Debating Natalism

Bryan Caplan has responded to my post opposing natalism, the view that we should try to create many more human beings because doing so will make us better off. This is a brief rejoinder to his post on the most important issues outstanding (Bryan’s quotations are in blockquotes).

In fact, there’s a good reason to think that innovation will rise at more than a proportional rate [to population]: Population increases not only the supply of innovation (more people to create ideas) but the demand for innovation (more consumers around to pay for ideas).

This is just restating the division-of-labor argument, though. A more extended market allows more specialization. One man’s demand is another man’s supply. But a market of 7 billion allows quite a lot of specialization, especially if it’s actually fully integrated. And the next billion will increase specialization less than the previous billion. We don’t know where the “social marginal benefit” and “social marginal cost” curves cross, but given the large human population, there are reasons at least not to be confident that they have not yet.

Environmental economics teaches us far cheaper and more humane alternatives [to limiting population]: taxes and tradeable permits. Questioning a person’s existence because he drives a car is severe overkill.

The problem is that the optimal tax rate in future might actually make it very difficult for some people to live good lives. Even now we are nowhere near the optimal tax along several dimensions.

Some people don’t like being crowded. But most seem to love it. Real estate prices are much higher in densely-populated areas, and the reason is simple: People prefer (all the benefits of population + all the drawbacks of population) to splendid isolation. If Jason were right, real estate would actually be cheaper in big cities. It’s not.

Capital prefers big cities for production, but there’s evidence that households don’t. The places with highest quality of life should have the highest property values relative to wages. And we actually find that non-urban areas have a higher property value-to-wage ratio than urban areas. To quote Chen and Rosenthal (2008: 523), “[T]hose locations most preferred by households often are non-metropolitan areas and cities in warm, coastal locations, including Santa Cruz, Honolulu, and San Francisco… Those areas least preferred by households tend to be old, industrial cities, especially in the rust belt.” Even within metro areas, suburbs tend to have higher property values than central cities (with the exceptions of places like Manhattan, Boston, and San Francisco). For instance, in southern N.H., the suburbs have higher property values than Manchester or Nashua. In western N.Y., the suburbs have higher property values than Buffalo or Rochester.

[I]n a world of largely closed borders, there’s an obvious benefit of large polities: They create big free-trade and free-migration zones, with all the attendant wonders.

Persuading governments to open to goods and investment may be much easier than persuading lots of people to have lots more children. It’s a matter of perspective, I suppose, but I don’t see the world of today as having “largely closed borders.” To immigrants, yes, but not to goods or investment — and the latter substitute significantly for the former.

But mankind has gotten much healthier during the population explosion of the last two centuries, and there’s a simple explanation: Larger populations lead to more innovation, including more innovation in medicine and sanitation.

Is population growth the main reason for the innovations of the last two centuries? I would say it’s more an effect than a cause. Liberalization of the economy seems far more important for innovation; nonliberalized but big economies like China and India have fostered very little innovation.

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