08 February 2010

Wasting our most precious resource?

"California's Central Valley will be the Appalachia of the West" says the Economist. It won't be if California's scarce water is traded at market prices, instead of allocated to historic users. That's the fastest way to maximize the value of our scarce asset. No change will merely enrich a few while producing crops (and goods and services) is lesser value.

Speaking of precious resources, this conservative pundit says that "economic growth depends strongly on an expanding population." He goes on to equate more babies with more prosperity. I've got four objections to his line:
  1. He's got it backwards: More prosperity leads to more babies, and even that trend has its limits.*
  2. "Growth is good" depends on your acceptance of GDP as a measure of happiness, which it isn't. (It measures trade in the cash economy.)
  3. He's missing the (negative) environmental impact of more people.
  4. Many economic "problems" with smaller populations result from Ponzi scheme policies that require the young to pay for the old (as with social security). Those polices can be reformed, defusing "demographic timebombs."
Bottom Line: Many of our problems result from the perverse incentives of bad policies, not human stupidity or natural constraints.

* Unless ignorance reigns:

6 comments:

  1. David: The conservative pundit might have commented on economic advantage of Haiti, Afghanistan, and sub Saharan Africa. These are places with very high birth rates.

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  2. David, quick response:

    1) More prosperity within social systems leads to more babies, relative to that system. Across systems, however, more prosperity leads to fewer babies. Look at the population growth and decline numbers for countries; with only two exceptions, all developed countries are in population decline.

    2) I like your comment here.

    3) Environmental impact of more people is an oversimplification of the problem. It is per capita consumption within the current consumption paradigm that is causing so much environmental degradation. There exists technologies which mitigate this to a remarkable degree.

    4) I agree with your comment here.

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  3. I'm reading through the actual article, and though I agree with him that pop. growth won't be a problem, I also don't think pop. shrinkage is a problem, either. Actually, I'm quite happy about it for future humans.

    He makes a simple circulatory argument: That population growth causes economies to expand, and economic expansion is good. His definition for good? Expanding economies. Therefore, "languishing" GDP is bad, strictly by his definition.

    Oh, those poor Swedes! I bet they wish they were all Bangladeshis.

    He's offered no reason why an expanding GDP is, in and of itself, a good thing.

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  4. @FC -- Yes, they are high. Does that mean that high rates will make the US poorer? You've got a causation/correlation problem.

    @Josh -- excellent comments. Agreed!

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  5. Mike E. said: "Nice note David. Hope the talk goes well. An interesting comparison... coming from WV as I do... I'm wondering if banana republic might also be in order? Or would that only work if Obama installed the next governor and we had mroe subsidized beat-downs. (The feds do an impressive job on the border and in Humbolt, tho)."

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  6. Haaha -- glad to get the real opinion from an old timer :)

    Don't think that they do a good job in Humboldt, tho -- free and easy drugs are a sign of a broken law. The border is also troublesome, since it (again) makes people who want to work into law breakers.

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