The Macroeconomic Effects of Increasing Populations on Scarcity and Abundance.

A summary and some considerations.

Max,

First, some housekeeping. I am so excited to start on this project with you! I have always enjoyed our in depth conversations and have always walked away from them feeling smarter and better acquainted with the world than when I walked in. I also believe that both we and anyone who happens to come across these have something to gain from our discussions on the things we find interesting. To keep these letters cohesive we should establish some expectations, here are a couple that I have thought of, let me know if you want to change or add anything. I think we should write these letters addressing each other, but keeping a hypothetical larger audience in mind. That means that I will go out of my way to define words and concepts that I don’t think are commonly known. That also means that I will try to give these letters some structure and come to an actual point rather than ramble on and on. I also think that we should try and write these on some kind of a schedule so that we can keep the conversation going. Something like “Cade publishes on Wednesday’s and Max publishes on Saturday’s” or something to that effect seems reasonable to me, that way we’re writing once a week.

Second, I am pulling most of what I am discussing here from this podcast. The guests of the podcast, Marian Tupy and Gale Pooley, wrote a book on this subject, Superabundance: The Story of Population Growth, Innovation, and Human Flourishing on an Infinitely Bountiful Planet. I am currently working through the book and I would highly recommend both it and the podcast as they are much clearer and go much deeper into this topic. I am hoping in this letter to outline Tupy and Pooley’s points as well as some of their potential ramifications on culture and public policy. I think we could have an interesting discussion on the accuracy and the “so what” of the paradigm shift outlined by Tupy and Pooley.

Soooo here I am about a week later and I’m realizing that trying to explain this all myself is probably a little too much too soon. So please listen to the podcast before continuing for context.

Supply

I find this discussion fascinating for a few reasons. First of all, it is absolutely true that we all were taught (probably implicitly) that having too many people on the planet is an obvious problem. To hear people pushing back against that narrative is refreshing and unlocked a mode of seeing the world that I had never considered. Have you noticed that what we learned growing up and the contexts we find ourselves in today frequently sculpt the scope of possible ideas we can have? But I digress, that is a conversation for another time. I remember growing up and seeing all sorts of movies that detailed the detrimental effects of increasing populations on the world (frequently through the lens of climate change, which I think assumes that increasing populations are bad [more people = more pollution]); see The Day After Tomorrow for just one example. All of this implicit knowledge fails to address the economic reality.

I find it so interesting, given how supply and demand works, that the prices of nonrenewable resources have actually decreased. I understand some aspects of how that works (with increasing technology we are able to gain access to greater reserves of a recourses, see fracking), and so you could argue that supply “increases”, but that doesn’t solve the issue that there actually is a finite amount of oil on the earth. This strikes me as a very similar to the coastline paradox (also something we should totally talk about). The issue is that shouldn’t we advance to a point that we are able to literally extract every last (insert your favorite nonrenewable here) and there would be no more on planet Earth? I guess the answer then would have to be looking outside our planet, or developing alternatives to replace it as oil is being slowly replaced by renewable sources of energy. I am not satisfied by that answer though. It feels too much like humanity is stumbling forward and barely getting our feet under us in time. Regardless, it seems that supply has been increasing at a faster pace than demand (hence prices lowering), or at least the economy behaves as if supply has been increasing. It seems that the economy, when it comes to nonrenewables, doesn’t care about actual supply, it cares about our effective supply, or the supplies of the resource that we actually have access to.

Time Prices

I love the measure that they use of time prices. Even in my own past laymen’s research of changing prices over time (i.e. "Isn’t it so crazy that hotdogs used to cost 3 cents in 1906?!”) I was never able to capture exactly the discrepancies between our purchasing power now, and the purchasing power of the past. While you’re obviously the economics major between the two of us, I think that measuring changes in economies in terms of time prices makes a lot of sense. It allows us to measure, in a very real sense, how changing economies affect the day to day lives of real people. It also makes this kind of work more accessible. Time prices are an intuitive measure that with minimal explanation clicks with people and makes it easier to have this kind of a discussion.

Increasing Populations

Isn’t it so interesting that it appears that as populations increase economic prosperity increases at an even faster rate? I think a lot of us have internalized the idea that by having kids we will just be creating another drain on our planet and will only be hurrying on it’s ruin, but that doesn’t appear to be the case. It seems that we actually create more than we consume, and isn’t that an amazing thing? As the authors noted, just imagine what our world be like if China hadn’t instituted its one child policy. There would be at least 400 million more people on the earth and we would be that much better off for it.

There are some thoughts on this issue for you Max. I’d love to hear what you think and see where this discussion takes us.

-Cade