Wednesday, January 16, 2008

The Future Is Bright

So says Alexander Tabarrok of Marginal Revolution:

People used to think that more population was bad for growth. In this view, people are stomachs--they eat, leaving less for everyone else. But once we realize the importance of ideas in the economy, people become brains--they innovate, creating more for everyone else....

In the 20th century, two world wars diverted the energy of two generations from production to destruction. When the horrors ended, the world was left hobbled and split. Communism isolated much of the world, reducing trade in goods and ideas--to everyone's detriment. World poverty meant that the U.S. and a few other countries shouldered the burdens of advancing knowledge nearly alone.

The battles of the 20th century were not fought in vain. Trade, development and the free flow of people and ideas are uniting all of humanity, maximizing the incentives and the means to produce new ideas. This gives us reason to be highly optimistic about the future.

The main thrust of Tabarrok's argument is that economic development worldwide will drive technological development and help all of mankind. However, his point that more people = more innovation can also apply to situations within individual nations. I guess it's a good thing, then, that the United States is experiencing a baby boomlet:
The fertility rate among Americans has climbed to its highest level since 1971, setting the country apart from most industrialized nations that are struggling with low birthrates and aging populations.

This also reminds me of the one of the most fantastically bad policy arguments put forward in recent memory:

A WEST Australian medical expert wants families to pay a $5000-plus "baby levy" at birth and an annual carbon tax of up to $800 a child.

Writing in today's Medical Journal of Australia, Associate Professor Barry Walters said every couple with more than two children should be taxed to pay for enough trees to offset the carbon emissions generated over each child's lifetime.

Walters looks at children purely as consumers of natural resources. Tabarrok's article, however, reminds us that these children could well be the ones to discover a new source of alternative energy or some other environmental breakthrough. Currently, the Australian government gives new parents a $4133 baby bonus. Now that is a smart policy. A vibrant Australia with a birthrate at least at the replacement level would certainly be better positioned to deal with the environmental challenges of the 21st century than a rapidly aging Australia burdened with a shrinking population and a crippling dependency ratio (which would be the inevitable fruit of Walter's policy). This lesson can apply to any developed nation. Have babies! It's good for the environment!*

*Eventually. On average. After all, maybe your baby will be a dim-witted, carbon-dioxide emitting machine. Like me! But if enough people have babies, someone's going to pop out an Einstein sooner or later.

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