December 07, 2015

Market Solutions for Population Problems

By Chelsea German
The Wall Street Journal put out an article with some excellent visual representations of the world’s changing demographics. (Please remember that you can also explore population growth, fertility rates, and the changing age make-up of the population using’s interactive maps and charts).

The WSJ notes, 
“In 1798 Thomas Malthus, a British essayist, argued that humanity would reproduce faster than food production could rise, leading to destitution and starvation. He was wrong. The Western world’s population grew rapidly over the 19th and 20th centuries, with a dip in 1918-19 because of World War I and the Spanish flu pandemic. But rising agricultural productivity proved more than capable of feeding the extra mouths.”
Humanity found ways to produce more food per unit of land through innovations like synthetic fertilizers and increasingly advanced genetic modification techniques. As production increased, prices fellcalorie consumption increased, and undernourishment fell even as the world’s population grew.

Malthus’ mistake was to ignore human beings’ ability to innovate their way out of problems. But, as Julian Simon found in The Ultimate Resource, people are excellent problem-solvers. A challenge (feeding a growing population), led to technological innovation (the Green Revolution and GMOs) and that led to a solution (higher agricultural productivity and falling food prices).

As Human Progress advisory board member Matt Ridley notes in The Rational Optimist and The Evolution of Everything, technological innovation depends on the exchange of ideas. The more people there are (and the freer and more timely their exchange of ideas), the better.

The WSJ article recognizes problems associated with declining working-age populations—especially when it comes to unsustainable social security commitments those countries have made to their elderly. The WSJ also notes that government programs to incentivize having more children do not seem to work very well, and are not a viable solution.

One of the ways in which nations could increase their growth rates is to attract immigrants from other countries where their talents may be wasted. To learn more about the economics of immigration and the contentious issues surrounding the debate, including the effects of immigration on the native-born population’s wages and culture, consider registering for Cato’s forum in January on the subject.