| Science - and Economics
by Jurgen Brauer, May 2007
About a year ago, a news article by Michael Balter in the prestigious journal Science failed to catch much of my attention (“The Baby Deficit,” 30 June 2006, pp. 1894-1897). What did catch my attention were two letters commenting on Mr. Balter’s article. Written by Ben Zuckerman (“Does the World Really Need More Babies?”) and Richard A. Grossman and Richard E. White (“Balancing Fertility Rates with Resources”), they were published in Science’s “Letters” section on 29 September 2006 ( pp. 1885-1887). The letter writers express resentment with economics and economists for favoring stronger population growth to reach the economic growth necessary to finance the retirement and health needs of ageing populations, even if at environmental expense.
As an economist myself, I may be a bit touchy on the subject, but I fail to see the letter writers’ complaint with economists when – interestingly enough – Mr. Balter’s article neither cited nor quoted even one economist in support of the article’s gist! Those who were quoted are Vladimir Putin (president of Russia), Peter Costello (treasurer of Australia), Anne Gauthier (sociologist), Peter McDonald (demographer), David Reher (population historian), Jennifer Johnson-Hanks (demographer and anthropologist), John Bongaarts (demographer), James Trussell (demographer), Laurent Toulemon (demographer), Gigi Santow (demographer), Robert Birrell (director, Center for Population and Urban Research), and Wolfgang Lutz (demographer). In the article’s accompanying sidebar Paul Ehrlich (entomologist) and Ronald Lee (demographer) also are quoted. The one economist who makes an appearance is Alan Greenspan, former chair of the Federal Reserve Board of Governors. In typical Greenspan-speak, he is quoted as saying that the projected population changes “present substantial challenges.” He is not quoted as saying – as the letter writers imply – that larger populations will address these challenges. Thus, when Messrs. Grossman and White write “As Balter reports, economists concerned with economic growth view low fertility in developed countries with alarm,” they not only misrepresent Mr. Balter but falsely attribute to economists views held by others. Mr. Zuckerman, the other letter writer, also misrepresents Mr. Balter. The article’s main text, the sidebar, and some of the quotes Mr. Balter collected make clear that he repeatedly questions the economic growth premise. And so do economists! Instead of thinking about what exactly GDP and economic growth measure (or fail to measure), the letter writers have fallen victim to prejudice about economics. Consider some examples. If I pay Mr. Balter to give me a massage, he earns an income that is counted toward GDP. The economy “grows.” But because no material resources are consumed in the exchange, it follows that economic growth is not necessarily a bad thing. If I mow my own lawn, there is no expenditure and no income, and therefore no measured economic activity. The economy does not “grow.” But if I pay Mr. Zuckerman to mow my lawn, my expenditure is his income, and this counts toward gross domestic product (GDP). Although the activity level has not changed at all - he is doing the mowing instead of me - there is “growth.” It follows that economic “growth” can be a quite meaningless statistic. Moreover, economic decline is not necessarily a good thing at all. If Messrs. Grossman and White wash dirty laundry in the river so that people downstream fall ill, die, and are removed from economic activity, then GDP falls. But this sort of a shrinking economy clearly is not a good thing. Mr. Zuckerman in his letter complains about ecological pressure exerted by “overpopulation” and concludes that “short-term economic and social pain for some people would be a blessing for millions of species on Earth, including our own,” implying that the well-being of the natural environment and economic growth are mutually exclusive. But expenditure on environmental protection, restoration, and remediation generates plenty of economic growth, whereas failure to do so can lower economic growth. Further, if a given state’s population shrinks by say 3% and GDP falls by 2%, then GDP per capita nonetheless grows. Thus, contrary to Messrs. Grossman and White’s assertion that we need to move away from “impossible exponential growth of consumption,” the numerical example shows that declining populations can grow economically without necessarily increasing resource extraction. All these examples demonstrate that the letter writes are sadly ignorant of elementary GDP accounting. But some of the demographers Mr. Balter quotes do not show much of an economics IQ either. Thus, when population historian David Reher is quoted as saying that “urban areas in regions like Europe could well be filled with empty buildings and crumbling infrastructures as population and tax revenues decline,” I say “so what?” Declining populations need less infrastructure and therefore reduced tax revenue to finance reduced need. No economic disaster need follow at all. The crux of Mr. Balter’s news article is the premise that if today’s adults cannot afford today’s kids (hence population growth below replacement level), then the maturing kids cannot afford the aging adults tomorrow. It follows, the quoted and cited politicians’ say, that larger populations are needed, hence the efforts to pay women to bear more children. But I do not know of any economist who would conclude this from the premise. Come age 65, “old” people are neither incapable nor incapacitated, and current pay-as-you-go health and retirement systems are not necessarily here to stay either. Also, although I do not know this for a fact, I suspect that older people live less resource-intensive lives than younger folks do. (Imagine morning gardening instead of the morning commute.) None of above denies the very real resource pressures the global environment presently experiences. But if the letter-writing scientists want to be taken seriously, they need to make serious arguments, not fire off ill-informed, irate letters to Science. Next time, consult first with your local economics department. You may be surprised how many of us are on your side. |