The Virtues of Economic Freedom vs. Population Control

 

> Yes I agree that economic freedom will increase economic growth and economic development.  However the point that I am arguing is that effective population control will also increase economic development in developing counties.  Unfortunately (for the rest of the world) China is the only good example of a developing country that has successfully controlled population growth without being extremely repressive in economic freedom.

 

Since factual evidence is not very convincing to you, let me step back and explain a little ethics and economic theory. 

 

First of all, even if population control had any positive effects, any government attempt to control how many children you may or may not have is immoral.  It is bad enough when a government outlaws your ability to not have children by outlawing abortion and birth control, but a government that outlaws how many children you may have is much worse, especially considering that you can always choose not to have sex, but it’s not that easy to hide your children from the ever-present, omnipotent State.  Such a government is thoroughly immoral and tyrannical and as such has no right to exist (as much as I may praise the free market reforms of China) You may point out that no all countries are as extreme as China– some have voluntary “family planning” programs – but the monies for those programs are still stolen by taxation from its own, as well as that of industrial nation’s citizens, which still makes it wrong.

 

Moving on to economics….

 

Economics shows that not only is free exchange of goods the best stimulant for the production of wealth, but that ANY population control is economically detrimental.  Yes, any government population control is economically harmful.   I doubt one can understand why unless he understands why capitalism is such a great thing in the first place, and I have no intention of trying it explain all that here, but I am going to try to cover the basics.

 

First, let’s look at a related topic, immigration.  Western Europeans are generally über-paranoid about the immigrants “flooding” the country and stealing all their wealth. This is a classic economic fallacy which is based on the mistaken view that the amount of wealth in any area is fixed.  The reality is that each citizen (unless he’s a child, crippled, or a bureaucrat) must be productive in some way shape or form by providing a service to otherwise (also know as a “job”) in order to feed, clothe, and shelter himself.  This amazing fact of life even applies to children (more on them later) and immigrants.  This means that immigrants to a country have to get jobs to make a living, and in the process create wealth (by making fries and McD’s, harvesting crops in CA, or cheap shoes at those “evil” sweatshops.  In the process of providing goods and services to the society they immigrated to, they also earn a living for themselves.  Hence, everybody benefits no matter how many immigrants come into a country because immigrants instantly because both producers and consumers of goods.  Supply and demand.  It’s amazing.

Of course there is more to it than that.   A “modern welfare state” is likely to frustrate the native-born population by bestowing the (naturally poorer, otherwise they wouldn’t have immigrated) immigrants with all sorts of welfare payments, but this is an arguments against welfare, not immigration (or birth control.)  Furthermore, immigrants (and immigrant parents) start to work right away when they come to a country, and start paying into the tax system immediately, while welfare benefits in the form of public education unemployment usually come a lot later.  Some will argue that illegal immigrants don’t pay taxes – but illegal immigrants don’t (and shouldn’t for that reason) get welfare benefits either.

 

Of course, there is such a thing as relative overpopulation.  Immigrants have come to American for over 300 years because America allows them to produce much more wealth than their countries of origin --they wouldn’t want to come here, unless they believed that coming here would be to their benefit.  This has very little to do with population levels and much more to do with factors like technology, and free markets.  Free markets (by definition, in fact) allow new jobs to be created much more readily than regulated markets because a free market means freedom to create jobs by entrepreneurship, and thus can support much higher population levels.   No one wants to move to Russia or Bosnia despite their much  lower population densities for reasons having much more to do with the socio-economical situation there than over-population.  This brings us back to my main point – free markets, not birth or - immigration - control is what generates wealth and allows a higher population level to exist with the same or higher amount of per-capita wealth.  This idea is demonstrated very well by the Solow growth model – in the end, population growth and technological growth are the ingredients to higher aggregate social wealth production - and by the nature of supply and demand, consumption.  Recent history demonstrates this idea very well – massive immigration into the States after WWII and rapid population growth increased GDP many times over, totally destroying the “population growth is evil” model.  (Some will argue that this had more to do with post WWII dominance, and I can easily how show how this is a fallacy, if you want.)

 

Back to birth control, having a child requires a parent to consider the cost of bringing that child into the world.  If a parent cannot afford to have a dozen children, then he will do his best not to do so.  However, the cost of having many children is much higher in industrialized countries.  This is because of several factors, such as the fact that in industrial nations more than half the kids are likely to survive into adulthood and in the process demand education, clothes, cars, cell phones, etc.  Parents in the States know it is hard enough to afford one kid, much less ten.  Another factor is the high opportunity cost of raising kids because in general, jobs in developed nations are a lot more available and pay a lot more than jobs developing nations.  In a developing nation, the situation is reversed.  Kids cost a lot less because not all of them survive childhood and because jobs are less readily available and pay less.  More importantly, child labor is often an important source of income in these nations, and parents have many children for the purpose of using them in subsidence farming (which is much more labor-demanding than modern agriculture) sending them to work in the factories, or even begging on the streets.  These economic incentives for large families are inversely proportional to the amount of economic opportunity available in the country – because new economic opportunities raise the opportunity costs of having kids.

 

The final step is to tie economic opportunity to free markets.  As I mentioned earlier, this fact is almost true by the definition of free markets, as a statist, bureaucratic economy allows much less room for new individuals to find jobs, discouraging immigration and encouraging emigration to freer nations.  The massive immigration movements of the 20^th century (and all of history) are almost always motivated by new opportunities for economic -- not religious or political freedom, even though a free mind and a free economy go hand in hand. 

 

Follow up:

 

“I doubt one can understand why unless he understands why capitalism is such a great thing in the first place”

This sounds so much like the Christians “There are miracles all around you, but you are blind to them because you don’t believe in god.”  Its funny.

 

Not at all – unlike Christians, I provided factual evidence and logical arguments to the validity of my claims, rather than asking you to accept them “on faith”

 

It seems that you are arguing that increasing aggregate economic production is the unquestionable good.

 

Not at all.  I am not holding anything in economics to be an “ultimate value” because economics is a study of human action and the consequences of various choices, not of normative judgment – that’s what ethics is for.  From an ethical (not economical) perspective, I would say that capitalism; a system of individual rights (property rights in particular) is the only system compatible with my ethical system that views the individual, not the collective as the highest and only end.  Because it respects the individual, capitalism also happens to be the system that generates more wealth (individual OR aggregate) than any other, namely statism.

Anyways,

 

For example if you can show that increasing population will increase per capita (not aggregate) social wealth production, then you will be set—and I will admit the error in my ways.  However you switched from discussing per capita to aggregate wealth—what the are you thinking?  Did you not realize how irrelevant that is? 

 

You seem to be implying that while the addition of an extra worker into society will raise output, each additional worker will produce marginally less, this lowering per capita output.  To an extent, this is true – for example, after a war that kills many people of a country, but does not destroy any capital, everyone (left alive) will have more stuff.  Additionally, assuming that technology and natural resources are fixed, this analysis would hold true even without a war.  Thus, it is true that there is such a thing as a population level that is above the optimal population level.  (Of course the population a country can support depends much more on economic factors than the size of the population – hence the US having a higher population, immigration AND birth rates than Russia and still having a much higher per capita growth levels.)

However, my argument was not “the more people the better” but that “any government population control is economically harmful” --- that is, when government intervenes in the natural reproduction rate and attempts to lower (as in China) or raise (as in Japan) it.  This is understood more easily on the family level – each parent much consider the  benefits vs. the costs of an additional child, and as long as government doesn’t intervene, will have the marginally optimal number of children.  If the socio-economic situation of the country will not support another child, then the parent will likely choose not to have one.  What’s true for a single family is true for all the families of the country.  (Whether a few teenagers or unwanted births occur is irrelevant, because the parent takes this into consideration when considering the overall population level.)  Of course, the same logic applies to the immigrant, who decides whether his country or another has a higher effective overpopulation level. Basically, my point here is that children, like any other economic good reach an equilibrium amount of “production” in a “free market” – that is where the government does not encourage extra of fewer births.  All the same arguments that apply both for and against a free market for any other economic good apply here.  The factual evidence of this is the deceasing birth rates in any given country as it industrializes and improves healthcare, etc – thus raising both the value and the cost of an additional human life.

 

Of course, the statist might bring up the “problem of the commons” here for kids, just like he would for land, the environment, etc.  However, just as in the market for goods, when property rights exist, the problem of the commons disappears.  That is, when you have to cover the full cost of raising your children and reap the full benefits (usually material in poor countries, and non-material in developed ones), the incentive will be to privately regulate your own consumption of “resources” to a renewable level – that is, not to let your kids bankrupt you.  However, in welfare state, when mothers can have extra kids covered by welfare paid for by other people, property right on children effectively disappear, incentive for the maximal family size go away, and over-population ensues (which is why welfare mom’s are more likely to have lots of kids)

 

Another common implicit statist fallacy is that technology and/or natural resources are fixed, so any population growth rate is necessarily decreasing per capita consumption.  This is ridiculous to say about a developing country, since it usually lags behind both in technology and its exploitation of natural resources (Russia is a great example of this) and almost always the lack of resource/technological development is because a free market doesn’t exist to provide the proper incentives is non-existent.  Additionally, since technology is not fixed at the status quo and new forms of natural resources are constantly being discovered, it is ridiculous to say this about developed countries as well.  In fact, some prominent physicists classify potential human energy sources in four stages – biomass, planetary, solar, and galaxy-level.  (I forget the technical terms for these.)  We are only in the first stage – using earth’s biomass (wood, coal, oil, etc) resources for energy.  Long before we run out of coal/oil/plutonium, we will switch to the next level of energy sources – planet level, and so on.  (Assuming we don’t blow ourselves up before that happens.)

 

Anyways, I could go on, but I’m sure some people will be complaining about the volume of email in their Inbox.

 

--David