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World Population Growth and Economic Growth

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EmbraceLiberty Posted: Thu, Jan 10 2013 10:35 PM

Usually when talking about the 18th century, the two details that are discussed are the population and economic explosions. Both revolutionized the world and blew the minds of malthusians and the like, who didn't think such growth was sustainable. Well, I have heard (to no surprise) that the world population is on its way in decline, as is true for many developed nations. And statistics show that it is true for the case that the more economic development a country has the lower the fertility rate is for the population. Now, this concept had me ponder. It makes absolute sense why people reproduced during the 18th century and so on. It was easier to feed your family, necessities became cheaper, and overall things became more afforable and easier to sustain a family. But today, things have become more expensive and make raising a child a heavy burden on a family. Now, I see how this would be an argument over inflation, but does anyone think that inflation is playing that much of a role in society that it is the reason why people are not reproducing? I understand the detrimental effects of inflation, but I do not think they are the driving factor in this population decline, especially since almost all over the developed world we see this trend. Interestingly enough, in countries that face inflation comparable to that of the US which are developing you do not see this trend, in fact the contrary. I always believe that through the ever increasing standards of living that people would continiously reproduce and human innovation would always meet the needs of the newborn, but now this is happening. This leads me to my ultimate question. Is there some sort of equilibrium point of all this? Is there a population ceiling? And if there is, can there be an economic ceiling? When nations free their economies they experience robust economic growth, but is there an end spot? It would explain why nations that are developed no longer run growth rates on the levels of lesser developed countries like they once did while in development. If we had Ancapistan would we consistently run 10% GDP growth a year or would it decrease until some equilibrium point?

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Wheylous replied on Thu, Jan 10 2013 10:44 PM

It makes absolute sense why people reproduced during the 18th century and so on. It was easier to feed your family, necessities became cheaper, and overall things became more afforable and easier to sustain a family. But today, things have become more expensive and make raising a child a heavy burden on a family.

You think people were able to survive more easily in the 18th century? Really? And it's gotten tougher? We must come from different worlds, then ;)

 

As to countries not being able to sustain growth rates, it's because growth rates are easier to maintain when less developed. If you're a C- student, it's much easier to get "most improved" than if you're an A- student. Smaller changes in absolute terms mean larger changes in relative terms.

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Wheylous, so after say a century of economic growth in Ancapistan it would be similar to economic growth in countries in Europe? That is strange. I would think that a country with strong infastructure should be able to match economic growth with "C-" countries who begin growing. I don't think your analogy really fits this scenario though. For example, grades in college would be an indicator of economic growth. So, A = 10%, B = 5%, C = 2% etc. If you are an A student (getting 10% growth rate per year) why do you stop receiving these grades? Now, Austrians would argue it is because of government intervention that comes after the prosperity capitalism brings is what creates the A student to becoming a C, but then again to my question on what economic growth in Ancapistan would look like. I'm sorry that I missed the picture of what your analogy tried to convey.

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John James, I read the thread but only found this quote relevant:

The law, to my understanding is simply "an approximate physical law as it is generally acknowledged that nothing can grow at a constant rate indefinitely."

Why can this not be the case in a place like Ancapistan where there is no infringements of economic growth?

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Clayton replied on Fri, Jan 11 2013 3:43 AM

Why can this not be the case in a place like Ancapistan

If nothing else, the laws of physics. Energy and matter are not available in unlimited supply. Furthermore, even supposing you found a way to, say, "harness the energy of the Sun" for virtually no cost, you still have the much more serious problem of entropy. You have to be able to exhaust the waste product from your ecosystem or it will grind to a halt, per the second law of thermodynamics. Hence, "unlimited growth" is simply impossible.

Plus, who would want to live on Coruscant?

Clayton -

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I dream about living in Coruscant every other day. So, one day we will hit a point that the economy no longer grows?

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The reason that people stop having children in developed countries isn't because inflation has degraded the standard of living (although it has), it's because developed societies are less agrarian.  In an agrarian lifestyle, each additional kid is capable of "working on the farm" at an age of probably about 5 or so (if not younger) for simple tasks.  Thus each new kid brings new labor into the family economy very quickly.  In a developed society, where less people own farms, and more people live on small lots, or in muli-family housing, and more people work in skilled/industrial/service jobs, children need to be fed, clothed, educated, etc.  They end up becoming a net cost rather than a net gain.   Furthermore, people have goals beyond having children. People would rather "get on with their lives" than continue to raise kids thier entire life. So, combined with modern birth control, people naturally end up tending to have two, one, or none.

The malthusian idea of overpopulation was based on the idea that the lower classes were mindless animals that would continue to have children until they starved.  Luckily people are more intelligent than that, and modern science and the market has made cheap birth control widely available.

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Bogart replied on Fri, Jan 11 2013 3:07 PM

I believe that inflation indirectly incentivizes people to have fewer offspring indirectly.  Inflation is the mechanism where governments fund their welfare states which in my opinion is directly responsible for declining birthrates.  Here are several ways the welfare state reduces birthrates:

1. Government transfers wealth from poor but productive young people to old wealthier people in the form of anti-Social in-Security and its more awful partner: anti-Medicare.  The social consequences of these programs are huge.  These programs divert trillions in scarce capital from those that would use to fund entrepreneurial activities to current spending on older folks.  These programs directly raise the price of labor thus hurting employers and making them more inclined to use automation instead of labor, or worse to forgo business opportunities.  These programs have caused older people to stop saving and thus make them completely dependent on these programs.

And these are direct transfers based upon life expectancy where young men, especially minority men, get to pay into a system where the beneficiaries are old women.

2. Government sponsors education.  This has really warped the behavior of both women and men through propaganda.  And to make matters worse it has convinced people, young men in particular, to go to college thus robbing the work force of productive time, robbing them of getting responsibility, and it has saddled these folks with mountains of debt.

3. Government pays for direct welfare payments.  This is not the worst for society but is the worst for minority communities.  These communities prior to the welfare state had higher marriage rates and lower rates of fatherless children than the white community.  But now it has more than flipped.  And then the structure is so sick that it penalizes families and employment. 

4. Government pays for people not to work.  This is awful as well because younger and younger men are going on the gravy train instead of employing themselves in making society better.

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dude6935 replied on Fri, Jan 11 2013 3:23 PM

I agree with LogicEarth's answer.

Also WRT:

The law, to my understanding is simply "an approximate physical law as it is generally acknowledged that nothing can grow at a constant rate indefinitely."

Nothing can grow at any rate (constant or variable) indefinitely. And an-cap societies will likely experience strong immigration. So I see no reason why an an-cap area can't continually outpace its neighbors in both population and output growth. 

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EmbraceLiberty:
So, one day we will hit a point that the economy no longer grows?

Not necessarily.  Many physicists and cosmologists believe the universe is constantly expanding.  But even if you reject that notion, you'd still have to figure just how long it would take before all the matter and energy in the universe is being used by the society you're talking about.  The universe will probably cease to exist before you even come close to that point.

And just to help give even the slightest appreciation for what I mean by "universe", see here.

 

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z1235 replied on Fri, Jan 11 2013 5:16 PM

EmbraceLiberty:

I dream about living in Coruscant every other day. So, one day we will hit a point that the economy no longer grows?

What does it mean (definition?) that an "economy" "grows", and why is it good that it does so?

 

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z1235,

What I mean by this is that output and production is increasing which in turn raises the standard of living. More production, more goods, lower prices, better standard of living. If the economy does not grow then the pie does not expand which does not benefit the average person.

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John James:

 But even if you reject that notion, you'd still have to figure just how long it would take before all the matter and energy in the universe is being used by the society you're talking about.  The universe will probably cease to exist before you even come close to that point.

 

Now, this is where the question ultimately leads to, but then again, there is plenty of open space, abundance of food, etc. and yet population is on its way to decline. I mean wouldn't we all have predicted that until every habitable area was populated with skyscrapers would population begin to decline, like we are now saying about the economy that until every atom is utilized will the economy seize to grow?  

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LogisticEarth, The flaw I see in your argument is that  the population was agrarian pre-industrial revolution. It became less agrarian and people started migrating to the cities when the population explosion happened. Why were people in the cities all over the developing world having so many children (and continued to have children) until just recently? Yes, children have needs but economic growth should make these needs more affordable and sustain the fertility rate that coutries previously had. 

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Bogart, can I get the soure for number 3?

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Some what unrelated post but I thought I would mention it. Recently I realized that socialism is dependent on population growth as it is a kin to ponzi scheme, in most cases, it requires an increase in "contributions" to sustain the unfunded liabilities of the socialist system. When we have a top heavy socialist system, like we will have in the UK, we will start to see the baby boom generation reach retirement and there will be more people that are going to be retiring, than there will be new people joining the ponzi scheme. This is going to result in an increase in debt and inflation, as that will be the only means the state has to fund the programs.

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you12 replied on Sat, Jan 12 2013 9:55 AM

I think the population explosion can be explained largely by longer lives instead of TFR. TFR is also linked with religious fervor.

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z1235 replied on Sat, Jan 12 2013 12:49 PM

EmbraceLiberty:

z1235,

What I mean by this is that output and production is increasing which in turn raises the standard of living. More production, more goods, lower prices, better standard of living. If the economy does not grow then the pie does not expand which does not benefit the average person.

If voluntary (inter)action, by definition, replaces a state of affairs with one considered to be better (improved), wouldn't a halt in "growth" imply a halt in action (and life) itself? 

 

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z1235, yes or we run out of resources like I previously mentioned. 

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z1235 replied on Sat, Jan 12 2013 1:44 PM

EmbraceLiberty:

z1235, yes or we run out of resources like I previously mentioned. 

What are "resources" and where do they disappear after we use them?

 

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It's very hard to talk about general social trends, because they have so many different components acting on different time frames. These are only a few sparse thoughts on the matter, not necessarily coherent as a whole.

The exponential growth law is a great intellectual achievement, but it has so many counter-intuitive implications that it usually eludes every one. It's not surprising that it's discoverer would be the first to get himself confused about its meaning. Malthus observation on population was precise, and even his idea of trap is very much what happens sometimes, when local regions get crowded beyond their support capacity. 

Crowding offers advantages as it reduces costs of transactions thus allowing better division of labor, and that's why cities emerge.

But given a technological level, there's a limit to the support capacity of cities, imposed by the costs of bringing and storing food from the surrounding areas and dealing with concentrated waste and other problems generated by excessive crowding.

Only a few geographical regions are suited for large-scale crowding given a technological level. These areas once settled rapidly grow and reach their support capacity.

Support capacities tend to rise with overall technological increases. And this growth is also of exponential-like behavior.

Before the industrial era, the rate of growth of support capacities was generally lower than the rate biological rate of growth of people and Malthusian traps were very common. 

But since then the situation seems to have reversed.

"Blood alone moves the wheels of history" - Dwight Schrute
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