Big Australia myths

Oliver Hartwich, from the oddly named Centre for Independent Studies, has penned an enthusistic treatise in support of a “Big Australia”.  More on Hartwich’s article later. First, a brief background (previous posts, here and here, cover various other aspects of the population debate).

The population debate in Australia is certainly not new, although credit goes to Dick Smith for bringing public awareness to an otherwise one-sided debate over the past couple of years. In 1994 the Commonwealth commissioned an inquiry (the Jones inquiry) into Australia’s population and carrying capacity, yet the inquiry failed to make firm recommendations. One of the inquiry’s authors then wrote a book in protest of the ‘government’s timidity’ and concluded that a sensible population policy for Australia would be to aim at stabilising the population within a generation or so and that this was quite feasible if net immigration of something below about 50 000 a year (say 100 000 migrants in gross terms) could be maintained. Population would then more-or-less stabilise somewhere between 19 and 23 million (depending on actual immigration) sometime before 2050.

More recently, Tony Burke became Australia’s first Minister for Population (actually, Minister for Sustainability, Environment, Water, Population and Communities). Clearly, the issue is of some social importance.

Let’s move on to Hartwich’s article.  You will have to accept my apologies for taking the easy way and fisking my critique.

Economist Dr Oliver Marc Hartwich is an advocate of a ‘big Australia’. Here are five reasons why he thinks the nation has nothing to fear from a growing population.

1. Australia is growing whether we like it or not

There are three factors that determine the size of our future population:
– How long Australians are going to live.
– How many children we will have.
– How many people move to and leave Australia.

Government cannot do much about much about an improving life expectancy – nor should it. Government cannot determine how many children we will have, either. And again it’s not the government’s business anyway.

This leaves migration as the only lever for population policy. However, it is difficult to fine-tune our net migration intake, nor would it be desirable to reduce migration at a time of near full employment and reported skills shortages.

Even if we cut migration by half we would still see Australia grow to almost 30 million by 2050. This is to say we better get used to the idea of a growing Australia. It is going to happen anyway.

Those three factors of course determine population growth rates.   But I strongly disagree that there is little government can do about improving life expectancy.  In fact, I would argue that many government initiatives have that exact goal in mind – from vaccinations, to safety regulations, to public hospitals provision.

I also strongly disagree that government cannot determine how many children we have.  Academics jumped at the chance to observe the baby bonus on reproductive decisions and found that it did have significant impact at both bringing forward reproductive decisions, and increasing fertility. Also, various policies promoting fertility have been in effect in many countries throughout the past half century with varying degrees of success.

I also disagree that it is difficult to fine-tune the immigration intake.  Nothing could be simpler.  Recent migration trends also suggest that immigration rates are falling.  In any case, I hope Hartwich maintains his ‘difficult to fine-tune’ stance on immigration if Australia one day faces a flat or declining population.

2. Australia has a good track-record of dealing with migration

No other country in the world has managed to integrate its migrants so well as Australia. Australia’s migrant community is, on average, less often unemployed or on benefits than the Australia-born population.

Migrants’ children do well in school tests, and migrants are not more criminal than the rest of us.

Australia is one of the most attractive destinations for potential migrants and through the points system in immigration we can continue to attract migrants who will bring the skills and qualifications that this country needs.

I’m not sure what the point of this argument is.  Migrants do better than locals?  So we should have more so that locals have even more competition for university places?

I agree that most migrants bring a culture of hard work with them.

3. It’s easier to grow than to shrink

Most European countries would love to swap their demographic problems for ours. Many European societies are ageing and shrinking. By the middle of the century there will only be two working-age Europeans left to care for each European pensioner.

Thanks to Australia’s strong population growth this so-called dependency ratio will remain much lower in Australia for a long time. The result is less pressure on social and health services and a stronger fiscal position. Australia can use this chance to prepare its social security systems for the long-term prospect of an aged population.

This I find odd, since Hartwich’s home country, Germany, is the superstar of European economic performance with a population stagnant since the mid-1990s and declining since 2003.  We also know that his claims about the dependency ratio are bunkum, as the Productivity Commission explained:

In sum, realistic changes in migration levels are unlikely to make a substantial difference to the age structure of Australia’s population in the future, and any effects are likely to be temporary. Realistic changes to fertility could have some effect in the long term, but the proportion of older Australians will still grow from current levels. Increased longevity (a desirable trend!) is the dominant force

Traditionally a population decline was the result of war or famine, but, as suggested here, that doesn’t mean population decline should always be in the disaster basket:

But if the causes are benign, what about the consequences? If the decline in the number of people is slower than the natural growth in productivity (or output per person), then the economy will still grow. For example, a modest population decline of 0.25% a year would reduce Britain’s economic growth rate of 2.25% to just 2% a year. That’s hardly a recession. The number of consumers may decline, but the growth in incomes-and export markets-will ensure that demand stays buoyant. Nor will there be a demographic crisis, with huge numbers of old people overburdening those of working age. Population decline also leaves fewer children to support, train and educate for the first 20 economically unproductive years of their lives. The dependency ratio of workers to non-workers is virtually unaffected whether the population is growing 0.255 a year or falling 0.25%. Adjustments to an ageing society-discouraging early retirement, moving from pay-as-you-go to funded pensions-will be necessary in any case.

Moving along:

4. Population growth will benefit the economy

Australia’s growing population will benefit the economy as consumers, savers, entrepreneurs, and workers.

More people will make it possible to increase the division of labour.

It will open up new opportunities for niche products and services, which otherwise could not be offered.

It will also make it possible to provide better mass transit infrastructure for which we currently lack the capacity.

Again, clutching at straws here.  I am not sure why domestic population is needed when labour specialisation occurs globally.   Perhaps to a very minor degree there might be some improvement in the degree of specialisation from having a workforce of 15million instead of 12million. Perhaps.

While I agree that our small market is occasionally a barrier to new products finding their way here quickly, internet shopping is quickly closing any gaps.

Mass transit sounds great, but not requiring it is also good.  There are plenty of ‘intermediate’ scale urban transport options Australia cities could adopt if the political will existed.

5. Australia is in the most dynamic world region of the 21st century

The ‘tyranny of distance’ is giving way to an ‘opportunity of proximity’. The fastest growing region of the world is Asia, in which there are hundreds of millions, or rather billions, of people who have escaped poverty and joined the global middle class.

What is happening in front of our eyes and not far from our borders is one of the greatest economic transformations that the world has ever seen.

Australia has the chance to be part of this growing Asia Pacific region. But we are not going to achieve this by sticking our heads in the sand, yearning to halt or reverse these changes.

Population growth is going to happen, and it will ensure that Australia can fully play its role in the region.

I have no idea why this is relevant to Australia’s population.  The population of Asia as a whole is estimated at nearly 4 billion.  If Australia’s population went from 22 million to, say, 40million, exactly how does that ensure we can fully play our role?

A stable population is by far the preferred outcome in economic terms, with either a low rate of growth or decline.  Very high rates of population growth around 2%, as we witnessed in 2008 to 2010, are not conducive to productivity growth and long run prosperity in the modern world.

Tips, suggestions, comments and requests to [email protected] + follow me on Twitter@rumplestatskin

Comments

  1. A stable population is by far the preferred outcome in economic terms

    Also in environmental terms, we live on a finite planet after all, a fact that seems to escape most economists.

    We can’t continue with an economic system that relies on extracting ever more non-renewable resources from the Earth, while destroying the ecological systems that sustain us.

    This should be self-evident, even to the most rabid mining fanboys. We need to grow our economies through productivity growth, not population growth and resource consumption. If that means a slower rate of growth, then so be it. Surely that’s better than following the path of Easter Island?

    • “we live on a finite planet after all”

      We have hit the limit of our abilities to make rational public policy well before squeezing the planet dry.

      It would take a budget of around 35K$ to fit every new home with a mix of 1.5KVA of Solar, 2KVA Wind and 3.5KVA Natural Gas backup genset. But we can’t manage to finance it from a 350K$ total outlay.

      We have had technical capability to use Natural gas in Mass transit and personal transport for around 20 years. But there is no policy framework to promote it.

      No Australian city has a comprehensive greywater recycling scheme.

      We are a net exporter of food. Yet we have expensive food by international standards. 20 years of staring down a duopoly in food distribution and not being able to do anything about it.

      Land management for housing has been arbitrarily ringbarked as mentioned by others.

      Public infrastructure is stuck between three levels of govt and the economic bulemia of Liberal and Labour. The “greatest health revolution” is just the most recent example of how many $ get lost playing the game without picking up the ball.

      Green sensibilities compete with major infrastructure builds such as Dam construction and minor ones like Bushfire survival measures. 20 Years to fine tune and weigh cost benefits and we end up with billions of dollars of coal fired desalination plants, full dams and entire country towns burnt to the ground.

      Countries like India, Brazil and Israel could give us an easy leg up on energy and water use.

      You can omprehensively stuff up long term policy on investment, energy, water, land use and infrastructure without needing to blame the planet for being “too small”.

      • We have hit the limit of our abilities to make rational public policy well before squeezing the planet dry.

        The fact that we’ll almost certainly elect Tony Abbott as Prime Minister within 18 months is testament to the fact that most Australians have lost the capability of rational thought.

        And to think, the alternative was Turnbull!

        • Tony Abbott won’t have anything fresh to offer on population policy. He will continue the same ponzinomics this government and the Howard government believed in. The days when a member would hear his constituents and go away to ruminate on their concerns are long gone. Politics is over-professionalised and centred on winning elections. We face more of the same under Abbott — congestion in our cities, unaffordable housing and a decline in living standards.

        • On population Turnbull thinks reducing migration is “silly because then you would have no growth”
          Turnbull?
          I just want to see the Libs put up a policy consistent with their supposed philosophy and then take that to the Aus people. Then if they got voted in they could implement the policy.
          Getting elected by default is not a mandate to implement anything.

        • Yes, We are back to square one on picking the best marginal electorate, pork barrel and spin show.

          Rudd had his opportunity to introduce higher accountability to the office. There was talk of impartialy costed election budgets, more transperancy in tenders/ contracts and less advertising.

          It never made it as far as a bill. No-one was asked to vote in support or oposition which would have been an interesting litmus test in itself.

          (Sigh) If only he had used his political power (plus independents) for good, not evil.

        • The fact that we’ll almost certainly elect Tony Abbott as Prime Minister within 18 months is testament to the fact that most Australians have lost the capability of rational thought.

          I thought myself that it was testament to the fact that the other mob is so inept that there is only one among them who could organize a root in a brothel with a union credit card in hand.

      • Government and opposition policies are solely directed at the bribing the swing voters in marginal seats.
        .
        Is it any surprise that these policies are short-term in nature and don’t consider the long-term impacts/benefits?

        • +1/2 from me. I take issue with “solely”. The other half of their policies are directed at rewarding the particular bunch of rent-seekers they see as their constituencies.

    • Easter Island’s problem was lack of property rights and markets. And lack of international trade.

      • Correct Phil but it all still relates to finite resources.

        There are no property disputes in an environment of abundance for a given resource, and nor is there necessarily any real scarcity when foreign trade exists and said commodity is in abundance or plentiful supply in another economy, and available at an affordable price.

        It’s only when there is not enough to go around that arguments break out…simple equity theory.

  2. The enthusiasm of so many Federal Politicians (unlike business interests) of both stripes for a Big Australia is hard to fathom.

    There would seem to be little political advantage in pushing for a Big Australia.

    The idea that it is all about rational economics and sensible public policy is also difficult to accept as on some many issues they avoid sensible public policy like the plague when short term political opportunism is an alternative.

    I doubt that they do it to ‘impress’ the big end of town as there always runs to be made in kicking business fat cats.

    Your solid responses to Mr Hartwich’s column suggest that the main driving rationale for the Big Australia fan club seems to be little more than a reflexive assumption that growth is good.

    Personally, I like high density cities, crowds and rapid change but I know that I am not anywhere near being in the majority.

    Most people seem to prefer their urban environments to be stable and resist any change – even to the point of having a fetish for tedious Victorian Wedding Cake architecture and spending fortunes converting small workman’s cottages into something tolerable.

    Dick Smith is reading the mood correctly.

  3. Cameron – you certainly do tackle the difficult subjects. This one comes with strong views on both sides.

    My simple comment is – the worlds population will reach 7 Billion in a few days, 9 Billion is not that far away.

    We may be an island, but isolation in this world is no longer an option.

    Exactly how do we resist? An outright refusal to take more migrants now may end up in a swamping tide of refugees at some future date.

    Is that more desireable than a structured intake where we make choices?

    ZPG globally would be the best option, but it isn’t going to happen, and we have absolutely no power over the issue. So the issue is what is our best defense against a spiralling global population problem. Do we try to stem a tide, or try to channel it in the best way that we can?

      • In short – Yes unless the world can tackle the problem of rampant population growth.

        I’m not discussing what I want, but simply acknowledging the issue. It would be suicidal not to see the issue clearly and then take steps to avoid it.

        The issue won’t be solved by Australia, or by our policies, immigration policies or otherwise.

        What do we do if the world won’t or can’t solve the issue? It wasn’t that long ago that the do gooders were horrified by China’s one child policy – but in retrospect they may be leading the world with what are virtually taxes on any more than one child.

        That leads onto an aging population being supported by a much smaller young population as per Japan in the next few decades. What is the solution? I don’t know, but it is larger than a wish list by Australians.

        • Its a little like the climate change debate: Australia can’t have any influence over the global situation, so lets not bother doing anything.

          Problem is, every little country thinks the same thing, and every city/state/province in the US and China has same attitude. No-one is big enough to actually achieve anything.

          End result: Malthusian catastrophe.

          Humanity probably isn’t equipped to deal with these problems.

          • Agreed – perhaps the catastrophe is the solution.

            Given the religious, cultural and economic diversity, an accord may not be possible on this issue.

            I know that I’m talking 50 or 100 years into the future, but there is never a better time than right now to make changes.

        • The main presupposition for capitalism and capital growth is the growing population. Either we have growing population and capitalism or we have to think about other economic model to live on this planet, or maybe we will populate Mars as a beginning???

        • I think what Peter is getting at is that it becomes a moral issue whether to accept immigrants if there is a pressing need at sometime in the future.
          Imagine a scenario where 10 million people are starving in Indonesia. Can we simply say “Sorry, 30 million is all we have room for”?
          A big Australia may happen simply because we are too human to refuse.

          • Actually I was being less moral than that. What do we do if the starving 10 million in your scenario simply sail across to our shores. we don’t have the capacity to stop them, and we have far too high a moral standard (see I got to your moral standard eventually) to simply shoot them. Genocide is not an option.

            We would have to accept them. Perhaps we could send some to other countries, but we would get the majority of them.

            We live on the edge of the greatest population centres on the planet, any event such as war or famine would start a migration to a “better” country. If I was starving in Indonesia with a family to care for, I would head here.

    • Not sure how taking more migrants now would help us avoid some future swamping tide.

      But you are quite correct about the difficulty of the issue.

      One thing that seems to be taken as a given is that the aging of the boomers will, in the absence of rapid population growth, reduce us back to some form of Dickensian poverty.

      Living standards are already remarkable compared to what previous generations enjoyed, some moderation in the rate of increase of those standards while we get through the ‘boomer bulge’ seems hardly an national emergency. Our grandparents would cringe at the whinging.

      • I’m not sure either, but a large wealthy country with a minimalist population would look like an attractive destination for me if I was a homeless refugee looking for somewhere to migrate to.

        Many will argue that we have a right to control our borders, but look at the rest of the world and tell me how many borders have changed, counties disappeared, new countries created, or merged, and then de-merged again. It’s scary isn’t it.

        Borders are nothing but a line on a map – they don’t really exist, especially if they can’t be defended.

        Sorry Cameron… I’ll go away now. thanks for an interesting subject to discuss. BTW I don’t support rampant growth for our population, but I think that any discussion on it must take the global issues into account.

        • Check out a number of TED Talks by Professor Hans Rosling, who talks about the population growth within the developing nations of the world. More particularly, he suggests that unless we assist those who are living in the poorest of conditions to elevate their standard of living beyond that of subsistance (or the even worse alternative of struggling to survive), nothing will slow or stop the predicted population growth of those nations. Interestingly, he claims that not even immigration will fix this problem as it will simply result in an increase in both birth rates and survival rates within those nations from which people have been relocated.

          Very interesting stuff.

      • There is no “boomer bulge” in Australia – maybe in the US. The number of followers(aged 26-45) exceeds the number of boomers (aged 46-65).

    • An outright refusal to take more migrants now may end up in a swamping tide of refugees at some future date.
      .
      Let me read between the lines:
      .
      (Let in the migrants and..)Stop the boats!
      .
      That is a bit of Tony Abbott style scare-mongering there..

      • No MAV I’m not being political – I’m looking at the future possibile scenarios. The boat people make up a very small percentage of our intake, they are more of a physcological threat than a real threat.

        there are plenty of credible forecasts of global populatiosn of 10 Billion, some say 15 Billion by the end of this century. Maybe we can handle that for a while, but what happens after years of drought. War and mass migration has been the outcome in the past.

        I just don’t know, but it’s something that should be considered in our thinking. We can’t stay isolated forever.

    • The only “defence” is a relentless campaign against poverty and an equally relentless campaign promoting education.
      Albeit the second point will go down like leaden flatulence amongst the fundamentalist types.

  4. I do not get how polies do not see that most of our current issues, cost of living, high electricity/water prices, healthcare stress, congestion, road management, housing stress are largely cause by the recent high rate of immigration.

    Our infrastructure cannot be updated/grow fast enough without consuming precious resources/$$$

  5. When they say we’ve got nothing the fear then that says it all to me.

    – we don’t have enough water,
    – lack of infrastructure (and no one wants to invest in it),
    – run a CAD indefinitely,
    – we barely tolerate mining,
    – most graduates don’t get jobs in their chosen studies,
    – we want to be in every war the US starts,
    – fail to make any effort in developing a balanced economy,
    – and the list goes on

    We’re selling off our fertile farm land to foreign entities, and mining on the rest. Even if your tough and stay on the farm compliance in all things farming is beyond a joke.

    The clever country were told….

    So more population is going to solve what? An ever expanding economy where a few get the benefits, and the politicians only thought is to stay in power…screw the people.

  6. Mmmm.
    1. 4.1 million bommers born in OZ and now we have 5.2 million to support in pensions and health due to immigration.
    2. As our nation ages, anti-immigration will take hold
    3. Our death rates double in the next 25 years and our fertility does not look like increasing, so our natural growth may drop to zero or below.
    4. Our demographic momnentum is 1/3 of our growth in real numbers, a point not well understood.
    5. Our official ABS population growth numbers since 2006 have included international student (here for longer than 12 months) and 66% of our NOM is temporary Visa holders. The ABS percentage is bogus.

  7. 2. Australia has a good track-record of dealing with migration

    No other country in the world has managed to integrate its migrants so well as Australia. Australia’s migrant community is, on average, less often unemployed or on benefits than the Australia-born population.

    This is bogus claim. There so many migrants that are unemployed / underemployed and not captured by the system. I know many of my migrant friends who cannot find suitable professional jobs and they have to do “informal, manual, cash-in-hand” kind of works just to make a living. Yes, they are doing it hard and they only do it because they want to provide better futures for their children.

    The other reason for less welfare claims from migrants to Centrelink is because there is a certain cultural and ignorance issue from new migrants, especially from the ones of East Asian / Oriental descent. They actually regard it as shameful to ask for welfare support if they can help it though they’re actually entitled to it.

    • There was a disturbing article in “Quadrant” years ago, that suggested that UN agencies tasked with selecting “refugees” to come to Australia and other Western nations, deliberately do NOT pick Christians, people who already speak English, people with qualifications, etc etc. The UN Poo-bahs regard Australia’s correct role as “provider of charity” to people who will be completely useless in return.

      • If that’s really the case, then western democratic countries as we know now would certainly be in trouble by the fiscal burden.

        And of course the local Greens Party approves this policy because they’re actually red socialist / communist in disguise. I always have suspicion that the Greens’ goal is to swarm Australia with so many poor, uneducated, and socially-incompatible people to become social problem, fiscal burden and part of their “poor class” mass in their future proletariat / communist revolution plan.

  8. It will be interesting to see if there are still many proponents of a “Big Australia” when the trend of increasing number and magnitude of extreme weather events we experience becomes clearer.

    Not to mention our dry/wet cycles becoming even more extreme, and the diminishing water in the Murray Darling reducing our capacity to feed ourselves (let alone continue to export).

  9. Biggest issue I can see is the complete hypocrisy of on one hand trying to reduce our carbon emmissions via increased energy costs and at the same time increasing our carbon emmissions by having a big australia.
    Certainly the cost of living for all utilities will have to rise. The increased inefficencies of shit infrastructure comes into play.
    When the Harbour bridge was built as well as the city circle rail links, it was designed for dual rail lines over the harbour so as to cater for the increased population growth that would occur. Fat chance of any forsight these days.

    • It is odd that this claim gets made again and again by the opponents of urban growth, yet the fast-growing cities of the USA manage to maintain the LOWEST tax rates, while it is all the “Planned”, “Smart Growth” cities that are the ones who forever cannot balance their budgets and cry poor on infrastructure.

    • Watching and Waiting

      Weren’t we being told to conserve our water supplies not so long ago? And now we supposedly have enough to take in endless hordes of people?

  10. I fear the day when corporations build advanced AI and robotics that can supplant most Human tasks. Guess who is leading the way ? Japan , probably the most to lose from a shrinking demographic but most the gain from such new technologies.

    What we are going to left with is a “Surplus of Human Sentience” . Ofcourse like in the stories it will herald a new age where mankind will live in luxury with most work carried out by the bots but not before a mass culling of the current population.

    • Why a mass culling? This is completely contrary to historical experience – it is increases in capital that has moved mankind further and further away from “subsistence” living and into specialisation, trade, consumption, services, etc. And this has been accompanied by population booms, not “culling”. Why would yet more capital and a further shift away from subsistence into consumption, services, and leisure, require a “mass culling”?

      • Yes, more capital, including labour, enables greater production. There’s no doubt about it.

        But the important question is how to maximise production per capita. This is best achieved with a stable population.

        We have 7 billion people in the planet already. Each year more new people are born to have their turn, and some die – why do we need more people all at once? The efforts of current day people will build capital to make future people more productive.

      • Yes but in history we didn’t invent our replacements,
        ..because why in the world would we need more humans when a more resilient being has been created.

  11. Check out the Lincoln Institute’s Atlas of Urban Expansion, which is like a healthy blast of garlic to a vampire:

    HOW MUCH land in the world/ each region/ each country, is “urban”?

    Worldwide: 0.47%. Sub-Saharan Africa: 0.12%.

    Between 1% and 2%: USA, India, Bangladesh

    Between 0.5% and 1%: China, Indonesia, Pakistan

    As a percentage of ARABLE land: Worldwide: 4%. Sub-Saharan Africa: 1.5%

    Between 4% and 8%: USA, Egypt, France

    Between 2% and 4%: China, Russia, Spain, Mexico

    Between 1% and 2%: India, Bangadesh, Canada, Vietnam, Ethiopia

    Less than 1%: Afghanistan, Sudan

    So much for “paving over paradise”, eh? “Overcrowding” is, almost everywhere in the world, NOT because of over-population, it’s because of over-concentration of population in urban areas.

  12. Colin Clark: “Exploding Population Myths”

    The Annual Monash Memorial Lecture, 1977

    “The simple method of judging the trend of population by comparing current births with current deaths is open to an objection so obvious that many people fail to see it, namely, that while current births relate to the present generation of parental age, current deaths relate on the average to the much smaller generation born some seventy years ago. If current deaths are equal to current births, therefore, this must mean that population in the future is certain to decline. Now we are facing depopulation.

    World power depends, even more than it did in the past, on having a large population, not primarily in having large numbers of recruits to the armed forces; but principally in having sufficient taxpayers to pay for the enormously costly equipment which modern armed forces require.

    The cause of our infertility must be sought, it seems, in our social psychology, in a profound disillusion with the civilisation in which we live. People will undertake the undoubted hardships and difficulties of bringing up children if they have firmly fixed in the backs of their minds the belief that there is something good in the civilisation in which they live, that they live in a world worth bringing children into.

    All previous civilisations have had a faith by which they lived. We have almost entirely lost ours, and are becoming totally disillusioned with our civilisation.

    When I said at a public session of the ANZAAS 1976 Conference in Hobart that these declines in reproductivity, if not checked, would bring our civilisation to an end, a substantial part of the audience indicated by their applause that they thought that this was a desirable objective.

    Another observation to be made of civilisations in decline is that they are becoming increasingly bureaucratic and overtaxed. Governments, even more than businesses, tend to have high overhead costs, i.e., those which show little or no alteration with the size of the population which they have to serve. A stationary or declining population thus increases the comparative burden of government expenditure. It also increases the temptation on governments, faced with difficulties in raising money by taxation or borrowing, to try to get out of them by inflation.

    It is significant that France, which for a long period has had an almost stationary population, since the nineteenth century should have suffered more persistent devaluations than most Western countries.

    It can only be some irrational force of social psychology at work which led such large numbers of supposedly rational people to accept with enthusiasm the obvious nonsense about the prospect of the immediate extinction of our industrial civilisation through the exhaustion of mineral and agricultural resources; while at the same time being overwhelmed by pollution. If such people really believed what they were saying, they would have bought agricultural land and mining shares, both of which would obviously be rising rapidly in value if the world really were on the point of exhausting its resources……”

    http://www.cooperativeindividualism.org/clark_colin_population.html

  13. Colin Clark’s magisterial 1967 book, “Population Growth and Land Use”, analyses numerous positive feedback loops in economies as populations are rising, that go into reverse when the population growth levels out or falls. This is even more significant in its economic effects, than resources like oil becoming scarcer and more expensive.
    I am only saying what I do here, not necessarily to argue for “more growth”, but to try and alert people to the kind of tough political options we are going to have to confront, that will go way beyond superannuation liabilities. The end of growth, either planned or unplanned, means serious recession and falling income, not equilibrium at the “status quo”.
    The development of free markets and the creation of wealth requires, along with
    a culture that encourages trust and co-operation; “connections” via transport
    and communication, between potential participants in exchange and trade. These
    connections can be the result of proximity (through density), as well as by roads and other transport infrastructure.
    There is a limit to how much density is achievable as a substitute for transport
    infrastructure, because the production of low-density rural areas, especially
    food, has to be transported to the workers in urban industry. There is actually a correlation between the “density achieved” in urban areas throughout history, and the provision of roads in those urban areas.
    Population growth is one way in which densities are increased, and “demand
    pressures” result in rural land being used more intensively and efficiently.
    Population growth disturbs a certain “status quo” that might have existed previously, where rural production levels were regarded as “satisfactory” to both the producers and the consumers of the produce.
    As population densities increase, and rural production increases, a number of
    efficiencies are realised.
    There is increased competition, and reduced oligopoly, monopoly, and monopsony exploitation.
    Increased specialisation becomes possible, because of a viable number of
    customers for the products of the specialist. “External efficiencies” are
    realised by increasingly networked producers.
    Economies are realised in infrastructure, social institutions, and government. Roads, bridges, harbours, etc, can be utilised by increasing numbers of people without capacity increases being immediately necessary. The same goes for churches and clergy, courts and lawyers, hospitals and doctors, other professionals, government bureaucracies, public buildings, educational and other institutions. This also allows for important advances in sanitation and health.
    Labour productivity growth occurs, and less additional “capital” is required for
    each additional unit of output. The utilisation of land and resources previously underutilised, is a “substitute for capital”.
    Nevertheless, return on capital increases, AND capital formation is also
    increased. A rising population results in increasing returns to existing
    investment, encouraging more investment. Less investments “go bad”, because
    there is a rising number of customers for whatever products or services the
    investor and his competitors provide. More production capital is utilised (and
    even worn out) before it becomes obsolete.
    The products that result from new investments, inventions, and efficiencies, are easily absorbed in a rising population; as are the redundancies and relocations that might be necessary. Younger people, of which there are more, are more mobile and receptive to change. The increases in wealth creation and demand, make society more amenable to changes in employment patterns as the result of advancing technology and methods. There are more valuable “positions” to go around, so that change is less regarded as a threat by those occupying positions of advantage.
    Younger people tend to accumulate capital, while older people tend to “draw down on it”. Larger families result in pressure on the parents to save more, and on the children to provide for themselves because their inheritance will be split more ways.
    (Note: Julian Simon added a further thesis to Colin Clark’s: that a higher
    population includes both more inventive geniuses, and more people to purchase
    and enjoy the fruit of those creative geniuses).
    A high proportion of government spending is inflexible to rises and falls in
    population. This spending is more efficient if population is higher. Much
    government spending is extremely difficult to reduce even when falling
    population justifies it.
    If population is falling, there is much greater pressure on politicians to cheat
    by inflating the money supply, as the fewer numbers of young simply cannot
    sustain the taxation levels necessary to keep the government running, apart from
    the burdens of caring for larger numbers of elderly.
    Younger people are rendered less able to save, capital is “drawn down on”,
    returns on investment decline, more investments fail, investment declines.
    Population increases demonstrated beneficial effects in Holland in the 1500′s, Britain in the late 1700′s, and Japan in the late 1800′s. Holland and Japan were economic successes while importing most of their food. A LOWER percentage of the workforce in agriculture, correlates to wealth increases. These increases in population and in wealth, result in a freer, more mobile society.
    Ancient Rome in its decadent phase, illustrates the effects of falling
    birthrates, including increased taxation burdens and monetary debasement.
    Declining populations, in ancient Rome and in Europe in the 1400′s, brought
    about a simultaneous shortage of workers, and yet lack of demand. Many people clung to their source of diminishing income, becoming protective and demanding restraint of competition; others had serfdom imposed upon them by the government, their freedom to relocate and change their livelihoods being removed. These seemingly contradictory effects are the result of a reversal of the “virtuous cycle” described earlier, that occurs when population is increasing.
    France, in the period from from the revolution onwards, also illustrates economic decline consequent on falling birthrates.
    In underpopulated lands, and where population is falling, the people themselves become more “protectionist” in sentiment, and more vulnerable to illusions regarding “planning” and regulation of production and prices. This only worsens the vicious circle of decline.