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Backgrounder #367 on International Organizations

July 13, 1984

Treating People as an Asset

By


(Archived document, may contain errors)

a 367 July 13, 1984 TREATING PEOPLE AS AN ASSET INTRODUCTION Nations Fund for Population Activities at a cost of millions of dollars--much of it coming from U.S. taxpayers--convenes in Mexico City, August 2-

6. Despite the rapidly approaching date neither the U.S. delegation nor the U.S. strategy has been selected.

The cause of this inaction is the rag.ing controversy about issues that will be addressed at the Conference. On one side are the right-to-life groups who are against abortion, members of Congress and the Administration (including apparently President Reag a n) who worry about government interference in family life and certain experts who have pointed out that the pessimistic Malthusian view of the world is unfounded and wrong The World Population Conference, sponsored by the United On the other side is the I l population lobby composed of environmental and zero-growth organizations who worry about the effect of more people upon resources and the environment) and the State Department and Agency for International Development, which long have insisted that populat i on growth reduces economic growth and increases political instability. These are the 'IMalthusians,l1 those whose view of the world assumes that the supply of physical factors is a key element in production, is fixed in supply [e.g land] or diminishes wit h exploitation [e.g an oil well rather than continually being augmented, and where output per worker therefore, falls as additional workers are added. This group has been joined by most members of Congress and some members of the Administration onto the tu r f where they are politically strongest: the matter of prohibiting abortion. Just two sentences in a White House draft position paper, prepared by the National Security Council The population-control advocates have pulled the struggle i 2 at the behest of t he anti-population-control side, deal with this topic. These passages recommend a cut-off of funds to country programs that promote abortion. While this is an important matter, it is only one aspect of the White House draft. The bulk of the draft, in fact , addresses the crucial issue of the relation ships between population, economic growth, and economic systems It makes the argument that should be at the center of the U.S delegation's strategy in Mexico City--that in the long run a growing population is b e neficial in an economic system that provides incentives for enterprise THE NEED FOR A BALANCED U.S. DELEGATION tuted entirely by those uncompromisingly in favor of population control. This seems to be the wish of the population lobby and the State Departm ent, and it was the case at the World Popula tion Conference in Bucharest in 19

74. Or will the delegation be balanced to reflect the diversity of American views on the ques tion? Not only would it be common fairness for this .diversity to be represented, but it could head off the sort of.resentment that was directed at the United States for its aggressive anti-natalist position in Bucharest. Such a catholic and tolerant policy could begin to win back friends that the United States has lost on ac count of t he coercive, U.S.-backed population-control programs A key question is whether the U.S. delegation will be consti- in several countries, such as India and 1ndonesia.l THE PRO-CONTROL VIEW The reasons given for reducing population growth, according Populat i on grow th is contributing to unusual economic social, and resource pressures which threaten to under mine U.S. initiatives for peace, economic progress, and human dignity and freedom in many areas throughout the world. Intelligence analyses identify four destabilizing aspects of population change and demographic pressures that can be exploited by communism and extremist movements which breed on frustrated aspirations a) Fast-growing youth populations b) International migration Ex plosive growth of cities d ) Ethnic tensions.2 Vincent Barabba, the U.S. representative to the Population to a State Department draft statement, are Commission planning the Mexico conference, earlier this year said The Agency for International Development says that it no longer sup ports any programs that are in any way coercive, though it does admit previous involvement.

In the past, however, AID has said exactly the same thing.

State Department Draft U.S. Scope Paper on the Definitions of Conference on Population," no date, pp. 2-3.

High population growth rates are undoubtedly hampering the efforts of many countries to achieve their economic and social goals, including basic elements of human life and dignity: adequate food and water, health services education, shelter, and employ ment continued high rates of population growth can slow the progress of development efforts generally and exacerbate the forces that sustain high infant and maternal mortality, the unmanageable movements of people, the deterioration of family struc ture, and the many other population problems whose solu tions we seek.3 But these assertions simply are not supported by the facts.

POLITICAL DESTABILIZATION The Weakness of the Political Argument It is a truism for many people in and out of the government that population growth has an unsettling effect, especially in poor countries. For example, in the March 19, 1984, Wall Street Journal Karen Elliott House and Steve Frazier wrote about the purported effects of rapid population growth and migration to the citie s as follows Though migration to the cities is the pattern all across the Third World, from Jakarta to Lagos, from Bombay to Caracas, nowhere is the problem more immediately threaten ing to U.S. interests than in Mexico City. These people form a pool of ur ban unemployment that could undermine political stability on America's southern border.

And the State Department's pro-control draft asserts that Fast-growing youth populations are growing faster than most developing countries can absorb them..tincreasingl y frustrated and angry, ready recruits for a cause, who have fueled unrest in Kenya, India, Lebanon, the Philip pines, Iran and elsewhere International migration creating growing political and social tensions in Africa the Near East, Asia, and Central and South America Explosive growth of cities The combination of over crowding, unmet expectations, and different ethnic religious, and social groups makes a politically vola tile mix. Violent demonstrations and mass riots over food or sectarian causes in the r ecent past in cities as varied as Tunis, Bombay, Sao Paulo, Cairo, Rabat Karachi, and Rio de Janeiro are manifestations of these growing pressures Ethnic tensions potential inter national conflicts over land, water, or resources, its influence should not b e ignored Popline, January 1984, pp. 1, 4. 4 The body of scientific literature on the subject, however is thin To the extent that there is systematic analysis, the conclusion seem to be that there is no connection between popula tion growth and war--or ot her political instability--due to the struggle for economic resources.

Quincy Wright.

Sciences, Wright argued The greatest inquiry ever into the causes of war was that of In his short summary in the Encyclopedia of Social Population pressure---has had lit tle influence in pro ducing war unless accompanied by increased knowledge of economic differentials and by inciting propaganda In sum, studies of both the direct and indirect influence of economic factors on the causation of war indicated that they have b e en much less important than political ambitions, ideological convictions, technological change legal claims, irrational psychological complexes, igno rance, and unwillingness to maintain conditions of peace in a changing world (pp 462-463 Nazli Choucri of the Massachusetts Institute of Technology has completed some recent work on the subject. She concludes that 11demographic8f factors sometimes lead to conflict, violent and nonviolent. But the key demographic factor is the relative increase in one ethnic g r oup relative to another, rather than increase in population size or population density per se. This can be seen most clearly by simply listing the wars that she considers Ilarchetypical cases of Ilpopulation dynamics and local conflict." These are: the Al g erian War of Independence, 1954 1962; the Nigerian civil war; the two wars involving Indonesia the conflict in Ceylon and El Salvador-Honduras; and the Arab Israeli series of wars. None of these would seem to be conflicts launched to obtain more land or m ineral resources to increase the standard of living of the group initiating the conflict.

To show that population growth causes conflict, it must be shown that two neighboring countries or groups, both of which are growing rapidly, are more likely to come into conflict than are two neighboring countries or groups neither of which is growing rapidly. This Choucri.has not shown-nor has anyone else. In Choucrifs view, conflict could just as easily be caused by one country or group reducing its growth rate rel ative to another country or group as one increasing its relative growth rate.

And in fact, many have argued that it was just so in the case of France and Germany, when France's birth rate was so low that it induced the Franco-German wars political instabil ity is another of those pervasive notions that everyone lfknowstl is true, which seems perfectly logical, but has no factual basis in the empirical evidence. There are many who will tend to disregard the empirical evidence on the matter, as has been the c ase with the economics of population and resources generally, on the grounds that the Malthusian theory is com pellingly strong.

Only time can tell which leads to the correct forecast. Yet In sum, the purported link between population growth and There is no logical rebuttal to that position 5 historical evidence has been unfavorable to those who maintained the Malthusian position.

Even if real conflicts over land for its economic output have sometimes occurred in the past, such conflicts should become less likely and may even disappear in the future. The reason is that land progressively becomes less important relative to other economic activity as countries develop.

The Weakness of the Economic Argument The economic justification for the population-control line is straight out of Malthus, as embodied in the Coale-Hoover study, which has provided the rationale for the U.S. government population policy since the late 1 950s, as well as for The Limits to Growth project of the Club of Rome and The Global 2000 Report to the President of 19

80. A good many lfintellectualslf in the poorer countries share this point of view. But many leaders and much public opinion in those sa me countries reject it, correctly believing it to be mistaken scientifically and regarding it as imperialistic interference by the U.S. The pro-control people will undoubtedly try to be less abrasive in 1984 than they were in 1974 in Bucharest, when the U . S. caused a storm of conflict by attempting to impose a population-control viewpoint upon the Conference. But they hold the Malthusian view so strongly that they are likely to push it as far as they can. And in this they have the sympathy of Rafael Salas, head of the United Nations Fund for Population Activities, and Leon Tabah, the head of the U.N. Population Division.

To be sure, in the short run, an additional person--baby or immigrant--reduces the community's standard of living. This extra consumer cau ses the temporarily fixed stock of goods to be divided among more people. As Malthus argued, more workers laboring with existing capital result in less output per worker.

If a family or nation decides that it wants not to have more children because the sh ort-run burden outweighs the long-run benefits, it can certainly make such a choice, subject to its own values. But if they should decide not to have more children because they think resources will be limited in the long run and therefore "diminishing ret urns" must occur, this choice would be made in error.

In the long-run, the story diverges from the short-run Malthusian bind. For the richer countries during the past century population growth has not shown a negative effect upon economic growth, according to the data of Nobel prize-winning economist Simon Kuznets. For example, though population has grown six times faster in the United States than in France, the rate of increase in output per person in the United States has been about the same as in France , and the level reached has been higher in the U.S. Nor do cross-national comparisons undertaken by Kuznets and others show any negative effects. A World Bank study shows that income in the poorer countries grew proportionally as fast or faster than it did in the rich countries between 1950 and 1975 though population grew much faster in the poorer c~untries These facts should be enough to dispel the Malthusian myth even if they are not conclusive proof that a larger population should be judged as beneficial in all ways. i 6 The purported negative effect of additional people upon natural resources, the bete noire of the environmentalists, .is stated prominently in the State Department draft The current situation of many developing countries, however, differs in certain ways from conditions in 19th century Europe and the U.S.

The rates and dimensions are much higher now, the pressures on land, water and resources are greater If Ilpressures are greater" is to have any meaning, it must be that these resources are less available now than earlier that the prices of food, metals, and other raw materials have been declining by every measure-especially relative to wages in the U.S. and even to consumer goods--since at least the beginning of the 19th century. In other w ords, despite the conventional wisdom that if one begins with an inventory of a resource and uses some up, there will be less left, raw materials have become less scarce. To continue to assert the contrary is to be unaware of the body of work beginning wi t h Barnett and Morse's 1963 classic Scarcity and Growth. It also ignores a considerable body of more recent work that reinforces this conclusion, such as this author's The Ultimate Resource and in the The Resourceful Earth.5 The evidence shows that, given t ime to adjust to shortages with known methods and new inventions, free people create addi tional resources, thereby confuting Malthusian reasoning. The extraordinary aspect of this process that begins with actual or perceived shortage due to population or income growth is that it eventually leaves things better off than if the shortage had never arisen, thanks to the resulting new techniques A specific example: plastics began as a substitute for elephant ivory in billiard balls after tusks began to grow sc a rce. That is why the life expectancies and the incomes of the people of the world have been rising along with rising populations, despite the increasing use of resources. This idea may be mind-boggling, but facts are facts This assertion has been refuted c omp1,etely by data showing THE WHITE HOUSE PAPER When a draft paper endorsing the pro-growth, anti-control position was leaked, former Senators Robert Taft, Jr., and Joseph D. Tydings, "both affiliated with the Population Crisis Committee decried the Whit e House draft in a recent letter saying that it would represent the adoption of a 'fundamentalist know-nothing' political philosophy with respect .to population and development in the less-developed nations. If "know-nothing f David Morawitz, Twenty-Five Y ears of Economic Development: 1950-1975 Baltimore: Johns Hopkins University Press, 1978).

Julian L. Simon, The Ultimate Resource (Princeton, N.J Princeton University Press, 1981); Julian L. Simon and Herman Kahn, The Resourceful Earth (New York: Basil Blackwell, 1984).

The Washington Post, June 14, 1984, p. A3. 7 refers to innocence of the scientific facts, one reply might be that the State Department position is indeed that, whereas the White House draft is generally consistent with the available evidence represents a 180-degree reversalll and is Ira potential foreign policy embarrassment of serious proportions.Il nation with moral principles continue to promulgate statements contrary to the scientific evidence just to be consistent? And would it not be e m barrassing for the U.S. to continue to endorse unfounded policies ment. Comparison of the data on density and economic growth across nations reveals that higher density is associated with faster rather than slower growth. Fly over Hong Kong--a place seemi n gly without prospects because of insoluble problems a few decades ago--and you will surely marvel at the astounding collec tion of modern high-rise apartments and office buildings. Then drive around on its excellent and smooth-flowing highways for an hour or two, and you will realize that a very large concentration of human beings in a very small area does not prevent comfortable existence and exciting economic expansion, if the economic system gives individuals the freedom to exercise their talents and to take advantage of opportunities. And the experience of Singapore makes clear that Hong Kong is not unique The former Senators also asserted that the White House'draft But should a great Nor is high population density a drag upon economic develop Singapore , in fact, despite its very high density, now suffers from a labor shortage in the sense that it is bringing in workers from abroad to fill jobs in construction and elsewhere.

And ironically, after years of the worldls strongest economic I coercion to indu ce people to have fewer children, Singapore is now considering giving incentives to middle-class families to have more children So much for the necessity of population control if a nation is to have economic development r i I Lest one wonder whether there is something special about Hong Kong and Singapore-whether just being Ilcity states" accounts for their astounding success in the face of high density and rapid population growth-consider that both have larger populations than many countries of the world w ith much larger areas. Would there be some reason to think that Hong Kong and Singapore have an advantage because they lack larger pieces of sparsely settled real estate outside their city areas? If so, it is an easy ltadvantagell for other countries to o b tain i CONCLUS IONS Population increase creates business opportunities and facil itates change. Larger populations make investment in expansion Asiaweek, June 22, 1984, p. 28; Far Eastern Economic Review, June 21, 1984 p. 31. :c a and new ventures more at t ractive by reducing risk and increasing demand. Thus there are more job opportunities, more young people working, and greater mobility within the labor force. Such mobility enhances the efficient allocation of resources and pro duces the best match of peo ple to jobs.

But the most important benefit of population growth is the increase it brings to the stock of useful knowledge. Minds matter economically as much as, or more than, hands or mouths.

For example, Hans Bethe, winner of the Nobel prize for physic s in 1967, has said that prospects for energy breakthroughs would be greater if the population of scientists were larger. Progress is limited largely by the availability of trained workers. And minds only arrive in company with bodies human knowledge. And the ultimate resource--as the White House draft quite correctly recognizes, and as even the State Department draft concedes-is skilled, spirited, and hopeful people exerting their wills and imaginations to provide for themselves and their families, thereb y inevitably contributing to the benefit of every one. But even the most skilled persons require an appropriate social and economic framework to provide incentives for working hard and taking risks--enabling their talents to flower and come to fruition. Th e key elements of such a'framework are economic liberty, respect for property, fair and sensible rules of the market that are enforced equally for all, and the personal liberty that is particularly compatible with economic freedom. This the White House dra f t also recognizes. There is justice here, and wisdom, and the promise of economic and human development. It is a sound platform upon which the United States may stand in Mexico City It deserves U.S. support The main fuel to speed the world's progress is t he stock of Julian L. Simon Senior Fellow Dr. Simon is a professor of Economics at the University of Maryland.

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