The Myth of the Need to Increase Population
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This article throws a spanner into the works that the politicians keep throwing at us about the economic need to increase the population in the country.
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ST –7 Jan 2007
Why the population is not essential in wealth creation
By Victor Mallet
THIS time last year I wrote a column to celebrate the decline of the Japanese population.
I wanted to debunk the idea that countries with falling numbers of inhabitants were heading inexorably towards social and fiscal disaster or even extinction.
A year on, there are encouraging signs of a change in attitudes. In particular, economists are increasingly challenging the myth that population growth is essential for economic growth.
There have, of course, been setbacks on the road to common sense. Jim Rogers, who founded the Quantum fund with George Soros, continues to question the wisdom of long-term investment in Japan because 'there will be no Japanese' if the current low birth-rate is maintained - a very big 'if'.
International Monetary Fund economists and Indian government ministers persist in using the awful phrase 'demographic dividend' to describe the alleged economic benefits of hundreds of millions of young people entering the workforce, even though these people are just as likely to be a social and fiscal burden in increasingly capital-intensive economies such as India.
The fundamental - and flawed - argument in favour of young and endlessly growing populations was best summed up by Richard Jackson, director of the global ageing initiative of the Center for Strategic and International Studies in Washington.
'Relatively faster growth in the US population will translate into relatively faster economic growth,' he asserted in a commentary to mark the day in October when the US population surpassed 300 million. 'This is not optimism, but simple arithmetic.
'Japan and many European countries face long-term stagnation or even decline in their real GDPs - and hence the aggregate economic and fiscal resources available to pursue future-oriented agendas, from investing in the young to investing in national defence.'
It is tempting to mock this as a pointlessly circular argument: more cannon fodder means more cannons, which means more need for cannon fodder. We should also ask why policymakers focus on absolute economic growth rather than the per capita income growth that would make more individuals better off.
Even if one accepts the economic need to boost a country's workforce, increasing the entire local population is a crude way to do it. In Japan - where the population is shrinking, remember - the labour force has been rising this year as older people rejoin the workforce and more women take jobs. The truth is that nations with small, stagnant or falling populations can produce strong economic growth.
If GDP growth depended purely on population increase, Africa, Latin America, Indonesia and the Philippines would be rich.
Sharmila Whelan, economist at investment bank CLSA, concludes in a recent report on demographics and Japan's economy that since the rise of Venice in the 11th century, there has been little connection between economic growth and population size or increase. Innovation and specialisation are more important.
Even in China, where population growth has clearly played its part in increasing the absolute size of the economy, Goldman Sachs reckons that accumulation of human capital - essentially education - has contributed more to GDP growth than the growth of the labour force since economic reform began in 1979.
It could be argued that ageing populations will not be able to deliver the innovation needed for future economic success. Yet those who bemoan the cessation of population growth are thinking back-to-front.
As people move to densely populated cities, enrich themselves and feel more secure, they tend to have fewer children. It is no coincidence that some of the richest and most crowded places on earth - Tokyo and Hong Kong, for instance - have some of the lowest birth rates.
The point is not that increased population creates wealth; it is that wealth creation leads ultimately to static or falling population. There is no reason to fight something that is both inevitable and good.
More wealth, lower birth rates; not vice versa
As people move to densely populated cities, enrich themselves and feel more secure, they tend to have fewer children. It is no coincidence that some of the richest and most crowded places on earth - Tokyo and Hong Kong, for instance - have some of the lowest birth rates. -
Originally posted by the Bear:
This article throws a spanner into the works that the politicians keep throwing at us about the economic need to increase the population in the country.
-----------------------------------
ST –7 Jan 2007
[b]Why the population is not essential in wealth creation
By Victor Mallet
THIS time last year I wrote a column to celebrate the decline of the Japanese population.
I wanted to debunk the idea that countries with falling numbers of inhabitants were heading inexorably towards social and fiscal disaster or even extinction.
A year on, there are encouraging signs of a change in attitudes. In particular, economists are increasingly challenging the myth that population growth is essential for economic growth.
There have, of course, been setbacks on the road to common sense. Jim Rogers, who founded the Quantum fund with George Soros, continues to question the wisdom of long-term investment in Japan because 'there will be no Japanese' if the current low birth-rate is maintained - a very big 'if'.
International Monetary Fund economists and Indian government ministers persist in using the awful phrase 'demographic dividend' to describe the alleged economic benefits of hundreds of millions of young people entering the workforce, even though these people are just as likely to be a social and fiscal burden in increasingly capital-intensive economies such as India.
The fundamental - and flawed - argument in favour of young and endlessly growing populations was best summed up by Richard Jackson, director of the global ageing initiative of the Center for Strategic and International Studies in Washington.
'Relatively faster growth in the US population will translate into relatively faster economic growth,' he asserted in a commentary to mark the day in October when the US population surpassed 300 million. 'This is not optimism, but simple arithmetic.
'Japan and many European countries face long-term stagnation or even decline in their real GDPs - and hence the aggregate economic and fiscal resources available to pursue future-oriented agendas, from investing in the young to investing in national defence.'
It is tempting to mock this as a pointlessly circular argument: more cannon fodder means more cannons, which means more need for cannon fodder. We should also ask why policymakers focus on absolute economic growth rather than the per capita income growth that would make more individuals better off.
Even if one accepts the economic need to boost a country's workforce, increasing the entire local population is a crude way to do it. In Japan - where the population is shrinking, remember - the labour force has been rising this year as older people rejoin the workforce and more women take jobs. The truth is that nations with small, stagnant or falling populations can produce strong economic growth.
If GDP growth depended purely on population increase, Africa, Latin America, Indonesia and the Philippines would be rich.
Sharmila Whelan, economist at investment bank CLSA, concludes in a recent report on demographics and Japan's economy that since the rise of Venice in the 11th century, there has been little connection between economic growth and population size or increase. Innovation and specialisation are more important.
Even in China, where population growth has clearly played its part in increasing the absolute size of the economy, Goldman Sachs reckons that accumulation of human capital - essentially education - has contributed more to GDP growth than the growth of the labour force since economic reform began in 1979.
It could be argued that ageing populations will not be able to deliver the innovation needed for future economic success. Yet those who bemoan the cessation of population growth are thinking back-to-front.
As people move to densely populated cities, enrich themselves and feel more secure, they tend to have fewer children. It is no coincidence that some of the richest and most crowded places on earth - Tokyo and Hong Kong, for instance - have some of the lowest birth rates.
The point is not that increased population creates wealth; it is that wealth creation leads ultimately to static or falling population. There is no reason to fight something that is both inevitable and good.
More wealth, lower birth rates; not vice versa
As people move to densely populated cities, enrich themselves and feel more secure, they tend to have fewer children. It is no coincidence that some of the richest and most crowded places on earth - Tokyo and Hong Kong, for instance - have some of the lowest birth rates.
[/b]
Insightful. -
in singapore, there are many elderly people that collect and sell used aluminum cans for a living. on december 5, 2006, i witnessed one such elderly person who was so poor, he resorted to drinking from a half-empty cup he found in a trash can... veron
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Where did that quote come from?Originally posted by eyebuzz: 
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you don't need a quote for that, all you have to do is to look around the hawker centres.. take the time to sit at a drinks stall.. order a can of coke.. drink it.. and when the can is emptied, you will be approached by one of the elderly who collect them for recyclers..
to the powers that be who don't care.. these elderly are also generating GDP when the recyclers pay them...
in the end, it's increased the GDP, since the elderly who collect cans also have to buy daily necessities from their meager earnings..
this is the "increased GDP" which the writer is talking about..Originally posted by Cystaire:Where did that quote come from? -
But doesn't that contradict your main point?Originally posted by the Bear:you don't need a quote for that, all you have to do is to look around the hawker centres.. take the time to sit at a drinks stall.. order a can of coke.. drink it.. and when the can is emptied, you will be approached by one of the elderly who collect them for recyclers..
to the powers that be who don't care.. these elderly are also generating GDP when the recyclers pay them...
in the end, it's increased the GDP, since the elderly who collect cans also have to buy daily necessities from their meager earnings..
this is the "increased GDP" which the writer is talking about..
If we don't continue to increase our population size, our aging population will have to bear more economic load and their retirement age will be older and older.
Unless we have the smarts to value-add our economy. The article doesn't give any clues how to do that. -
tis still come back to the fact why the population is not steadily replenishing itself: first stop at two, then, have more if u can afford, then, foreign talents, then, casinos to bet on.... hotel singa
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Should send this article to PAP... they sorely need to open their eyes and minds. -
One day it will just go "POP" when everybody least expects it.
Yes, there goes the weasel.
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And what happens when the larger and newer generation gets older? the population needs to be increased even further? at what point do we stop? Has anyone thought about what living conditions would be like if we had a population of, say, 8 million? The aging population problem is a self-correcting one, if you stop to think about it.Originally posted by Cystaire:But doesn't that contradict your main point?
If we don't continue to increase our population size, our aging population will have to bear more economic load and their retirement age will be older and older.
Unless we have the smarts to value-add our economy. The article doesn't give any clues how to do that.
Also bear in mind that scarcity of resources(land, drinking water, food, energy) is a major threat facing the human race -
no it doesn't...
the myth that the aging population will bear the "economic load" is crap.. because it is simple math too.. but here, we will look at it in another way...
increase population supposedly means each person pays fewer dollars towards the looking after of the "aging population"... say... 1 million people looking after 250,000 elderly (a 4-1 ratio)
however, people WILL age... so, the working people become the "aging population" in time... which has increased... say the elderly in the first snapshot has passed on... and so have a few of the 1 million.. there are now 750,000 elderly.. we need 4 times 750,000 which is 3 million people to look after this 750,000
in time, we have maybe 2.5 million elderly... and we will need 10 million to look after... and in time...
this cycle cannot be sustained can it?
the politicians in singapore are paid truckloads of dosh to come up with a solution... and here, the writer has written about it too... to increase the quality of life of the people, you will get the "value added" productivity and industries...
also, the article is trying to tell us that to increase the population in order to "lighten the economic load" or "increase GDP" will not make for a better life for people.. in fact, if you follow the cause-effect analysis, it will cause misery as we are driven towards a more crowded and accelerated lifestyle...
btw, since medical science has improved, people are living longer and therefore a lot of them have voluntarily returned to the work force...
not my cup of tea.. but hey.. it's happening..
this is not the voodoo economics.. this is something which is common sense, and more and more people are starting to realise this.. economics as we have been taught is wrong and fundamentally flawed...
i guess there are a few mavericks who have realised this and are starting to question classical economics..
the writer is one of them
Originally posted by Cystaire:But doesn't that contradict your main point?
If we don't continue to increase our population size, our aging population will have to bear more economic load and their retirement age will be older and older.
Unless we have the smarts to value-add our economy. The article doesn't give any clues how to do that. -
I understand that the cycle cannot be sustained. But it appears whether we accept a ton of young immigrants or not, the elderly will have continue working older and older in order to sustain economic growth.Originally posted by the Bear:no it doesn't...
the myth that the aging population will bear the "economic load" is crap.. because it is simple math too.. but here, we will look at it in another way...
increase population supposedly means each person pays fewer dollars towards the looking after of the "aging population"... say... 1 million people looking after 250,000 elderly (a 4-1 ratio)
however, people WILL age... so, the working people become the "aging population" in time... which has increased... say the elderly in the first snapshot has passed on... and so have a few of the 1 million.. there are now 750,000 elderly.. we need 4 times 750,000 which is 3 million people to look after this 750,000
in time, we have maybe 2.5 million elderly... and we will need 10 million to look after... and in time...
this cycle cannot be sustained can it?
the politicians in singapore are paid truckloads of dosh to come up with a solution... and here, the writer has written about it too... to increase the quality of life of the people, you will get the "value added" productivity and industries...
also, the article is trying to tell us that to increase the population in order to "lighten the economic load" or "increase GDP" will not make for a better life for people.. in fact, if you follow the cause-effect analysis, it will cause misery as we are driven towards a more crowded and accelerated lifestyle...
btw, since medical science has improved, people are living longer and therefore a lot of them have voluntarily returned to the work force...
not my cup of tea.. but hey.. it's happening..
this is not the voodoo economics.. this is something which is common sense, and more and more people are starting to realise this.. economics as we have been taught is wrong and fundamentally flawed...
i guess there are a few mavericks who have realised this and are starting to question classical economics..
the writer is one of them
Too bad that doesn't seem avoidable.
I think your point (and the article author's point) is that economic growth must stop one day, once the per capita income becomes very high enough. Nobody can sustain this treadmill unless we strip the Earth bare.