Growth, Globalization, and the Environment

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Growth, Globalization, and the Environment

By: John C. Downen
Posted on May 18, 2005 FREE Insights Topics:

Most folks instinctively believe growth and environmental protection are mutually exclusive. Increased economic activity and growing populations stress the Earth’s “carrying capacity.” In this view, we must choose between protecting the planet or promoting economic progress. Fortunately this is not the real choice. Consider this.

Population Growth

In 1798, Thomas Malthus published An Essay on the Principle of Population. He argued that, left unchecked by “moral restraint,” population growth would outstrip the increase in food supply. Mass starvation, disease, and wars would result, bringing population back into balance with available resources.

Today, these views underpin much of environmentalists’ bleak picture of our future. (If economics is the dismal science, environmentalism is the dismal religion.) Folks like Paul Ehrlich and the Club of Rome began predicting the world’s imminent collapse from overpopulation and resource depletion almost 40 years ago. Though they’ve been repeatedly refuted by reality, in response they simply delay The End another few decades.

In fact, we are not experiencing unlimited population growth. The rate of world population increase has declined since 1963, with the greatest slowdown happening since 1990. The UN projects world population will peak at around 9 billion in 2075, declining then leveling off thereafter.

Practically all current (and future) population growth occurs in the poorest countries, yet even there rates are falling. In the 1950s, according to UN data, the average woman in the less developed world had 6.2 children. Today that’s down to 2.9 children per woman. The rate of natural increase (births minus deaths, per hundred people) averages less than 2 percent in the developing world. While this is acting on a very large population base, the important fact is that growth is slowing. Fertility rates in all European countries are below the replacement rate of 2.1 children per woman. Without immigration, they will soon lose population -- Italy and most of Eastern Europe already are. The U.S. is hovering right around the replacement rate.

What Malthus didn’t understand, and many environmentalists seem to ignore, is that as people become wealthier they tend to have fewer children (Mormons being a notable exception). As economic opportunities increase and more people live in cities than on farms, the “cost” of having children rises. The fact that fertility rates are declining before many poorer nations have significantly modernized bodes well for future population decreases. The surest way to continue reducing population growth in the developing world is to educate women and improve their employment opportunities. Educated women have smaller, healthier, better-educated families.

Natural Resource Exhaustion

The idea that there are not enough resources to go around, and thus the poor become wealthier only if the rich become poorer, is intuitively appealing. Fortunately it’s also wrong.

First, natural resources are not fixed. Rather, they are determined through science, technology, and entrepreneurship. That is, some substance in the environment becomes a resource when it becomes useful. Petroleum wasn’t considered a natural resource until the mid-19th century.

As a resource grows more scarce, the resulting rise in price induces consumers to economize on it and seek substitutes. When hundreds of millions of Chinese drive cars the price of gas will rise significantly. This increase, not concerns about global warming, will make hydrogen an attractive fuel source.

Human ingenuity and technological progress are accelerating. Electronics and telecommunications foster economic activities that rely more on human resources than natural resources. Barring a sudden, massive disruption, we will continue to find ways to use current resources more efficiently and discover new ones.

Second, the belief that wealthy countries must reduce their standard of living in order to improve that of everyone else is based on the false belief that economic progress is a zero-sum game. That is, I get richer only by making you worse off.

By their nature, free market exchanges make everyone better off. A survey of the research finds that multinational companies tend to pay higher wages than domestic firms and that foreign firms prefer to operate in “a stable political and social environment in which civil liberties are well established and enforced.”

Of course there will always be problems to solve. But increased wealth and economic freedom provide the resources and foster the creativity to tackle difficult environmental problems and reduce our impact on the planet.

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