CHAPTER 34 THE BIG PICTURE II: LDCs CHAPTER 34: TABLE OF CONTENTS The Conventional Theoretical Models Again - The Data Contradict the Popular Models The Role of the Political-Economic System A Model That Reconciles Theory and Evidence for LDCs Some Objections Considered Summary Afternote In time, the countries we now refer to as less-developed will fall into the category of more-developed countries discussed in chapter 33. But for now, their situations are still sufficiently different to warrant separate discussion, though it should be noted that the basic economic principles apply equally in all cases. During several decades starting in the 1960s, economic models of the effect of population growth upon the standard of living in less-developed countries (LDCs) have had great influence on governmental policies, as well as on the thinking of social scientists and the public. Phyllis Piotrow's historical account attributes enormous impact to Ansley J. Coale and Edgar M. Hoover's book of 1958 which concluded that population growth hampers LDC economic growth: "The Coale-Hoover thesis eventually provided the justification for birth control as a part of U.S. foreign aid policy." The highest- ranking State Department official involved in population matters, immediately after his appointment in 1966, prepared an extensive position paper: Adopting completely the Coale-Hoover thesis.... [Philander] Claxton [Jr.] argued that the U.S. government must move from reaction and response to initiation and persuasion.... By the time the paper reached the Secretary of State's desk, it had already achieved part of its purpose. All the appropriate State Department and Aid bureaus had reviewed, revised, commented, added to, and finally cleared the document. The rest of its purpose was accomplished when [Secretary of State Dean] Rusk agreed to every single one of Claxton's ten recommendations. This United States policy, based on a now-falsified model, continues to the time of writing. The foreign activities that are part of it expend more funds than ever in activities as shady as ever that may again draw other countries' hostility to the U.S., as happened in India and elsewhere. More about these political aspects was said in the first edition, but the subject is now so extensive that it must be left for part of a subsequent book. Since the first edition, U.S. policy has become more complex, however. At the 1984 U.N. World Population Conference, the U.S. declared that the effect of population growth is "neutral". The material presented in this book, and in its 1977 technical predecessor, played some role in this turnabout - to what extent it would be hard to say, given that I played no role in person, contrary to what population "activists" have flattered me with. But the politics of the matter since then have been turbulent, with the population-control movement still being exceedingly dominant in the Congress, and U.S. AID continuing its foreign activities much as before. This history makes clear the importance of having a sound economic-demographic model for LDCs, which in turn requires sound empirical research and sound theory. Progress has been aided by the landmark 1986 Report of the National Research Council of the National Academy of Sciences, which repudiated the Coale-Hoover view, and arrived at a point not far from what is discussed here, as mentioned in the Introduction. THE CONVENTIONAL THEORETICAL MODELS The long-accepted population model of Coale and Hoover has two main elements: (1) an increase in the number of consumers, and (2) a decrease in saving due to population growth (a proposition whose validity was discussed in chapter 25, with ambiguous results). Their well-known conclusion is that, whereas in India with continued high fertility, income per consumer over 1956-86 could be expected to rise from an index of 100 to 138, with declining fertility it could be expected to rise from 100 to 195 - that is, India could expect some 2 1/2 times as fast economic growth with low fertility as with high fertility. It is crucial to notice that the main Coale-Hoover model simply assumed that the total national product in an LDC would not be increased by population growth for the first thirty years, either by a larger labor force or by additional productive efforts. Therefore, their model boils down to the ratio of output divided by consumers; an increase in the number of consumers decreases the per capita consumption, by simple arithmetic. In their words, "The inauspicious showing of the high-fertility case in terms of improvement in levels of living is traceable entirely to the accelerated growth in the number of consumers that high fertility produces." To repeat: The main mechanism producing the Coale-Hoover result is simply an increase in the denominator of the output/consumer ratio, where output is the same by assumption for the first thirty years for all rates of population growth. Subsequent LDC models (including a variant by Coale and Hoover) took into account that a faster-growing population produces a larger labor force, which in turn implies a larger total output. But this modification still implies Malthusian capital dilution, and while slightly altering the main Coale-Hoover result, such a model still necessarily indicates that a faster-growing population leads to a lower output per worker and lower per capita income. In sum, the conventional theory suggests that a larger population retards the growth of output per worker in LDCs. The overwhelming element in the conventional theory is the Malthusian concept of diminishing returns to labor, operating with the assumption that the stock of capital (including land) does not increase in the same proportion as labor. Another important theoretical element is the dependency effect, which suggests that saving is more difficult for households where there are more children, and that higher fertility causes social investment funds to be diverted away from industrial production. Combined in simulation models, these conventional elements imply that relatively-high fertility and population growth diminish the output per worker (and even more the income per consumer, because the proportion of consumers to workers is higher when the birthrate is higher). AGAIN - THE DATA CONTRADICT THE POPULAR MODELS But the empirical studies data do not support this a priori reasoning. The data do not show that a higher rate of population growth decreases the rate of economic growth, for either LDCs or MDCs. These data include the long-run historical data shown in figure 33- 1. Also relevant are cross-sectional studies that relate the rate of population growth to the growth rate of per capita income in various LDCs; no correlation between the two variables is found. Another sort of study plots the growth rate of per capita income as a function of population density. Roy Gobin and I found that density has a positive effect on the rate of economic growth, as seen in figure 34-l. And a study by J. Dirck Stryker found that among the French-speaking African countries, lower population density is associated with lower economic growth - that is, higher population density implies a higher standard of living.***INSERT 34-5A And Kelley and Schmidt (1994) have massively confirmed the Simon-Gobin finding. FIGURE 34-1. Economic Growth Rates Related to Population Density in LDCs, 19?? to 19?? [***get more recent plot - from World Bank Report data, perhaps] Check for yourself: Fly over Hong Kong -- just a few decades ago a place seemingly without prospects because of insoluble resource problems -- and you will marvel at the astounding collection of modern high-rise apartments and office buildings. Take a ride on its excellent smooth-flowing highways for an hour or two, and you will realize that a very dense concentration of human beings does not prevent comfortable existence and exciting economic expansion -- as long as the economic system gives individuals the freedom to exercise their talents and to take advantage of opportunities. And the experience of Singapore demonstrates that Hong Kong is not unique. Two such examples do not prove the case, of course. But these dramatic illustrations are backed by the evidence from the aggregate sample of countries, and hence do not mislead us. Hong Kong is a special thrill for me because I first saw it in 1955 when I went ashore from a U. S. Navy destroyer. At the time I felt great pity for the thousands who slept every night on the sidewalks or on small boats. It then seemed clear to me, as it must have to almost any observer, that it would be impossible for Hong Kong to surmount its problems -- huge masses of impoverished people without jobs, total lack of exploitable natural resources, more refugees pouring across the border each day. But upon returning in 1983, I saw bustling crowds of healthy, vital people full of hope and energy. No cause for pity now. The most important benefit of population size and growth is the increase it brings to the stock of useful knowledge. Minds matter economically as much as, or more than, hands or mouths. Progress is limited largely by the availability of trained workers. THE ROLE OF THE POLITICAL-ECONOMIC SYSTEM A crucial element in the economics of resources and population is the extent to which the political-social-economic system provides personal freedom from government coercion. For an economy to grow, individuals require a social and economic framework that provides incentives for working hard and taking risks, enabling their talents to flower and come to fruition. The key elements of such a framework are economic liberty, respect for property, and fair and sensible rules of the market that are enforced equally for all. To illuminate the importance of the system as a crucial condition for whether additional people quickly become a benefit, it is useful to mention two extreme situations when additional people have been a negative force - sometimes reducing the standard of living all the way to misery and subsistence - rather than a force for growth, simply because of a lack of economic freedom: (1) A shipful of illiterate African slaves coming toward the United States. Additional slaves on the ship would only contribute toward faster death aboard, because freedom was totally absent. (2) A German prisoner-of-war camp for British soldiers in World War II. Despite the large stock of technology among the inmates in such a situation, and despite modern values and free-enterprise culture, the outside authority structure was strong enough to prevent any real growth. Additional inmates would not produce faster growth, only more crowding. If conditions got bad enough, the additional misery might lead to an explosion, and conceivably toward the "growth" of an escape. But chances of the latter were small. Technology is not enough to distinguish the above two cases from that of, say, Hong Kong, where the addition of so many people after World War II almost surely did have a positive effect upon growth, as in Singapore. Values and culture also are not enough to distinguish. Only the social system, including the low taxation of Hong Kong, can distinguish the cases. China is much more like a prison than is Hong Kong because it suppresses mobility and opportunity. And if one takes the political-economic structure of China as given, the Chinese may be right that slower population growth means a higher standard of living in the present generation. Powerful evidence that the world's problem is not too many people, but lack of political and economic freedom, comes from pairs of countries that have the same culture and history, and had much the same standard of living when they split apart after World War II -- East and West Germany, North and South Korea, Taiwan and China. In each case the centrally-planned economy began with less population "pressure", as measured by density per square kilometer, than did the market-directed economy. And the communist and non-communist countries also started with much the same birth rates. But the market- directed economies have performed much better economically than the centrally-planned economies (see Table 34-1??). This powerful explanation of economic development cuts the ground from under population growth as a likely explanation. Table 34-1 [**Bauer table] A bus trip across the Karelian peninsula - seeing first the part now in Finland, and then in the part that was in Finland until 1940 but afterwards was in the Soviet Union and now is in Russia - reveals differences like night and day at the border. And Table 34-2 shows dramatically different 1990s living standards in two towns on opposite sides of the (then) Czechoslovakia-Austria border, and between East and West Germany, which had similar standards of living before World War II, but vastly different situations now. Table 34-2[Aus] Or consider Mauritius. In the 1960s, James Meade, the Nobel-prize-winning British economist - but also a believer in eugenics, who embodied in his work the idea that a human life could be so poor materially that it was better not lived; see chapter 23 - offered Mauritius as his example of a densely crowded country whose rapid birth rate was ruining its chances of economic development. He foresaw terrible unemployment, and Mauritius did suffer this blight for many years. But in the early 1980s Mauritius radically changed its economic-political framework, allowing free enterprise a chance to flourish. By 1988 one could read that "Offshore Jobs Dynamo Offers Model for Africa...The government here says that unemployment, which ran at 23 percent six years ago, no longer exists." This is as close to an economic miracle as this world is likely to see. The change over those few years had nothing to do with changes in Mauritius' birth rate, nor was there a reduction in the high population density. Economic freedom was the only new element. Some readers (though fewer than at the time of the first edition) may not know how well the poorer countries have been progressing. Contrary to common belief, per capita income in LDCs has been growing as fast as or faster than in the MDCs, despite the fact that population growth in LDCs has been much faster than in MDCs. This is prima facie evidence that population growth does not have a negative effect on economic growth. Indeed, the fact that countries with high densities have higher income levels on average implies that they must on average have had higher growth throughout the past than countries with lower population densities. Aggregate statistics sometimes lack conviction because they are abstract. To give the data more realism, let us consider the change in a typical Indonesian village between 1953 and 1985 when Nathan Keyfitz studied it: [In 1985 the villagers] typically wear shoes, have houses of brick and plaster, and send their children to the elementary school in the village. Some have electric lights and a television set, own a motorcycle, and hope their children will go to the secondary school a few kilometers away. Thirty-one years earlier shoes were rare, houses were almost all of thatch and bamboo with earth floors; lighting was at best with kerosene, and even that was something of a luxury; there was no primary school. Keyfitz calculated that per person income rose about 3 percent per year, a very respectable rate by any measure. People's diets had improved. The poorest class improved itself considerably - the daily wage in terms of kilos of rice doubling. The poor also improved in dignity and independence, Keyfitz reports. Concerning the responsibility of each citizen to "spend one night per week on guard duty...In our earlier visit we found that the landowner could order one of his gedok [subservient client-dependents] to take his place; today that is more difficult. The patron cannot even send one of his gedok on a daytime errand in the matter-of-fact way that was once acceptable. At one time the village headman's land was cultivated for him by village laborers acting without pay; now the headman has to pay them the going wage." One cause may be that "much easier travel, by which nearly everyone has a chance to observe the freedom of nearby towns, not to mention larger cities...makes them intolerant of unnecessary bondage at home." One of the most arduous and omnipresent tasks of women in 1953 was pounding rice to hull it. In 1985 the job was done with mechanical rice dryers and hullers, operated as businesses. Population grew substantially, from 2,400 to 3,894, so income grew despite population growth (or because of it), the opposite of what Malthusian Coale-Hoover type theory would expect. Keyfitz and his colleagues assumed in advance that in 1985 "unemployment would be the great problem of the village", because of population growth. But they found that this was not so. Better-off people were using their additional income to hire others, who had now become specialized workmen, to build houses professionally instead of do-it-yourself productions; schools and mosques were being built, too. The researchers also found, contrary to their expectations, that the proportion of the crop going to labor had risen and the proportion going to the landowner had fallen, the opposite of what simple Ricardian theory of increased population would predict; increased productivity of the land is the explanation. Keyfitz's systematic account of the East Javanese village squares with the vivid anecdotal descriptions by Richard Crutchfield, who over a quarter century visited villages in poor countries, and then revisited some (1981). The universal improvement that he found came as a surprise to him. My personal experiences agree. In almost all the non-European countries I visited from the beginning of the 1970s to the present - Israel, India, Iran, China, the Soviet Union, Thailand, Hong Kong (yes, there is agriculture in Hong Kong), Philippines, Colombia, Costa Rica, Chile, and others - I have made it my business to visit agricultural villages, and to ask (through translators, of course) villagers about their farming practices at present and in the past, about their possessions and consumption present and past, and about the number and the education of their children. (Only in the Soviet Union was it not possible for me to find out what was what, despite the bluntest possible inquiries.) Improvement could be seen everywhere, in all respects - tractors, roads to the market, motorbikes, electric pumps for wells, schools where there were none before, and children gone on to university in the city. A MODEL THAT RECONCILES THEORY AND EVIDENCE FOR LDCs When the theory and the data do not jibe, either (or both) may be at fault. The available raw data have been re-examined several times, always with the same anti- Malthusian result. Let us therefore turn to a re-examination of the theory. The model whose results are presented below includes the standard economic elements of the well-known earlier models, plus the main additional effects discussed in earlier chapters but left out of earlier models. These newly-added elements include, among others: (1) the positive effect of increased demand (due to a larger population) upon business and agricultural investment; (2) the propensity of people to devote more hours to work and fewer hours to leisure when family size increases; (3) the shift in labor from agriculture to industry as economic development proceeds; and (4) economies of scale in the use of social infrastructure and other sources. All of these elements are well- documented. Further, if we are to understand the effect of population growth upon income and the standard of living, we must know the effect of income on population size and growth. All else being equal, income raises fertility and reduces mortality. But other factors do not remain the same while income changes, except in the very short run. In the long run, an increase in income in a poor country with a high fertility rate reduces the fertility rate. (This is the demographic transition described in chapter 23, which results from income-induced changes in mortality, urbanization, the higher costs of rearing children, and so on.) And after some point, mortality no longer falls significantly with additional income. Hence the long-run effect of an increase in income is a decrease in the rate of population growth. These effects also must be added to a realistic simulation. When these important economic elements are included, rather than excluded as they are from earlier economic-demographic models of LDCs of the Coale-Hoover variety, and when reasonable assumptions are made about the various dimensions of the LDC economy, the results are very different than those from past models. The simulation indicates that moderate population growth produces considerably better economic performance in the long run (120 to 180 years) than does slower-growing population, though in the shorter run (up to 60 years) the slower-growing population performs slightly better. A declining population does very badly in the long run. And in the experiments with the "best" estimates of the parameters for a representative Asian LDC (the "base run"), moderate population growth has better long-run performance than either fast population growth (doubling over 35 years or less) or slow population growth. Experiments with one variable at a time reveal that the difference between these results and the opposite results generated by previous models is produced, not by any single variable, but by the combination of the novel elements - the leisure-versus-work decision with extra children in the family, economies of scale, the investment function, and depreciation; no single factor is predominant. And over the range of positive population growth, different parameters lead to different positive rates of population growth as "optimum." This means that no simple qualitative theory of population growth of the classical Malthusian sort can be very helpful, and a more complex, quantitatively based theory such as this one is necessary. For the interested technical readers, a fuller statement of the findings follows. Others may skip ahead. (1) Using those parameters that seem most descriptive of LDCs today, the model suggests that very high birthrates and very low birthrates both result in lower long-run per-worker outputs (hereafter referred to as "economic performance") than do birthrates in between. It will surprise few that very high birthrates are not best. But the outcome that moderate birthrates produce higher income in the long run than do low birthrates runs very much against the conventional wisdom. The same result appears with quite different levels of the various parameters. The moderate-fertility populations also enjoy more leisure in the long run than do the low-fertility and high-fertility populations. (2) In a variety of conditions, over quite a wide range of moderate to high birthrates, the effect of fertility upon income is not spectacularly large - seldom as much as 25 percent, even after 180 years (though the difference in results produced by low and moderate birthrates is great). This is quite surprising at first thought. But it is what Kuznets anticipated: ...given the political and social contest, it does not follow that the high birth rates in the underdeveloped countries, per se, are a major cause of the low per capita income; nor does it follow that a reduction of these birth rates, without a change in the political and social context (if this is possible), will raise per capita product or accelerate its rate of growth. We stress the point that the source of the association between demographic patterns and per capita product is a common set of political and social institutions and other factors behind both to indicate that any direct causal relations between the demographic movements and economic growth may be quite limited; and that we cannot easily interpret the association for policy purposes as assurance that a modification of one of the variables would necessarily change the other and in the directions indicated by the association. The results of my model suggest a population "trap" - but a benevolent one very different from the Malthusian trap: If population growth declines too fast as a result of increasing income, total output fails to rise enough to stimulate investment; depreciation is then greater than investment, and income falls. In the model, this results in a return to higher fertility and then another cycle. Hence the ill results follow from population decline in this model, rather than from population increase as in the Malthusian trap. (3) The advantage of moderate birthrates over low birthrates generally appears only after quite a while - say, 75-100 years. This is another reason why the results found here differ from those of the Coale-Hoover and similar models in which the time horizon is only 25-30 years (55 years in the Coale-Hoover minor extension), whereas the time horizon here is 180 years (or longer in some cases). This points up the grave danger of using short-horizon models in the study of population growth. Population effects take a long time to begin and a much longer time to accumulate. (4) Perhaps the most important result of this simulation is that it shows that there are some reasonable sets of conditions under which fairly high fertility has better economic performance at some times than does low fertility, but there are also other reasonable sets of conditions under which the opposite is true. There are even sets of conditions well within the bounds of possibility under which extremely high fertility offers the highest income per capita and output per worker in the long run. That is, the results depend upon the choice of parameters within ranges that seem quite acceptable. This implies that any model of population that concludes that any one fertility structure is unconditionally better or worse than another must be wrong, either because that model's construction is too simple or for some other reasons. The sole exception to this generalization is fertility below replacement. Such a low-fertility structure does poorly under every set of conditions simulated here, largely because a reasonable increase in total demand is necessary to produce enough investment to overcome the drag of depreciation. In sum, the differences between the results produced by this method and the results obtained by Coale and Hoover are due to the inclusion in this model of several factors omitted from the Coale-Hoover model: (a) the capacity of people to vary their work input in response to their varying income aspirations and family-size needs; (b) an economies- of-scale social-capital factor; (c) an industrial investment function (and an industrial technology function) that is responsive to differences in demand (output); and (d) an agricultural savings function that is responsive to the agricultural capital/output ratio. These factors together, at reasonable parameter settings, are enough to offset the capital-dilution diminishing-returns effect as well as the effect of dependency on saving found in the Coale-Hoover model. The difference in overall conclusions between this model and others, however, is also due to the much longer time horizon used in this model. One's judgment about the overall effect of an additional child depends upon the discount rate chosen for weighing the costs and benefits in immediate periods together with periods further into the future, as was discussed in the context of the MDC model in chapter 33. If we give little or no weight to society's welfare in the far future, but rather pay attention only to the present and the near future, then additional children clearly are a burden. But if we weigh the welfare of future generations almost as heavily as the welfare of present generations, then additional children now are on balance a positive economic force. In between, there is some discount rate that, depending upon the circumstances of each country, marks the point at which additional children now are at the borderline of having a negative or positive effect. The choice of that discount rate is ultimately a matter of personal values, which we shall take up in chapter 39. In brief, whether we assess the effect of additional children now as being negative or positive depends largely upon our time perspective. And given the economic analysis developed here, anyone who takes a long-range view - that is, gives considerable weight to the welfare of future generations - should prefer a growing population to a stationary or declining population. SOME OBJECTIONS CONSIDERED This and the previous chapter have reached conclusions contrary to prevailing popular opinion as well as to most of the professional literature since before Malthus, (though professional opinion has shifted in the 1980s). Therefore, it may be useful to consider some of the objections to these conclusions. Of course, the full text of this book and my 1977, 1987, and 1992 books, including both the analysis and the empirical data, constitute the basic rebuttal to these objections. The following paragraphs take up the objections in a lighter and more casual fashion. Objection 1. But population growth must stop at some point. There is some population size at which the world's resources must run out, some moment at which there will be "standing room only." When someone questions the need to immediately check population growth in the U.S. or in the world, the standard response ever since Malthus has been a series of calculations showing how, after population doubles a number of times, there will be standing room only - a solid mass of human bodies on the earth or in the U.S. This apparently shows that population growth ought to stop sometime - well before "standing room only," of course. But even if we stipulate that population growth must sometime stop, by what reasoning do people get from "sometime" to "now"? At least two aspects of such reasoning can be identified. First, the stop-now argument assumes that if humans behave in a certain way now they will inevitably continue to behave the same way in the future. But one need not assume that if people decide to have more children now, their descendants will continue to have them at the same rate indefinitely. By analogy, because you decide to have another beer today, you must automatically drink yourself to death. But if you are like most people, you will stop after you recognize a reasonable limit. Yet many seem to have a "drunkard" model of fertility and society: if you take one drink, you're down the road to hell. Another line of reasoning that leads people away from the reasonable conclusion that humankind will respond adaptively to population growth derives from the mathematics of exponential growth, the "geometric increase" of Malthus. The usual argument that population will "explode" to a doomsday point is based on the crudest sort of curve fitting, a kind of hypnotism by mathematics. Starkly, the argument is that population will grow exponentially in the future because it has always grown so in the past. This proposition is not even true historically, as we saw in chapter 22; population has remained stationary or gotten smaller in large parts of the world for long periods of time (for example, in Europe after the Roman Empire, and among aborigine tribes in Australia). And many other sorts of trends have been reversed in the past before being forced to stop by physical limits (the length of women's skirts, and the spread of Christianity and Islam). If you are attracted to the sort of curve fitting that underlies most arguments about the need to control population growth, you might do well to consider other long trends that we have discussed earlier. For example, the proportion of people who die each year from famine from natural causes has surely been decreasing for at least a century since the beginning of mankind, and even the absolute number of people who die of famine has been decreasing despite the large increases in total population (see chapter 5). An even more reliable and important statistical trend is the steady increase in life expectancy over recorded history. Why not focus on these documented trends rather than on the hypothetical total-population trend? An absurd counter-speculation is instructive. The exponential increase of university buildings in the past decades, and perhaps in the past 100 years, has been much faster than the rate of population growth. Simple-minded curve fitting will show that the space occupied by university buildings will overtake and pass the amount of space in which people stand long before there is "standing room only." This apparently makes university growth the juggernaut to worry about, not population growth! Some will reply that the analogy is not relevant because universities are built by reasonable people who will stop when there are enough buildings, whereas children are produced by people who are acting only out of passion and are not subject to the control of reason. This latter assertion is, however, empirically false, as we saw in chapter 24. Every tribe known to anthropologists, no matter how "primitive," has some effective social scheme for controlling the birthrate. Children are born for the most part because people choose to have them. Even the proposition that population growth must stop sometime may not be very meaningful (see chapter 3 on "finitude"). The length of time required to reach any absolute physical limits of space or energy is far into the future (if ever), and many unforeseeable things could happen between now and then that could change those apparent limits. Objection 2. But do we have a right to live high on the hog - consume all we want, have as large families as we want - and let later generations suffer? The facts suggest that the opposite assumption is the more appropriate: If population growth is higher in a given generation, later generations benefit rather than suffer. During the Industrial Revolution in England the standard of living might (or might not) have been higher for a while if population had not grown so quickly. But we today clearly benefit from that high population growth rate and the consequent high economic growth of that period, just as the LDC model suggests. Objection 3. Your models emphasize the long-run positive effects of population growth. But as Keynes said, in the long-run we're all dead. I've addressed Keynes's clever-but-silly wisecrack in chapter 12. It's true that you and I will die. But in the long run others will be alive, and those people matter - just as the future of the "planet" properly matters to ecologists and others. And as emphasized earlier, one's overall judgment about population growth depends upon one's discount rate - how you weigh the immediate and the future effects against each other. SUMMARY History since the Industrial Revolution does not support the simple Malthusian model or the Coale-Hoover extension. No negative relationship between population growth and economic growth is revealed in anecdotal history, in time-series studies over the past 100 years, or in contemporary cross-sections. Rather, the data suggest that there is no simple relationship at all, for either less-developed-countries (LDCs) or for more- developed-countries (MDCs) (as discussed in the previous chapter). For MDCs, the most general and most appealing explanation of this discrepancy between theory and evidence is the nexus of economies of scale, the creation and adaptation of new knowledge by additional people, and the creation of new resources from new knowledge. Therefore the MDC model in chapter 33 incorporates this fundamental influence on economic progress that has previously been left out of population models. And that model - more complete than Malthusian and neo-Malthusian models such as The Limits to Growth - indicates that, after a few years during which a representative additional child has a net negative effect, the net effect upon per capita income comes to be positive. And these positive long-run effects are large compared with the added costs to the community until the child reaches full productivity. A present-value weighing of the short and long run at reasonable costs of capital reveals that the on-balance effect of additional persons is positive, an attractive "investment" compared to other social investments. In LDCs the explanation is somewhat different, but the outcome is similar. Additional children influence the LDC economy by inducing people to work longer hours and invest more, as well as by causing an improvement in the social infrastructure, such as better roads and communication systems. Additional population also induces economies of scale in other ways. The upshot is that, although additional children cause additional costs in the short run, a moderate rate of population growth in LDCs is more likely to lead to a higher standard of living in the long run than either zero population growth or a high rate of population growth. AFTERNOTE The Limits to Growth, Global 2000, and Their Relatives The Limits to Growth simulation of 1972, in which we breed to the exhaustion of natural resources, is so devoid of meaning that it is not worth detailed discussion or criticism. Yet it is taken seriously by many people to this day, and it is therefore a fascinating example of how scientific work can be outrageously bad and yet be very influential. The Limits to Growth was immediately blasted as foolishness or fraud by almost every economist who read it closely and reviewed it in print, for its silly methods as well as for disclosing so little of what the authors did, which makes close inspection impossible. To use the book authors' sort of language, the whole Limits to Growth caper was public-relations hype, kicked off with a press conference organized by Charles Kytle Associates (a public-relations firm) and financed by the Xerox Corporation; this entire story, along with devastating commentary, was told in detail in Science the week following the book's appearance in 1972. (The public-relations campaign may not be a bad thing in itself, but it certainly shows the manner the authors and the sponsoring Club of Rome intended to have their material make its way in the world of ideas.) One strong reason not to put stock in the Limits to Growth predictions is that the model was quickly shown to produce rosy forecasts with only minor and realistic changes in the assumptions. The most compelling criticism of the Limits to Growth simulation, however, was made by the sponsoring Club of Rome itself. Just four years after the foofaraw created by the book's publication and huge circulation - an incredible 4 million copies were sold - the Club of Rome "reversed its position" and "came out for more growth." But this about-face has gotten relatively little attention, even though it was written up in such places as Time and the New York Times. And so the original message is the one that remains with many people. The explanation of this reversal, as reported in Time, is a masterpiece of face-saving double talk. The Club's founder, Italian industrialist Aurelio Peccei, says that Limits was intended to jolt people from the comfortable idea that present growth trends could continue indefinitely. That done, he says, the Club could then seek ways to close the widening gap between rich and poor nations - inequities that, if they continue, could all too easily lead to famine, pollution and war. The Club's startling shift, Peccei says, is thus not so much a turnabout as part of an evolving strategy. In other words, the Club of Rome sponsored and disseminated untruths in an attempt to scare us. Having scared many people with these lies, the club can now tell people the real truth. (I have been waiting in vain since the first edition for them to sue me for libel in that previous sentence.) But it is possible that the Club of Rome did not really practice the deceitful strategy that it now says it did. Maybe the members simply realized that the 1972 Limits to Growth study was scientifically worthless. If so, the Club of Rome then lied about what it originally did, in order to save face. From the outside, we have no way of knowing which of these ugly possibilities is the "truth." Is my summary of the reported facts not fair? Perhaps I should use quieter language, because I know that some will find the use of words like "lie" sufficient reason to reject what I am saying. But I have no public-relations firm to magnify my message a million-fold in the media, nor do I have a message that people are waiting breathlessly to hear. So I must use strong language to get this point across. And - is there really anything wrong with calling a documented and self-confessed lie a lie? Surely this is one of the more curious scientific episodes of recent years. The Limits to Growth authors have not recanted, to my knowledge, even though their sponsors have. But neither did the authors confront and contradict their sponsors when the sponsors recanted. The whole matter seems to have passed with little notice, and The Limits to Growth continues to be cited in the popular press as authoritative. If the shoe were on the other foot, I would surely hear plenty from such organizations as Zero Population Growth and the Environmental Fund. The Global 2000 Report to the President of 1980, done for President Jimmy Carter in conjunction with the Council on Environmental Quality and the Department of State, was a later incarnation of material similar to The Limits to Growth, done by many of the same people. It differs in that it was an "official" document with all the influence that such status automatically confers. Like Limits to Growth, the conclusions of Global 2000 are almost wholly without merit largely because of the absence of the long-run trend data that show that resources are becoming more rather than less available, and that our air and water have been getting cleaner rather than dirtier. Even the authors of the Global 2000 Report agree that such trends are the proper basis for such a study, but they nevertheless relied upon the same old discredited Malthusian theorizing that has led one after another of these studies to make forecasts that were soon falsified by events - as was the case with Limits to Growth and Global 2000. Yet this study, too, was heavily ballyhooed, and became the basis for many policy decisions. The Resourceful Earth, which Herman Kahn and I edited in 1984, presents solid scholarly material on most of the questions addressed by Global 2000, having much in common with the material in this book. In 1992 there appeared a sequel, Beyond the Limits, by the group that produced Limits to Growth. The main message was still very dour, but this time the authors built themselves an intellectual escape hatch. They say they may seem to have been wrong, but their ideas were really correct. They simply erred on the date for disaster. (Imagine your reaction if a weather forecaster asked not to be marked wrong because the snowstorm that s/he forecast for tomorrow was simply misdated by four months.) This is in the tradition of Malthus, who changed almost everything in his second edition except the conclusions that made him famous. The Limits authors now suggest we have a choice. If we change our ways, we can avoid collapse. But "if present trends remain unchanged, we face the virtually certain prospect of global economic collapse in the next century" . page # \ultres \tchar34 December 6, 1993