Population Pays

by Benjamin Studebaker

Remember that immigration reform bill that’s attempting to crawl through the congressional minefield? Back in January, I was critical of the bill, because it seems to presume that reducing immigration numbers is still a desirable goal. I argued that the bill over-emphasized border security at the expense of encouraging immigration, and that increasing immigration was fundamentally advantageous to economic growth, that immigrants contribute more to the economy than they consume in public services. At the time, my view was predominately theoretical. Now, however, we have empirical data. The non-partisan and generally trustworthy Congressional Budget Office (CBO) has released a report in which it predicts that immigration reform would shrink the deficit by $197 billion.

How does the CBO come to this figure? It estimates that the changes to immigration laws would lead to an additional 10.4 million US residents over the next ten years. These residents would, of course, consume public services–$262 billion worth of them. However, they would also contribute to the economy and pay taxes, and it’s estimated that the added revenue would amount to $459 billion over the same period. In sum, immigration reform pays for itself. It is a sound economic investment by the state, a good stimulus.

The CBO has a great reputation, but if you doubt their methodology, there’s a good 40 pages of explanation in the report. The thing I find most striking about all of this is that, based on this CBO report, the more immigration we have, the larger the positive effects are likely to be. While it’s clear that the immigration reform bill as presently structured would be good for the economy, it also seems quite likely that an even more permissive bill that did more to encourage immigration and less to obstruct it would have even larger net benefits to the US economy. In other words, amnesty was and is an economic winner–it is only xenophobia that prevents us from enjoying its benefits. The right’s discomfort with foreign cultures and people has a literal cost to the state and to the wider economy. Is it worth paying? I see no rational reason why it would be. We should always welcome willing and capable contributors to our economy, regardless of their native language, cultural background, skin color, religious views, or what have you. These people improve the standard of living for all of us, and if we reject their immigration, they will instead advantage foreign states, harming our relative economic standing and consequently our long-term security.

The CBO’s research also backs another argument I previously made against the Malthusians, who believe that increasing the population increases consumption faster than it decreases production, such that the principle solution to many of the world’s most serious problems is population control. The CBO shows that, at least in the United States at this time, additional workers produce more value than they consume–almost twice as much, actually. The United States is far from among the most densely populated countries, but it is at an equal or greater population density to some of the countries whose poverty the Malthusians point to as evidence of a population problem:

Many poor African countries have population densities that are equal to the United States or lower. Yet, in the American case, more people means more economic growth. It means more resource production, not more strain on resource capacity. The US even remains a net food exporter. It even has been reducing the percentage of its land that it uses for agriculture while simultaneously increasing agricultural yields. A recent study highlights corn production, for example:

The study goes on to claim that even as population increases worldwide over the course of this century, less and less land will be used for farming:

This further suggests that the problem in poor African countries is not a problem of total available resources, but a double-headed serpent:

  1. Distribution–people in poor countries lack the wealth to trade for surplus resources produced in other parts of the world.
  2. Technology–people in poor countries lack the technological penetration necessary to compete with rich countries in global food markets.

Between the two, this leaves us with an uncomfortable paradox. We are fully capable of producing enough food to pay everyone, but the free market system nonetheless remains incapable of distributing food in such a way that everyone has enough. Instead, obesity skyrockets in developed states, where people buy far more food than they need, while others go hungry.

Malthusians are too quick to jump to the conclusion that the reason some people are hungry is that there is not enough food for all. The true problem is that the market economy is not capable of self-regulating in this area. It treats food no differently than it treats any luxury commodity.

No one needs a television in order to live. Many people in the world do not have a television, some people have one television, and then there is a small group of relatively well-off people that have multiple televisions, which are often higher quality than the rest. The reason some people do not have televisions is not that it is physically impossible to make enough televisions for everyone, it is that it would not be financially profitable to do so. In order to get televisions to the world’s poor, you’d have to sell televisions for too little. It’s not worth it to most television manufacturers or vendors. The market treats food the same way–some of us have too little food, some of us have what we need, and some have much more than what is needed and at higher quality. Your average fellow in sub-Saharan Africa struggles to purchase food not because there is an absolute shortage, but because food growers and vendors are not willing to sell food at a price which the sub-Saharan consumer can pay, because such a price is not profitable. All things we consider necessities rather than luxuries suffer from this same problem–the market does not care how badly you need a given thing, it only cares whether or not you can pay for it. It will adjust what it produces to meet not the social need, but the demand at the price it needs to meet to be profitable.

To feed Africa’s poor, either African states must increase their domestic food production so that they no longer have to buy imported food at the relatively high prices demanded by developed countries or developed countries must be willing to sell food at a loss. Developed countries will never sell food at a loss because doing so is not in their interest, so the salvation of Africa’s malnourished must be African agriculture. Africans need to farm more, and they need to improve farming technology. Foreign aid, charitable organizations, and so on should focus on helping Africans improve their technology and agricultural efficiency. Attempting to bring about low birth rates in Africa only serves to rob that continent of its one major advantage over developed states. While growth in developed states is slowed by ageing populations insufficiently supported by a small population of young workers, growth in Africa will take off as soon as it achieves some measure of political stability, the way some Asian and South American countries have.

One caveat on all of this–it is certainly possible for population to be a problem, but not in the way Malthusians and opponents of immigration reform typically conceive of it. If population increases very rapidly, it can outpace technological growth and the capacity of a society to adjust its infrastructure. If you doubled the global population tomorrow, it would indeed be problematic, because we would simply not have any way of putting those people to work fast enough in productive ways such that we could feed them. However, growth rates like that are entirely theoretical. Global population growth has in the past been faster than it presently is:

We were capable of making the requisite adjustments to our technology and infrastructure in the mid-20th century, and we remain fully capable of doing that going forward. Population growth at these reduced rates only becomes a problem if technological improvements stop altogether, but at that point, we’re dealing with the collapse of civilization, not a population problem.