The Importance of Population

by Don Boudreaux on July 6, 2005

in Standard of Living

Dr. R. T. Ravenholt was Director of USAID’s Population Program from 1966 to 1979. His letter in today’s New York Times gives some hint about why foreign "aid" programs have been so unsuccessful.

Dr. Ravenholt wants more emphasis on birth-control for Africans. Here’s his punchline:

Resources divided by the population equals the human condition.

Dr. Ravenholt believes that there’s a fixed amount of stuff (and stuff to make stuff) to go around. This view, of course, is widespread. If it were true, Dr. Ravenholt would be correct that fewer people would mean more material wealth. Birth control would then be key to economic prosperity.

But Dr. Ravenholt’s belief is mistaken. Evidence against this belief is under our noses. Compare Manhattan to Mississippi.

Probably the richest 23 contiguous square miles on the planet is Manhattan. It is also a speck of earth that is among the worlds most densely populated, with each square mile, on average, packed with 67,000 residents. More than 1.54 million people live on Manhattan and some 2.12 million people work there all amidst the millions of visitors who flock to that island every year.

According to conventional belief, Manhattanites should be among the earths most destitute and wretched peoples. Yet despite the fact that Manhattan has no forests, farms, pastures, fisheries, or mines, per-capita income there is a sky-high $73,000.

Compare Manhattan to the 46,907 square miles that are Mississippi, a state boasting a great deal of fertile farm land, bountiful lakes and rivers, and thick forests. Mississippi is also blessed (if conventional belief is valid) with a human-population density less than 1/1000th that of Manhattan (61 Mississippians per square mile compared to 67,000 Manhattanites per square mile). According to conventional belief, Mississippians should be much wealthier than Manhattanites. But instead they’re much poorer. Per-capita income in Mississippi is less than $16,000, a mere 22 percent of that of Manhattan.

After I first published these paragraphs (in this essay) in November 2003, I received a good deal of e-mail informing me that my comparison is invalid – the chief complaint boiling down to "you simply can’t compare Manhattan to Mississippi."

Why not? If those (like Dr. Ravenholt) who believe that "resources divided by the population equals the human condition" are correct, then why are Manhattanites so much more materially wealthy than Mississippians?  Why should such an obvious and central truth not be in evidence when looking at Manhattan compared to Mississippi?

I asked this question to all my correspondents. The reply to my question was, in effect, "other things are happening to create this difference in material wealth."

No doubt ‘other things’ explain the wealth difference between Mississippians and Manhattanites. But an overlooked factor is not found elsewhere; it’s found smack-dab in the population numbers themselves. Manhattan is a rich place in large part because it’s densely populated with a lot of free people.

People create wealth. Julian Simon’s lesson cannot be repeated too often: free human beings are the ultimate resource.

When people are reasonably free, it’s more correct to say that "resources times population equals the human condition."

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