Baby booming is a curse or not

Do babies create
poverty?

This is a challenge to the
conventional wisdom that population growth impedes economic
progress

 

Why do we still believe that
population growth slows economic development? For decades our
institutions have mis-analysed such world development problems as
starving children, illiteracy, pollution, supplies of natural
resources and slow growth , and have attributed their cause to
population growth – the population ‘explosion or boom or
plague’. But for almost as long, there has been a body of
statistical evidence that contradicts this conventional wisdom
about the effects of population. This error has cost dearly. It has
directed our attention away from the factor that we now know is
central in a country’s economic development, its economic and
political system. Furthermore, misplaced belief that population
growth slows economic development has been the basis for inhumane
programs of coercion and the denial of personal liberty in one of
the most valued choices a family can make – the number of children
that it wishes to bear and raise .

 

About a dozen competent statistical
studies opposing the population explosion theorist agree that
faster population growth is not associated with slower economic
growth. On average, countries whose populations grew faster did not
grow slower economically. Of course, as countries develop
economically the fertility rate tends to fall. But it is economic
level that influences the rate of population growth, not the
reverse. Costs and benefits of having children change with the
shift from rural to urban living along with increases in education
and shifts in attitudes – this being the famous ‘demographic
transition’. Examples of counties with high population growth and
high economic growth include Thailand, Malaysia, Ecuador,
Jordan, Brazil, Mexico , Syria, Panama, Taiwan, South Korea,
Singapore and Hong Kong.

 

The research wise reader may wonder
whether population density is more important than population
growth. But the data show that higher density is associated with
better rather than poorer economic results. Let’s check for fact-
fly over Hong Kong – just a few decades ago a place seemingly
without prospects because of insoluble resource problems – and you
will marvel at the astounding collection of modern high rise
apartments and office buildings. You will realize that a very dense
concentration of human beings – 40 times the density of China- does
not prevent comfortable existence and exciting economic expansion,
as long as the economic system gives individuals the freedom to
exercise their talents and to take advantage of opportunities.

 

The experience of Singapore
demonstrates that Hong Kong is not unique. Its population density
and its soaring per person income are like Hong Kong’s. Two such
examples do not prove the case, of course. But these dramatic
illustrations are backed by the evidence from the aggregate sample
of counties.  The layman inevitably wonders- 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 more workers
laboring with the same fixed current stock of capital means 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.

 

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 insufficient
to meet needs, the railroad and the motor car were developed. When
schoolhouses become crowded, we build new schools – more modern and
better than the old ones.

 

As with man made production capital,
so it is with natural resources. The English learned to use coal in
industry when trees became scarce in the 16^th century.
Satellites and fiber optics derived from sand replace now expensive
copper for telephone transmission. And the new resources wind up
cheaper than the old ones were. Such has been the entire course of
civilization.  The most extraordinary part 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 physical capital
created to meet the shortage. There is however, one crucial natural
resource that is becoming more scare- human beings. Yes, there are
more people on earth now than in the past. But if we measure the
scarcity of people the same way we measure the scarcity of economic
goods- by the market price – then people are indeed becoming
scarcer, because the price of labor time has been rising almost
everywhere in the world. Just a few years after Egypt was said to
have a labor surplus, agricultural wages in Egypt have soared, for
example, and people complain of a labor shortage, because of the
demand for workers in the Persian Gulf.

 

But no sooner is one fear about
population growth scotched, then another takes its place. The
latest bugaboo is the effect of population growth upon education.
The World Bank now worries that even if a higher birthrate does not
imply fewer natural resources, it does imply less education per
person, and once more it just ain’t so.

 

Studies have shown that societies
with relatively high proportions of youths somehow find the
resources   to educate their children almost or equally as well 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 in clued the Philippines,
Costa Rica, Peru, Jordan and Thailand. Now we come to the matter
that the international development institutions consider poor form
to mention when discussing economic development: economic and
social systems. Compare countries that have the same culture and
history, and had much the same standard of living when they split
apart after World War II. For Example the following countries were
found having density of population and GNP per capita positively
correlated. That is more densely populated countries were enjoying
more GNP, other factors remaining the same; such as – Taiwan-China,
South Korea -North Korea, East European countries – Western
European countries (Germany East – West). To be more precise
centrally planned communist countries that had and still have less
population per square mile than the market directed non -communist
counties in each pair also started with much the same birth rates
and population growth rates.

 

The research findings makes clear,
despite the frequent absence of data for the centrally planned
counties, that the market directed economies have performed much
better economically, no matter how we measure economic progress.
Income per person is higher. Wages have grown faster. Further,
indexes 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 compare to the
centrally planned, centrally controlled economies.

 

Also birth rates fell at least as
early and as fast in the market directed countries as in the
centrally planned countries. China’s problem is not too many
children, but rather a defective political economic system. Even
the most skilled persons require a social and economic framework
that rewards hard work and risks, enabling their talents to flower.
The key elements of such a framework are economic liberty, respect
for property, fair and sensible rules of the market that are
enforced equally for all and the personal freedom that is
particularly compatible with economic freedom. Persons and firms,
acting spontaneously in search of their individual welfare,
regulated only by rules of a fair game, will produce enough to
maintain and increase economic progress and promote liberty.