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Population and the Economy

    According to United Nations estimates, world population reached the six billion mark on October 12, 1999 -- a number that is steadily rising.

    The 1998 Revision of United Nations world population estimates says, "from 1804, when the world passed the 1 billion mark, it took 123 years to reach 2 billion people in 1927, 33 years to attain 3 billion in 1960, 14 years to reach 4 billion in 1974, 13 years to attain 5 billion in 1987 and 12 years to reach 6 billion in 1999."  "It is estimated that 2000 years ago the population of the world was about 300 million. For a very long time the world population did not grow significantly, with periods of growth followed by periods of decline. It took more than 1600 years for the world population to double to 600 million."  The following chart shows how rapidly the world population has grown in recent decades, from about two billion in 1930 to more than six billion in 1999.

    While the total world population size (the blue line on the chart, above) is growing, the annual population increments (the orange bars, above) have peaked, so that the number of new people added each year is declining.

    Global population density varies from place to place.  For example:

   Australia, with a present population of 19,169,000, has an average density of 2.5 persons per square kilometer.

    China's present population of 1,261,832,500 has an average density of 135.3 persons per square kilometer.

    The United States has a present population of  275,562,700, has an average density of 30.1 persons per square kilometer.

    India, with a present population of 1,014,003,900, has an average density of 341.0 persons per square kilometer.

    See the U.S. Census Bureau's online world demographic aggregation tables.

    Similarly, population growth rates vary remarkably in different parts of the world.  The World Population Data Sheet published by the Population Reference Bureau shows that about 80% of the present world population lives in less developed countries where the population growth rate is 1.7% per year.  In developed countries, with about 20% of the world population, the present population growth rate is only 0.1% per year.

    The United Nations predicts that the entire world population will stabilize at about 10 billion people.  The 1998 Revision of the official United Nations estimates and projections says that "by 2050 the world is expected to have 8,909 million people, an increase of slightly less than half from the 2000 population. By then the share of Asia will have stabilized at 59 per cent, that of Africa will have more than doubled, to 20 per cent, and that of Latin America nearly doubled, to 9 per cent. Meanwhile the share of Europe will decline to 7 per cent, less than one third its peak level. While in 1900 the population of Europe was three times that of Africa, in 2050 the population of Africa will be nearly three times that of Europe."

    In some more developed countries, where the population growth is close to leveling off, populations will start to decline during the next fifty years.  According to the U.N.'s 1998 Revision, "a very slow and decelerating population growth in Northern Europe during the first quarter of the 21st century will be followed by steady population decrease in 2025-2050 ....  Western Europe will start experiencing negative population growth earlier and its population will shrink by 6.5 per cent.  Populations of Eastern and Southern Europe will be decreasing during the entire projection period at a high and accelerating pace; by the mid-century they are expected to lose 18 and 20 per cent of their 1998 sizes, respectively.  On the contrary, the populations of Eastern Asia, Northern America and Australia/New Zealand are projected to keep growing; their respective increases by 2050 will be 15, 29, and 39 per cent."

    There is disagreement among demographers as to when and where population changes will occur.  However, the unarguable facts of rapid world population growth and impending population decline in developed countries have substantial economic impacts and implications.

       Economy

    During recent decades of rapid and continuous population growth, there has been a continually increasing demand for life essential products and services (such as food, clothing, housing, education and medical care) as well as an increasing demand for leisure and luxury products and services in developed and developing countries.

    Observing the phenomenon of rapid population growth here on the Island of Maui, in Hawai`i, and a corresponding increase of development activities has been a remarkable eye-opener.  This being an island, the limits of physical expansion are plainly defined, and development has to be placed within those physical limits.  Contained as it is, the impact of rapid growth and development here has been all the more visible.

    The impacts here have been negative in terms of the environment.  There has been a steady introduction of more alien species that are taking a toll on the existing plant and animal life.  The increased crowding has caused traffic and pollution problems.  As more people want more homes in a limited field of real estate, housing and land costs have dramatically increased.  It is my understanding that our experience on Maui, as amplified as it may be in terms of visibility, is similar to the same phenomenon that is taking place in many locations throughout the world.

    As advocates debate the pros and cons of rapid development here, development advocates tend to emphasize economic benefits, arguing that they offset the visibly adverse environmental and esthetic impacts.  In other words, economic arguments are advanced to counter the empirical perception of and visceral reaction to a decreasing quality of life.  The argument that growth is good for the economy is really simply a reflection of the economic opportunities that population driven demand inexorably brings with it.  As you have more people, you can sell more stuff.

    This situation then is really not so much an argument as an opportunity -- demand is increased by population growth, and demand drives the economic marketplace.  The countervailing positions emphasize issues such as adverse environmental and esthetic impacts and the sustainability of endless growth (especially on an island.)

    Since this population growth driven increase in demand has been fueling economic opportunity, what are the implications of a predictable leveling off of population growth and an eventual decline in population?

    The argument over growth-driven development is one of detail rather than a yes/no proposition -- more people demand more housing.  The issues are in the details of the design and planning of housing expansion vis a vis adverse impacts.

    The argument will be significantly affected by an end to population growth, and even more so by a population decline.  Imagine yourself living in a time when the population is declining on an island that has been over-developed (both in terms of its natural, physical limits and in terms of what is needed for a decreasing population.)  What would you expect to be the demand at that time?

    I predict that the demand will then shift to support a restoration economy.  While we are presently caught up in a quantity of life economic situation, we will in the predictable future find ourselves in a quality of life economic situation.  The emergence of a new and viable restoration economy is already visible (e.g. Kaho`olawe.)  Eventually the facts of population will end the present growth driven demand and there will be an increased demand for quality of life and restoration economic activities.

    What does this prediction say for the present?  First of all, we need to preserve the environmental, cultural, esthetic and quality of life values and resources that we now have, because our grandchildren are going to want them.  Secondly, as we plan for the unavoidable need to accommodate more people during the next fifty years or so, we need to also recognize that this is a temporary situation.  Today's growth driven economy is not a permanent condition.  With a minimal amount of foresight, we can then perceive that when the growth driven economy subsides, there will be lingering effects from development accomplished in times past.

    We need to help those whose interests and economy will harmonize in restoring and enhancing quality of life in the predictable future by not exhausting or devastating the resources and places they will have to work with in their own time, on their own terms.


Click here for an interesting population comparison counter.




   Note:  The net worth of the top one percent of Americans is greater than that of the bottom 90 percent, according to research from the Federal Reserve and the Internal Revenue Service.  Jeff Gates, Towards a More Democratic Capitalism