Economics and Population

[Naja]

No, I'm not a Malthusian!

But seriously, those of you who have some education in econ (and preferably sociology, too), I'd like to have your opinion: is economic growth possible without population growth?

Begin!

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[Erik]

I only had economics at high school for 3 years, so I'm no expert.

But why wouldn't it be possible?
And aren't there lots of examples of places with a declining population and a growing economy?

[Naja]

I only had economics at high school for 3 years, so I'm no expert.

But why wouldn't it be possible?
And aren't there lots of examples of places with a declining population and a growing economy?

Yes and no. The European Union, for example, actually has a growth rate (and a currency) that is starting to outpace the U.S. However, while their birthrate is negative, their population still needs to increase: they just have to do it through immigration (no extra charge, that's one of the root causes of this whole anti-Muslim backlash that we're seeing throughout Europe).

I'm not sure. Are there any examples of developed (industrial or post-industrial) countries with a "steady state" population that still experiences economic growth?

This question is sort of funny, because I remember when reading Wealth of Nations that Adam Smith thought the relationship was reversed - that population growth necessitates economic growth (wealth accumulates, the capitalist reinvests the wealth, he raises wages to hire more workers, the birthrate goes up because higher wages improve living conditions, the larger population fills up the workforce, wages go back down, wealth re-accumulates, etc.). Smith was obviously writing at the beginning of the Industrial Revolution, and he obviously wasn't familiar with the Demographic Transition (better living conditions and lower mortality rate actually decreases the birthrate over time because people don't need to have such large families), so his population theory was really a product of the times.

[Aristophanes]

Declining population growth can lead to better economic statistics, particularly in nations with low economic growth. Of course, non-replacement birth-rates aren't just inevitably economic dead-ends, they are also societal, social and cultural dead-ends.

[Naja]

Declining population growth can lead to better economic statistics, particularly in nations with low economic growth. Of course, non-replacement birth-rates aren't just inevitably economic dead-ends, they are also societal, social and cultural dead-ends.

That's true, Aristophanes, especially socially. Look at China's one-child policy. China is now going to have a generation that never had siblings or cousins. That's going to have profound implications - all of them bad.

This is more about the Demographic Transition (but it involves the economy), but another reason why Europe allows so many immigrants to enter its country is because its national (European) population is aging, as well as declining in birthrate. In other words, there are slowly more old Europeans than young (working-age) Europeans. Considering that most European countries are very welfarist, that has a lot of other nasty implications (a larger proportion of people on government benefits than there are younger workers).

A society with a low birthrate and a low death rate doesn't have to be older, though. At least in theory, it will level off to where there is a healthy proportion of younger workers to older non-workers. But no society's gotten there, yet. I wonder if there's some sort of impetus to keep the population growing in any way - hence my question. Could the economy keep growing if the population stopped getting bigger (as in, birthrate and immigration only replenish the population, and do not increase it)?

[Erik]

I'm not sure. Are there any examples of developed (industrial or post-industrial) countries with a "steady state" population that still experiences economic growth?

Spain: pop growth +0.13%, economic growth 3.4% (2005 est)
Belgium pop growth +0.13%, economic growth 1.5% (2005)
Japan: pop growth +0.02%, economic growth 2.4% (2005 est)
Germany: pop growth -0.02%, economic growth 0.9% (2005).
Poland: pop growth -0.05%, economic growth 7.8% (Q3 2006)

[Naja]

Those are reassuring figures, Erik. Thank you.

The environmentalist in me just finds something wrong with today's "grow or die" variety of capitalism. All these apologists for the system are either dense, or blind, or both: there is only so much that humans can grow before the global ecosystem (read: "long-term human survival") becomes irreperable and irreversibly damaged.

A finite world simply cannot accomodate an economic order that demands infinite population growth. Not unless you want to colonize space, or some weird **** like that.

[Aristophanes]

Those are reassuring figures, Erik. Thank you.

The environmentalist in me just finds something wrong with today's "grow or die" variety of capitalism. All these apologists for the system are either dense, or blind, or both: there is only so much that humans can grow before the global ecosystem (read: "long-term human survival") becomes irreperable and irreversibly damaged.

A finite world simply cannot accomodate an economic order that demands infinite population growth. Not unless you want to colonize space, or some weird **** like that.

Finite is a relative concept: compared to two-thousand years ago, or even one hundred, the possibilities this world affords in terms of energy and food have exploded.
But we don't have to worry about population growth: if anything we'll have to worry about population decline.

[Naja]

Seneca: I appreciate you bringing up the Demographic Transition again. While aggregate population growth isn't necessarily hand-in-hand with the relative age of the population, they become intertwined when you're talking about the long-term economic well-being of a society (can't accomodate growth if most of your population doesn't work, can you?). But, unless I misunderstood you, your main concern seems to be just that: the proportion of young workers to older state dependents. If that's the case then wouldn't the age demographics even out over time? Since birth and death rates are low, and average life expectancy becomes higher, that means that quality of life will reach a higher average. Translation: people will (willingly) work longer and retire later.

Secondly, you have to account for technological innovation. Even if the young and the old don't reach equilibrium, what does that matter if technology can make the working demographic sufficiently productive? If technological improvements and automation can help workers create enough wealth for a secure economic growth, what does it matter if there are less workers? That's the trend these days, with or without population disparities - automation displacing human labor. If you think about it, an aging population might be a blessing in disguise! Technology and automation are already worsening unemployment problems; if there are less people who work in society, then that means there will be less contested "jobs" due to automation, and therefore less unemployment.

[Ó Cathasaigh]

I just finished a course in Macro-Economics this semester in College, so I'll do my best.

I suppose Economic growth IS possible without population growth. Of course you have to take into account Real numbers, rather than nominal numbers. Standard of living is the key in this scenario.

Look at China, while they are growing NOW, they didn't have the technology to realy take advantage of their ever growing numbers.

[Denny Crane!]

Well every economic advisory body of each western country that has in unison I believe a declining birth rate believes that you need an increasing population for sustained economic growth.

Economic growth is something that is very carefully balanced. In the west we have moved from manufacturing to secondary, tertiary and service industry and mismanaged government education policies have led to a decline in basic primary workers which has meant an influx of basic skilled workers was neccessary. This was nothing to do with an aging population, this was to do with educational management.

The lack of workers for basic manual labour is more to do with an affluent society than population decline.

What cannot be ignored is the aging population, the increase in people claiming off the state and the shift in age demographics. I do not it is possible to sustain a highly successful economy without population growth. I say this because major pension reform is not acceptable to the population. If they were to push it through and push the retirement age back to 70 immediatly then we could survive admirably. That along with major reform of a mismanaged pension system that wastes tens of billions a year. Regardless there will be some loss of growth without immigration.

In the case which I am speaking which is of course Britain we must bear in mind that a great deal of pension worries were caused directly by Gordon Brown raiding pension funds for billions on his conception as chancellor.

Peter

[RusskiSoldat]

Underpopulation usually comes as a result of prosperity, not the other way around.
Of course places like Poland which have dropping populations and rising economies are the exception since the ex communist states are catching up to the west businesswise. When there is more equality between east and west, east will stagnate along with west.