Ferraris for all

Tom Friedman, a foreign affairs columnist for the New York Times, is having a new book published in September called Hot, Flat and Crowded. Evidently he argues that America should pursue environmental goals both as a good in itself and because it can help the nation retain its position of world leadership. It sounds like it puts him firmly in the neo-Malthusian camp (for Friedman's earlier work on this theme see post of 15 April 2007).

Labels: America, book, environment, Malthus

Martin Wolf, the chief economics commentator of the Financial Times, argued in a feature in yesterday’s paper that sustaining economic growth is the century’s big challenge.

The article, which was partly a review of the new book by Jeffrey Sachs and partly a discussion of the recent growth commission report, started by asking:

“Is it possible for the vast mass of humanity to enjoy the living standards of today’s high-income countries? This is, arguably, the biggest question confronting humanity in the 21st century. It is today’s version of the doubts expressed by Thomas Malthus, two centuries ago, about the possibility of enduring rises in living standards. On the answer depends the destiny of our progeny. It will determine whether this will be a world of hope rather than despair and of peace rather than conflict.”

As a free marketeer Wolf says that his inclination is to argue that problems raised by economic development can be resolved. But later on he admits to developing some sympathy with environmentalism:

“it has become evident, at least to me, that the human impact on the planet on which we depend has risen to enormous proportions. We have treated the global commons as if they were free. Self-evidently, they are not.”

Evidently free marketeers cannot be relied upon to give an unequivocal defence of economic growth.

Labels: development, economics, environment, growth, Malthus, progress

A substantial feature in Monday’s Wall Street Journal on the new “limits to growth” illustrated, if anything, the limitations of the free market critique of environmentalism. The article - which unfortunately it not freely available on line - started with the correct observation that the Cassandras have always proved wrong on limited resources. But it lacked confidence in the ability of the current generation to increase supply to meet rising demand. Its conclusion:

“Indeed, the true lesson of Thomas Malthus, an English economist who died in 1834, isn't that the world is doomed, but that preservation of human life requires analysis and then tough action. Given the history of England, with its plagues and famines, Malthus had good cause to wonder if society was "condemned to a perpetual oscillation between happiness and misery." That he was able to analyze that "perpetual oscillation" set him and his time apart from England's past. And that capacity to understand and respond meant that the world was less Malthusian thereafter.”

By coincidence the Financial Times today ran a piece by Martin Wolf, its chief economics commentator, lamenting the death of the free market:

“Remember Friday March 14 2008: it was the day the dream of global free- market capitalism died. For three decades we have moved towards market-driven financial systems. By its decision to rescue Bear Stearns, the Federal Reserve, the institution responsible for monetary policy in the US, chief protagonist of free-market capitalism, declared this era over. It showed in deeds its agreement with the remark by Josef Ackermann, chief executive of Deutsche Bank, that “I no longer believe in the market’s self-healing power”. Deregulation has reached its limits.”

Labels: consumption, economics, finance, growth, Malthus

Moisés Naím has an ambivalent article in Foreign Policy (March / April 2008) entitled “Can the World Afford A Middle Class?”. His short answer is “yes, but it will be awfully expensive”. Naim makes the correct but obvious point that the economic development of the likes of China and India will involve the use of a huge amount of resources. However, Naím seems doubtful about the ability of humanity to find new sources of supply for natural resources. Although he does not openly embrace Malthus he expects the surge in demand for resources to have unexpected and painful side effects.

Labels: china, consumption, development, economics, inequality, Malthus

Jeffrey Sachs has a new book out. Yet, judging by an extract in Time magazine (24 March), Common Wealth for a Crowded Planet repeats many of the themes of his previous work (see links to “my reviews” in the left hand column):

“The defining challenge of the 21st century will be to face the reality that humanity shares a common fate on a crowded planet. We have reached the beginning of the century with 6.6 billion people living in an interconnected global economy producing an astounding $60 trillion of output each year. Human beings fill every ecological niche on the planet, from the icy tundra to the tropical rain forests to the deserts. In some locations, societies have outstripped the carrying capacity of the land, resulting in chronic hunger, environmental degradation and a large-scale exodus of desperate populations. We are, in short, in one another's faces as never before, crowded into an interconnected society of global trade, migration, ideas and, yes, risk of pandemic diseases, terrorism, refugee movements and conflict.

“We also face a momentous choice. Continue on our current course, and the world is likely to experience growing conflicts between haves and have-nots, intensifying environmental catastrophes and downturns in living standards caused by interlocking crises of energy, water, food and violent conflict. Yet for a small annual investment of world income, undertaken cooperatively across the world, our generation can harness new technologies for clean energy, reliable food supplies, disease control and the end of extreme poverty.”

Although he does not say it explicitly his argument is that there are natural limits to economic growth. The best we can hope for is to eradicate “extreme poverty”. Our growing use of resources, in his view, could lead to disease, terrorism and conflict.

Labels: book, development, economics, environment, inequality, Malthus

There follows a comment by me from this week’s Fund Strategy. It is related to the news analysis on rising food prices that I posted yesterday.

Thomas Malthus, who more than anyone else popularised the idea that population grows faster than food supply, died in 1834. It is a tragedy that so many people now seem intent on resurrecting his ideas.

When Malthus first published "An Essay on the Principle of Population" in 1798 he famously argued that the food supply would rise arithmetically (1, 2, 3, 4 and so on) while population would grow geometrically (1, 2, 4, 8 etc). He therefore foresaw a future of mass starvation and famine.

Fortunately, nearly 200 years of history have proved Malthus wrong. It is true that over the years there have been occasional famines, with many millions dying. But the general trend is of vast improvement. Overall, the average human has far more and better-quality food than when Malthus was writing, despite the huge rise in population. There is still some way to go before everyone is well fed but the situation is generally getting better. It should be remembered that back in Malthus's time virtually everyone lived on the edge of starvation.

The fundamental mistake Malthus made was to underestimate human ingenuity. Although demand for food has increased, the supply has risen even more. People have harnessed new technology to allow agricultural yields to rise enormously. Far more food is produced for each hectare of land.

Sadly, many contemporary authorities propound what are essentially Malthusian views. The recent surge in global food prices has added impetus to such arguments. Many conclude that rising population and affluence, which they see as driving up prices, are therefore negative developments.

Like Malthus the contemporary cynics underestimate humanity. They do not see that the richer we are the more technology is likely to develop and the better able we will be to deal with problems. For example, richer countries are in a stronger position to deal with the challenge of climate change. The Netherlands can afford modern flood defences whereas Bangladesh currently cannot.

Ironically it is often the same doomsters who block technological progress. The widespread campaign in Europe against genetically modified crops is a good example. Such technology could provide huge advances in raising yields, yet many are acting against its implementation.

It would be far better to let Malthus rest in his grave than try to bring his spirit back to life.

Labels: consumption, economics, food, Fund Strategy, Malthus

Spiked has run my review of Gregory Clark’s A Farewell to Alms in its monthly review of books.

Labels: Africa, book, Malthus, progress, review, spiked

Today spiked has published an important essay by Frank Furedi on environmentalism.

Labels: environment, Malthus, spiked

Gregory Clark, the author of A Farewell to Alms (see 7 August and 10 August posts), has written an article in the New York Sun on Africa. He argues the continent is caught in a “Malthusian trap” in which rising living standards lead to population growth which in turn puts pressure on fixed resources and then depresses living standards. The problem with this perspective is that it naturalises underdevelopment: in other words it misses the broader economic and social barriers to development.

However, Clark does call for industrialisation as a way of breaking out of the Malthusian trap and promoting development. In this he is way ahead of most other development thinkers nowadays.

Labels: Africa, book, development, economics, Malthus

The Library of Economics and Liberty has published a podcast by Paul Romer, one of America’s leading experts economists, on economic growth. The webpage from which it can be downloaded includes lots of useful links including a defence of Thomas Malthus.

Romer is the leading advocate of new growth theory - also called endogenous growth theory - which emphasises such factors as technological change and ideas in the growth process. It is a move away from the focus on physical capital which previously dominated economics.

Labels: America, economics, growth, Malthus

The economic history of the world by Gregory Clark, a professor of economics at the University of California, Davis, is about to be published by Princeton University Press. When I first wrote about it in my post of 1 August 2006 the book was to be called The Conquest of Nature but the final version is called A Farewell to Alms.

According to the review in today’s New York Times the book argues against institutions as an explanation for the transition from poverty to wealth. Instead it locates the explanation for the change in shifting values: “The change was one in which people gradually developed the strange new behaviors required to make a modern economy work. The middle-class values of nonviolence, literacy, long working hours and a willingness to save emerged only recently in human history.” (Although this quote begs the question of why such values emerged).

The book also sounds like it has an interesting and closely related discussion of how humanity escaped from the “Malthusian trap”: “each time new technology increased the efficiency of production a little, the population grew, the extra mouths ate up the surplus, and average income fell back to its former level.”

Labels: book, economics, Malthus, progress

Engineers Against Poverty has published a debate between me and David Nicholson-Lord, research associate of the Optimum Population Trust, in its July newsletter. Nicholson-Lord argues that the size of the global population is itself a problem. I counter that human ingenuity has enabled humanity to overcome apparently natural limits and is likely to do so in the future. The debate can be viewed on pages 3-5 of the newsletter: here (PDF).

Incidentally, Nicholson-Lord is also the deputy chairman of the New Economics Foundation (NEF). His involvement in both organisations suggests the NEF is more Malthusian than its radical reputation suggests.

Labels: consumption, development, environment, Malthus, media appearances

The Independent is scared of economic development.

Yesterday the newspaper ran a classic Malthusian scare story on its front cover about how food prices were rising while supplies were falling. It said one of the main factors behind this trend towards “agflation” (agricultural inflation) is the “growing affluence of millions of people in China and India is creating a surge in demand for food - the rising populations are not content with their parents' diet and demand more meat.” The other factor it identified was the increasing use of agricultural crops as a source for biofuels rather than food.

The Independent did a poor job of putting recent food prices rises into context. Although food prices have risen recently the long-term trend is for them to fall. To be fair the article did conceded that: “Sixty years ago an average British family spent more than one-third of its income on food. Today, that figure has dropped to one-tenth.”

On Friday it ran an article on what it saw as the threat of relatively cheap cars becoming available in India. Apart from congestion the inevitable threat of climate change was raised.

It is a tiny step from expressing such fears about development to outright hostility. If the Independent’s perspective is accepted then it makes sense to try to limit development.

The alternative is to welcome economic development as it brings better lives to literally billions of people. It also brings with it a better chance of tackling such problems as insufficiently high agricultural productivity and climate change. After all, the experience of the two centuries since Malthus shows that his pessimistic outlook grossly underestimates human ingenuity.

Labels: china, climate, consumption, development, environment, food, india, Malthus