I sometimes irritate people because I'm unwilling to let little things slide by. We'll be having a discussion about some larger issue, and I'll fight to the death over a throwaway sentence in the middle of three pages of single-spaced text. The reason I'm willing to do this is because while the three pages of text may be pretty good overall, it's the punchy but not-quite-true sentence in the middle that people will actually remember*.
This line of thought was provoked by John Sumser's Labor Shortage 3 article, which casually lobs this assertion over the wall as if the author was stating a law of physics:
"As mentioned in yesterday's article, there will be 60 Million new workers in the USA over the next 20 years. That's a 20% growth in the labor supply. Unfortunately, we need about 70% growth just to stay out of recession."
Bullfeathers.
The relationship between population and economic growth is murkier and filled with more wild-eyed speculation than the waters of Loch Ness. Add the words "My gut tells me" after "unfortunately" in the paragraph above and you get something a lot closer to objective reality.
Russia is now doing well economically while the bottom falls out of its population, but that could be nothing more than a figment of the price of oil. Little good that's done for the Middle East, though, where countries like Egypt have long seen economic stagnation alongside some of the highest population growth in the world. Japan has one of the lowest population growth rates in the first world and is past the tenth year of economic malaise, while China has slashed its population growth rate towards developed-world levels whilst turning in annual growth in the 10% range, but so has India, which is set to outgrow China in the not-distant future. Western Europe and the UK, as usual, are somewhere in the middle of all this.
One thing that's rather obvious is that comparing the economies and populations of Japan, China, India, Russia, the US, France, and Saudi Arabia, is like comparing fish with bicycles. Even here in the US it's hard to connect economics with population growth in any large way. Here in the Boston area, a family in the wealthy suburb of Brookline with three or four kids may be doing very well economically, or they may be conservative Jews who value a large family more than material luxury.
Do more people equal more economic growth? Only if you believe in the labor theory of value, which is a fancy way of saying that the economic value of a factory worker's eight-hour shift is the same as the factory manager's 9-5 day. Even the seemingly-obvious cases fail to support this notion, like real estate prices. Most of Boston has lost population over the past 50 years, with many neighborhoods like Beacon Hill and East Boston having half or less the number of residents in 2000 than in 1950. You'd think that with half as many people living somewhere, housing prices would go down. But in fact, they've soared, due in large part to people living in larger houses than they used to. It's just one mroe example of how markets often confound expectations. In the real world, all the variable sin the equation change simultaneously.
This issue aside, John's series has been excellent on the whole in that it recognizes that the "shrinking labor pool" argument is not half as simple as it's made out to be. And if anything, the US is set to become even more exceptional over the next half-century as we are the only first-world nation on track to experience any population growth, let alone the substantial growth that is predicted.
