growth, income growth, or other causes -- tend to leave us even better off than if the shortages had never arisen, because of the continuing benefit of the intellectual and physi- cal capital created to meet the shortage. It has been true in the past, and therefore is likely to be true in the future, that we not only need to solve our problems, but we need the problems that accompany the growth of population and income. The same process occurs with the supplies of non-material resources. The data show that societies with relatively high proportions of youths somehow find the resources to educate their children roughly as fully as do countries at similar income levels with lower birth rates. Outstanding examples of high rates of education in the face of relatively large numbers of children include the Philippines, Costa Rica, Peru, Jordan, and Thailand. Nor does it make sense to reduce population growth because of the supposedly-increasing pollution of our air and water; we saw that our air and water are becoming cleaner rather than dirtier (Figure 1-8). Chapter 1 showed the extraordinary decrease in the world's death rate in terms of increases in life expectancy. Let's now put it differently. In the early 19th century the planet Earth could sustain only one billion people. Ten thousand years ago, only four million could keep themselves alive. Now, five billion people are living longer and more healthily than ever before. This increase in the world's population represents our triumph over death. I would expect lovers of humanity to jump with joy at this triumph of human mind and organization over the raw forces of nature. But many people lament that there are so many humans alive to enjoy the gift of life. They even approve the brutal coercive population-control programs in China. The most important benefit of population size and growth is the increase it brings to the stock of useful knowledge. Minds matter economically as much as, or more than, hands or mouths. The progress of civilization is limited largely by the availabil- ity of trained workers. The main fuel to speed the world's progress is the stock of human knowledge. And the ultimate resource is skilled, spirited, hopeful people, exerting their wills and imaginations to provide for themselves and their fami- lies, thereby inevitably contributing to the benefit of everyone. Skilled and creative people require, however, an appropriate economic and political framework that provides incentives for working hard and taking risks, enabling their talents to flower and come to fruition. The key elements of such a framework are respect for property, fair and sensible rules of the market that are enforced equally for all, and the personal liberty that accompanies economic freedom. In the absence of such a frame- work, the short-run costs of population growth are greater, and the long-run benefits fewer, than in free societies. WHAT SHOULD OUR OUTLOOK BE? The doomsayers of the population control movement offer a vision of limits, decreasing resources, a zero-sum game, conser- vation, deterioration, fear, and conflict - concluding with calls for more governmental intervention in markets and family affairs. Should that be our vision? Or should our vision be that of those who look optimistically upon people as a resource rather than as a burden -- a vision of receding limits, increasing resources and possibilities, a game in which everyone can win, creation, the excitement of progress, and the belief that persons and firms, acting spontaneously in the search of their individual welfare, and regulated only by rules of a fair game, will produce enough to maintain and increase economic progress and promote liberty? And what should be our mood? The population restrictionists say we should be sad and worry. I and many others believe that the trends suggest joy and celebration at our newfound capacity to support human life -- healthily, and with fast-increasing access to education and opportunity all over the world. I believe that the population restrictionists' hand-wringing view leads to despair and resignation. My "side's" view leads to hope and progress, in the reasonable expectation that the energetic efforts of humankind will prevail in the future - as they have in the past - to increase worldwide our numbers, our health, our wealth, and our opportunities.