Err, no

Indeed, it has always been the case that in order to have economic growth it is necessary to have more people.

In fact, not just no, but bollocks.

If economic growth were a matter of just having more people then there would be no rise in the size of the economy per capita, would there? And given that we do have economic growth per capita then ….well, you see the problem.

It\’s possible to make a weaker claim, that we can only have economic growth per capita if we have a growing population but that too is nonsense. The onward march of technology, our ability to add more value to resources over time will lead to continued economic growth.

There\’s just one special case where the assertion might be true: if population if falling faster than growth per capita is growing. Take a reasonable historical (for the capitalist world) average: 3% growth in GDP per capita over the years. If population is falling at 4% a year then total GDP will be falling while the living standards are rising. And as it\’s that latter that we care about, not the former, even in this special case we don\’t actually care.

6 comments on “Err, no

  1. Isn’t the real problem when the numbers leaving the labour force exceed those entering it, which could happen even when overall population was still rising?

  2. But that would almost certainly mean a fall in GDP per capita, which is what our genial host is – correctly – telling us is the important measure.

  3. what about the empirical fact that there are (I think) countries with shrinking populations that are growing output per capita?

    See The Economist’s recent survey on population, combined with any source of GDP per capita numbers. I haven’t got time now, but I wouldn’t be too surprised if one or two countries managed to have shrinking populations and rising absolute output.

  4. Yes, but the issue is whether falling population might lead to falling GDP per capita. I think Ed Hugh wrote a lot on this and was quite persuasive.

    I think if there were no new babies born in the UK and no immigration then GDP per capita would decline as they reached 18 as the labour force would shrink faster than the population and at some point productivity could not increase fast enough. Whether its true of less extreme cases is not clear.

  5. I draw the Telegraph’s attention to the C14th.

    The population of Europe halved, and absolute GDP (or whatever one uses to measure a herd of goats and few women in wimples making a tapestry) fell, but per capita wealth increased, becasue there were more resources to go round.

    What is more, the poor did very well (if they didn’t develp bubos and die) because the decline in the number of labourers made the system of serfdom untenable and workers were able to bid up the cost of their labour.

    In fact, this must have had a positive effect on the economy as a whole (not just distribution) becuase it would rationalise the process and stop talented weavers being trapped pulling a hand-plough.

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