Simonizing Bill Gates

by Don Boudreaux on November 27, 2010

in Myths and Fallacies, Population, Property Rights, Standard of Living

Here are two letters to the Wall Street Journal:

Bill Gates writes that “slowing population growth” has “proven … to be critical to long-term economic growth” (“Africa Needs Aid, Not Flawed Theories,” Nov. 27).  What’s the evidence for this claim?

Did Hong Kong grow as a result of slowing population growth?  No.  What about Taiwan over the past 60 years?  No.  Was slowing population growth key to England’s unprecedented economic blossoming during the industrial revolution?  No.  Did population growth in America slow before its economy began to grow?  No.

Did the great 20th century migration to California cause that state’s economy to languish?  No.  Do the high population densities of Manhattan, London, Sydney, and Toyko keep people in those cities poor?  No.  What about high population densities of countries such as South Korea, Netherlands, and Belgium – are their citizens poor as a consequence?  No.  Do low population densities in the Republic of Congo, Chad, and Bolivia keep people in those countries rich?  No.

It’s disappointing that Mr. Gates, visionary entrepreneur that he is, so readily accepts the pop myth that population growth is a drag on economic growth.

Sincerely,
Donald J. Boudreaux

And

Bill Gates writes that “slowing population growth” has “proven … to be critical to long-term economic growth” (“Africa Needs Aid, Not Flawed Theories,” Nov. 27).  What’s the evidence for this claim?

It’s true that higher per-capita incomes can give people more time and resources to invest for the future – investments that are key to economic growth.  It’s true also that higher per-capita incomes can indeed result from declining population growth.

But slower population growth is neither necessary nor sufficient for faster economic growth.  Private investments that spark growth can come from outside – and WILL come from outside if public policies and institutions in the poor country become more friendly to commerce and competitive markets.  More importantly, without private investments attracted by improved policies and institutions, any slowing of population growth results, not in faster economic growth but, rather, in total output falling until per-capita incomes are again where they were before population growth slowed.

Sincerely,
Donald J. Boudreaux

And s Steve Horwitz points out to me in a private e-mail, Gates has the correlation right: high economic growth is correlated with slowing population growth, but the latter is the result of the former rather than its cause.

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