Monday, May 1, 2000

Population: The Ultimate Resource

The press release titled "Population: The Ultimate Resource" was published in May 2000.

Twentieth Century has witnessed unprecedented demographic changes. For the first time in history, the world population almost quadrupled from about one and a half billion in 1900 to six billion in the span of just hundred years. Likewise, Indian population too crossed the one billion level in May 2000, from about 238 million at the beginning of the Twentieth century. This is particularly significant, since as late as the 1920s, India had experienced a slight decline in population due to poverty and deprivation.

At long last it seems that man is successfully defying death and deprivation that were constant companion of his ancestors. Infant mortality rates have fallen, life expectancy at birth have doubled or tripled, and the result is that there are more of us to enjoy life on earth as never before.

Yet, there is hardly any sign of celebrations. It is amazing that such an achievement is virtually going unnoticed. Instead all we hear is that the planet may be on the verge of collapse because of the burgeoning numbers of humans.

It is ironic that many environmentalists who would herald similar growth in population of some of the endangered species as a very good indicator of the environmental health of the planet, see the success of man as a harbinger of environmental doom. Even many economists usually consider an increase in production of steel or birth of an additional calf, as positive addition to the national output or Gross Domestic Product, but view the birth of a human child to have a negative impact on GDP.

It is indeed ironic that the birth of a human child is valued so little. After all, that baby might be a potential Tagore or Einstein, or an entrepreneur who put up that steel mill, or the farmer who nurture his land or cattle to increase its yield, or the worker who strive to increase his productivity. And it is precisely on that potential that the future of humanity depends.

Julian L. Simon

This book is dedicated to the man who thought otherwise - Julian L. Simon. He appreciated the enormous cost mankind has paid throughout history when the population is estimated to have stayed stable at a few million, and life expectancy hovered in the twenties. This made Simon aware of the true potential of man that has made him overcome such great odds.

Simon successfully challenged and helped turn on its head the centuries old Malthusian fear that a growing population will simply devour the planet, and lead to famine, disease and death of civilisation as we know it. Human population that barely crawled for millennia, suddenly tripled in the 20th century, but the world per capita output quadrupled during the same period, improving the quality of life for everyone. The best proof of this comes from the doubling or in many cases even tripling of life expectancy at birth in step with population increase.

Simon was to write later "It is your mind that matters economically, as much or more than your mouth or hands. In the long run, the most important economic effect of population size and growth is the contribution of additional people to our stock of useful knowledge. And this contribution is large enough in the long run to overcome all the costs of population growth."

Julian Simon was an economist and demographer who taught at the University of Maryland at College Park, just outside of Washington, D.C. In the 1960s he became concerned at the state of affairs and the growth of population on the planet, and wanted to do something meaningful in order to prevent the seemingly inevitable doom that awaited man. He began looking at data to see the kind of impact man has had on the planet. And he was in for a surprise.

Virtually every data he looked at, from life expectancy and infant mortality rates to health indicators, to prices of natural resources and consumption good like food items, to environmental quality, things seemed to have improved, and have been doing so for as long as one could see. Only, in the last few centuries, the improvements have accelerated even as population began to grow. Simon was convinced, "The standard of living has risen along with the size of the world's population since the beginning of recorded time. There is no convincing economic reason why these trends toward a better life should not continue indefinitely."

Simon first came in to public prominence in 1980. He took a very unusual step for an academic. He decided to place his money on the validity of his position that there is no scarcity of natural resources. He challenged any one to bet with him on prices of any natural resources. He said that if the resources were becoming scarcer, then their prices ought to rise, and he was prepared to bet that the prices would actually fall. Paul Ehrlich, a biologist and one of the foremost critics of population growth, along with a couple of colleagues, decided to take up the bet. Simon and Ehrlich agreed on five metals - copper, chrome, nickel, tin and tungsten. The bet was to be settled a decade later.

In the meantime, Simon published his masterpiece, The Ultimate Resource. He marshalled all the evidence and data and showed the long term trends. "Our supplies of natural resources are not finite in any economic sense. Nor does past experience give reason to expect natural resources to become any more scarce. Rather, if history is any guide, natural resources will progressively become less costly, hence less scarce, and will constitute a smaller proportion of our expenses in future years," he wrote. The book was completely revised and expanded in its second edition in 1996. It has now been published in over half a dozen languages. It is even available in Chinese. We hope we will have an Indian edition in the not too distant future.

The bet was finally settled in 1990. As Simon had predicted, the prices of all the metals had fallen. The fall in some cases had been so dramatic that Simon would have won even if the prices were not adjusted for inflation. Ehrlich paid up, although he claimed that the drama was not of any environmental significance. But no one ever took up Simon's standing offer again.

Simon continued teach that, "The ultimate resource is people - especially skilled, spirited, and hopeful young people endowed with liberty - who will exert their wills and imaginations for their own benefit, and so inevitably benefit not only themselves but the rest of us as well."

I had first read The Ultimate Resource in the mid-1980s. It was an eye-opener. His sense of optimism was infectious. He taught me to really appreciate the true potential of man, particularly free and independent man not chained by social customs or bureaucratic regulations. I wrote to him in 1990 after I read about the outcome of his bet. I wrote that I had not believed that any one would be foolish enough to accept such an obvious loser. That it was Ehrlich, only showed the intellectual hollowness of our opponents. We corresponded off and on, and then had the honour of being associated with some of his work. He was instrumental in introducing me to a lot of people around the world, and helped in establishing the Liberty Institute in 1995, and was a member of its board of advisors. He along with his wife, Rita, very generously travelled to India in 1997 and participated in our Freedom Workshop in Devlali (near Nasik).

Following his sudden death in 1998, we named the research section of the Liberty Institute after him. The Julian L. Simon Centre we hope will keep alive his indomitable spirit, and never ending sense of inquiry.

Simon viewed people to be the ultimate resource. He held that for their talents to flower and come to fruition, people require conducive economic and political framework that provide the incentive for working hard and taking risks. "The key elements of such a framework are respect for property, fair and sensible rules of the market that are enforced equally for all, and the personal liberty that accompanies economic freedom. In the absence of such a framework, the short-run costs of population growth are greater, and the long-run benefits fewer, than in free societies." Likewise, the primary objective of Liberty Institute is to promote appreciation of the institutional framework of a free society - individual rights, rule of law, limited government and free market.

People don't come with just a mouth, but also a mind. They are not just consumers, but also producers. This explains the apparent paradox that more we consume, more we have left to consume. Simon showed that while our number have multiplied, far from depleting the resources these have become more abundant as measured by the falling prices of almost every resources over time. The only resource whose price has been increasing consistently is that of human labour. This is the only resource which has become progressively scarce even as their numbers have grown. Because, increasing ability to consume, in a free economy, induces producers to innovate and develop newer, cheaper and better products to attract the attention of consumers. Clearly, a society that considers her people as the ultimate resource, and recognises the value of freedom will discover the key to unlimited resources.

Simon genuinely rejoiced at the potential that every new life brought. He wondered how many Michaelangelo or Einsteins would be lost to the world because of misguided preference for birth control policies. For him life was always full of promise and possibilities, and he was full of optimism that as people struggled with problem, they would make the world a better place than ever before.

Simon did not say that there were no problems. He only said that the trends were that life was getting better than before. He admired man's willingness to strive to improve further. As we enter the next millennium, and think of all myriad problems confronting mankind, we would do well to remember Simon's predictions for the coming century, "humanity's condition will improve in just about every material way." The issue will clearly continue to be debated in future just as even the ancient Greeks had worried about the possible Malthusian doom much before the arrival of Thomas Malthus himself two thousand years later. But another prediction of Simon unlikely to generate any debate is: "humans will continue to sit around complaining about everything getting worse."

The Argument

In this small volume we have sought to bring together the ideas of Julian Simon, and others who shared his basic perspective. But each of the essays seeks to bring out a different aspect. The book has four articles of Simon. The first is his speech at our Freedom Workshop in 1997. Here he outlines his basic ideas concerning population, environment and development - that more people, produce greater wealth, enjoy a healthier environment and have access to abundant resources.
In a second article Simon argues in favour of immigration. In view of the periodic outburst of sentiments against immigrants from neighbouring countries, and migrants from countryside to the cities, that we experience, Simon's reasons for keeping the borders open should be of interest to readers in India. He says, "Opponents of immigration seek to persuade us that new immigrants damage society economically, politically, and culturally. Immigration restrictions are intended to "protect us" in the same way as tariffs and trade quotas. But like trade barriers, immigration restrictions largely protect us from benefits." He reminds us of the tragedy of the now defunct Berlin Wall where so many lost their lives trying to escape from tyranny at home. And in his characteristic fashion he says, "This should remind us how wonderful it is that people want to come here."

In another piece, Simon takes an unusual look at Shakespeare's Sonnet I, and finds that the bard's "vision uncannily parallels a current theory on the subject." In the poet's quest for truth and beauty, Simon finds " truth and beauty are like knowledge, and thereby like the supply of natural resources that flows from knowledge, …..our stocks of intellectual goods are not depleted by use, but will continue to enhance forever human life." This essay provides a distinctive insight in to Simon's mind, and provides a glimpse to the sense of joy the author feels as he goes about exploring new territories.

We have also included an autobiographical piece that Simon was asked to write in 1996, a couple of years before his death. In this piece Simon not only sketches his life, but also shares his philosophy. He concludes by a self-assessment, "I have lived an extraordinarily lucky life." True to this assessment, this lucky man has left the world incredibly richer.

Lord Peter Bauer, the dissident development economist, in this reprint of his 1991 essay shows why a growing population is not an obstacle to economic development. He writes, “There is ample evidence that rapid population growth has certainly not inhibited economic progress either in the West or in the contemporary Third World. The population of the Western world has more than quadrupled since the middle of the eighteenth century. Real income per head is estimated to have increased fivefold at least. Much of the increase in incomes took place when population increased as fast as in most of the contemporary less developed world, or even faster.”

Advocates of population control generally like to point at the apparent reduction in per capita availability of agricultural land. They assume that this trend has sealed the fate of mankind. However, Bauer says, "It is pertinent also that productivity of the soil in both prosperous and poor countries owes very little to the "original and indestructible powers of the soil," that is, to land as a factor in totally inelastic supply. The productivity of land is the result largely of human activity: labour, investment, science, and technology. Moreover, the factor price of land, including return on investment, is a small part of the national income in most countries; and this proportion has tended to fall rather than rise those Western countries for which reasonably reliable statistics are available. This would not be so if land were acutely scarce are acutely scare relative to other productive resources."

Deepak Lal, another renowned development economist in this updated version of his 1989 article finds that that population growth has had no impact on India's economy, particularly agriculture, and that there were other factors. To those concerned about burgeoning population and its impact on food production, Lal says, “Apart from the few Green Revolution States, much of the agricultural growth in India has been induced by population growth.” So much for Malthus.

Columnist Sauvik Chakraverti argues that population growth causes prosperity and urbanisation and free trade are suited to absorb the diverse potentials of the increasing numbers. “The proof that population causes prosperity can be condensed into four words: Urban Areas Are Rich,” writes Sauvik.

Indeed, there is a very good correlation between rates of urbanisation and economic wealth, in India as well as internationally. On the other hand, there is hardly any relationship between population density and economic wellbeing. Today, Japan and India have comparable population densities, but there is no comparison between the two economies.

Traditionally, people have always tried to crowd together in order to maximise the benefits of trade and exchange. In fact, if today's six billion people could be placed together approximating the population density of, say, Singapore (5000 people per sq. km), they would fit in to an area about one third of India. And the world would be a much richer place with abundant land and resources to sustain a cleaner, greener, and healthier world.

Nicholas Eberstadt, a political economist, identifies the ideology that has been at the root of the belief that population needs a public policy to restrain it from proliferating. He cautions, "To make the economic case for an active population policy, population planners would ultimately need to centre their arguments on estimates of the economic value of human life. They would have to show, in effect, what would be the "present value" of a child born today, and also to show how that present value would be changed by altering the size of the baby's cohort of peers, or the cohorts following." Eberstadt also points out that demographic change may assume a variety of manifestations, its form in the modern era has typically been both comparatively benign and relatively advantageous for the purposes of economic growth.

The implications of demographic change are not restricted to the economy alone. For instance although the rate of population growth is slowing, due to falling birth rates, the absolute annual increase is still near its historic high of 86 million a decade ago because there are so many women and men of childbearing age. Over 95 per cent of growth is in developing countries.
Consequently, In 1960, Europe had twice as many people as Africa; by 2050 it is estimated that there will be three times as many Africans as Europeans. Asia, by far the most populous region, has more than doubled in population since 1960, as has Latin America and the Caribbean. Meanwhile, population growth has slowed or stopped in Europe, North America and Japan. The United States is the only industrial country where large population increases are still projected, largely due to immigration.

Clearly, the declining share of the European-Caucasian is likely to affect many other spheres of political and economic life. This raises the prospect of other possible agendas playing a role in shaping the debate over of population. Even The Wall Street Journal has recognised that “[T]hough the talk about reducing population is couched in terms of individual ‘freedom’ and ‘choice,’ …..the context of these choices is a world where more babies—especially yellow, brown and black babies—is thought to be a scourge that threatens the well-being of everyone.”

As Bauer says, "The central issue in population policy is whether the number of children people have should be decided by the parents or by the agents of the state." In the present era of globalisation and democraticisation, this issue assumes added significance. Because at a time when there is a general recognition of the people's freedom to choose their political representative and pizzas, or between their colas and the cars, any attempt to deny people the choice over the size of their family will heighten the anomaly.

The fundamental issue as we enter the new millennium is should we consider our fellow human beings as a resource and shape policies that protects his freedom, or should we look at our numbers and think of it as a drain on our limited resources.

In a small way, this book seeks to reopen this debate. We would achieve our aims, if these few essays help to introduce the reader to a different perspective. The human population is the ultimate resource and not the problem. Rather than blaming the people, we should look at our policies that have curbed the spirit of inquiry and enterprise, and led to the wastage of the most precious of all resources, the human mind. We hope this book will succeed in expanding the scope of the population debate. Our future and those of our children depend on it.

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