May 25, 2010

Malthus, an 18th Century economist, predicted that, with increasing prosperity, population would always increase to the point where some were starving. Ever since then, economists have kept saying, “See, Malthus was wrong!” Still, I think he had a point. There have always been people starving at one place in the world or another.
Population has kept growing. At 7 billion, the choicest places to live are very crowded. To feed all these people, we have farming on marginal land where crops are uncertain. In such places people do starve in the bad years. Water supplies are now marginal or insufficient in many lands. Technology may provide us enough water to produce enough food to feed 7 billion people. Certainly at some population level we would come to the limit of the resources of our planet. Will it be 10 billion or 15 billion or 20 billion? We are already struggling for sufficient water as it is.
Population growth is slowing now, and there are estimates that world population may level off in this century at something like 10 billion. If so, further technology might enable all of us to survive.
However, it is the poor who provide the population growth. Only if they can somehow rise out of poverty will our population stabilize. Unfortunately, the worst poverty is in lands ruled by bandits. Regime change and nation building is not an option. We have shown the futility of that in Viet Nam, Afghanistan and Iraq. At best, it will take many years before the rule of law prevails around the world. That is a minimum requirement for the elimination of poverty.
The Welfare State is no solution. Welfare encourages larger families. Perhaps if we abandon the welfare state in favor of the free market, we can once again prove that Malthus was wrong, not because we can feed an unlimited population, but because we will limit population to suit the capacity of our shared planet.
The USA has 5% of the world’s population and consumes over 20% of what the world produces. Many people dream of the whole world becoming as wealthy as the USA. To achieve that, the world would have to produce 4 times as much wealth as it now does. The problem is that this would proportionately increase demand for raw materials and energy.
Supplies of raw materials would become depleted and more difficult to extract. The increasing cost of extracting raw materials would place a limit on growth. At some point recycling will become competitive with extraction but would add to the cost of producing everything. That means that we, all of us, would sensibly settle for something less than the present American Standard of living.
Eventually we will have less extreme poverty but there will always be inequality, because we are born with unequal endowments into unequal circumstances. Equal opportunity does not produce equal results.
Eventually, that is, assuming that someday people everywhere can free themselves from despotic, repressive, parasitic governments, which exclude the possibility of real economic progress..


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