18 Apr 2008

FT: "Procreation does not result in wealth creation"

The Financial Times has a very interesting article on the relationship – or in this case, lack thereof – between population growth and prosperity. It astounds me a little that any of their findings would be surprising to a first-worlder in 2008, but I’ve heard enough people lament the population decline in Japan and Western Europe that this obviously isn’t the case.

There are two important lessons here. One is that we should always look at per capita, rather than overall, production when measuring the success or failure of various economic policies. Any policy that produces a higher GDP at the expense of a lower per-capita figure is stupid, since it’s the per-capita figure that’s linked most intimately with standards of living. Lesson two is that policies that are based on continuous population growth just aren’t sustainable, and we need to get rid of them (or at least rethink them) before we hit the inflection point and they become untenable. What we need not to do is view the population decline itself as a problem, because it’s not. It’s taking population growth as a given that’s the mistake.

Countries with declining populations, or with populations that may begin to decline soon, have a unique opportunity to consolidate standards-of-living gains and create new social structures that aren’t predicated on pumping out offspring (and consuming non-renewable resources) by the bushel-basket. This is nothing but good for people living in those areas, provided the transition is managed thoughtfully.

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