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Monday, July 30, 2007

WWMD: What Would Malthus Do?

An article in this week's Economist discusses recent history and current trends in world population.

If you'll recall the "Logistic Equation" from precalculus or calculus, you know that certain things, such as population growth and predator-prey relationships, can be shown with a nifty formula, involving an ugly thing called the natural number "e." When graphed, this renders an s-shaped curve, or what looks like a sideways graph of tangent.

Basically, it means that populations tend to grow slowly at first, then reach a critical number that sends the species population soaring through reproduction, until environmental effects (shortage of food, disease, predators, or crowding) force members of the population out, or dead. The curve levels out and maintains what would appear to be a long-term stable number, ceteris paribus.

Numbers are still growing; but recently—it is impossible to know exactly when—an inflection point seems to have been reached. The rate of population increase began to slow. In more and more countries, women started having fewer children than the number required to keep populations stable. Four out of nine people already live in countries in which the fertility rate has dipped below the replacement rate. Last year the United Nations said it thought the world's average fertility would fall below replacement by 2025. Demographers expect the global population to peak at around 10 billion (it is now 6.5 billion) by mid-century.

I would wager this recent inflection point has something to do with the signals we are receiving from our environment. Increased income, wealth, and abundance of materials has given rise to a shift in attitudes among young professionals, whom would rather use disposable income to enjoy themselves than save for a child's college, especially when costs are rising as rapidly as their are in the knowledge economy.
Think of twentysomethings as a single workforce, the best educated there is. In Japan (see article), that workforce will shrink by a fifth in the next decade—a considerable loss of knowledge and skills... In Japan, rural areas have borne the brunt of population decline, which is so bad that one village wants to give up and turn itself into an industrial-waste dump.

Well, hardly a poor use of resources if its a choice willingly made. But it begs the question: how much does the "labor" or "human capital" part of the production function really affect the makeup of an economy?
States should not be in the business of pushing people to have babies. If women decide to spend their 20s clubbing rather than child-rearing, and their cash on handbags rather than nappies, that's up to them.

Really? That's interesting, because an article from Medical News Today discusses some of the incentives Estonia is using to entice its young females to have multiple children. From that article:
Estonia provides employed women who have children with their monthly salary, up to $1,560 monthly, over a 15-month period and unemployed women with $200 monthly.

Whatever the measures, governments tend to protect their investments in capital and infrastructure and have been known to wage war, from time to time, over resources. So why not protect human capital as well?

more people + better education = economic growth


Juris Naturalist said...

I read other portions of this study, and it really gave me pause, because I have been quick to say that Malthus was wrong. I still do, but I am more open to being proven wrong than I was.

I think the increase in human capital may contribute to lower birth rates. As people are able to eek out a living more easily without their children working for them then they have less incentives to have children. As manual labor becomes a smaller portion of all economies, fewer people are needed.

It's obviously more complex than that, but still interesting.

Happy Trail Treader said...

An interesting point you bring up is the "Human Labor" as capital. As you know,in the industrialized countries technology is replacing this "human labor" in large areas of the market. In textiles (that have not moved overseas), one person is doing the job of 20. As this technology makes its way into the rising industrial nations (in mining, textiles, other natural resource harvesting) the labor demand there will fall as well. Production will only increase with these advancements in technology, which will bring a higher standard of living to the fewer people needed to enjoy it. A result SHOULD be one of homeostasis, where our production meets our consumption needs (until conditions change, e.g. Malthus). And again, it is a little more complex than just a labor question...