On Clark And Caplan

Greg Clark:

[Bryan] Caplan [says] … children impose not costs, but benefits, on the rest of society. …. I think Caplan’s … proposition will soon prove to have applied only in a limited historical window. Future population increases will likely exert substantial downward pressure on the growth of living standards. … There is thus a race between resource costs and scale economies as population grows. … For 99.9% of human history, up till 1800, the winner in that competition was resource scarcity. …

The downward march of food and energy prices since 1800 may well end soon. Current high prices may presage a food scarce-energy scarce future. … Population will again be an important determinant of income. This implies a negative externality associated with fertility, with all the unpleasant implications this holds for those of libertarian persuasion.

Caplan responds:

Clark is right to name economies of scale as one social benefit of population. But he neglects the far more important effect on innovation. … As long as parents are financially responsible for their children, any negative effect of population on living standards is internal to the family. … If parents didn’t care about their already existing children … there might still be a problem. But parents do care about their already existing children. … So it’s unclear whether a problem even exists. … Are you actually willing to bet that global real per-capita GDP will be lower in 2020 than it is today? How about 2030? 2050?

Clark is right that in the long run resource scarcity dominates living standards – that applied for most of human history, and will apply to most of our descendants. Our special dreamtime era of rapid growth and rising living standards can’t last long – probably within a few centuries (and certainly within ten millenia), average consumption will be way down from today.

But Caplan is right that fertility has a net positive externality. Yes property rights are not perfect, so people can hurt each other. But people help each other far more via innovation and scale economies. Yes those will dwindle in the long run, but so will property rights violations.

Of course if you are willing to look only at tiny elites, you can find high average consumption in both the distant past and future. The tiny fraction of future humans who are not robots might well manage to keep a high living average living standard. But most creatures recognizably decended from us will have near subsistence consumption. And that, I think, will mostly be a good thing.

Added 8a: Bryan responds; Tyler comments.

GD Star Rating
loading...
Tagged as:
Trackback URL:
  • Psychohistorian

    This analysis of the marginal effects of children ignores social stratification, and, particularly, the importance of labor supply on cost.

    After the Black Death, peasant wages skyrocketed, leading to (poorly enforced) laws setting maximum wages, and indignant nobles complaining about peasants refusing to sign year-long contracts and only signing weekly ones, demanding meat and fine clothes, and so on.

    Similarly, the influenza pandemic of 1918, which disproportionately killed the young and healthy, is believed to have increased wages for that generation by about .5%.

    An essential determinant of the value of labor is its scarcity. Where unskilled labor becomes more abundant, wages fall and amount employed increases. This increases the returns to skilled labor and to holders of capital. There’s thus a benefit to society, but a detriment to the average group member.

    In short, if skilled workers get more fertile, and unskilled workers get less fertile, wealth should shift from the former to the latter. Aggregate wealth may be lower than if both groups were more fertile, but most people who aren’t Robin Hanson care more about average than aggregate wealth.

    • anon

      It is easy to redistribute wealth in such a scenario: just enact a land reform taking land away from nobles and redistributing it to peasants. (Land is in fixed supply, so this has little adverse effect economically; it may even encourage investment in non-land capital.)

      Yes, such a possibility depends on institutional factors. But by the same token, nobles might force the institution of serfdom or chattel slavery in the expensive-labor scenario. (This actually occurred in 16th century Russia after vast amounts of land were opened to colonization and the land/labor ratio shifted in favor of poor workers). So, population size may have little implication on overall inequality.

  • Vladimir M.

    The unstated premise in Caplan’s argument is that actions of others can damage you only via externalities. This enables him to pull off a rhetorical legerdemain by claiming that given respect for property rights, there can be no negative externalities from others reproducing, so all is peachy.

    Of course, the trick is that the standard definition of externalities does not include the losses you may suffer if someone’s actions influence the markets so that your assets lose value and/or the price of what you want goes up. So for example, if you keep your savings in gold and someone figures out a way to synthesize gold cheaply so that your savings are wiped out instantly, this doesn’t count as an externality. Similarly, if you live from selling labor and your competition multiplies so much that your wage falls below subsistence so you starve to death, that’s not an externality either. Or, if someone bids up the price of something you need to survive beyond your means, this change may kill you, but it’s not an externality.

    The last two scenarios are what awaits most people under the upload scenario, but somewhat milder analogous effects are easily imaginable even under large natural population growth. But strictly speaking, no negative externalities are involved in either case, so Caplan’s argument is technically correct, however misleading.

    • Jeffrey Soreff

      Well said!

      Also, even in the context of the restricted view of what counts as an externality, the claim that:

      Yes those will dwindle in the long run, but so will property rights violations.

      is unbelievable with respect to property rights violations.
      Forget all of the history of warfare and various flavors of
      confiscation. We haven’t been successful at keeping our
      banks’ foreclosures within the law. If
      something that is so strongly a creature of property and
      financial law as a bank cannot be made to comply with it,
      the claim that property law has great strength to shape the
      future is absurd.

    • Sister Y

      Yes, this. Defining real, perceptible, measurable harm as not-harm.

    • anon

      These changes are called “pecuniary externalities”. They are not real externalities and are not included in conventional cost-benefit analysis, because gains and losses are always in balance. For instance, if a new technology is developed which makes gold cheap, the losses of current owners of gold are balanced by the gains of those who would’ve bought gold at the previous, expensive price.

      Of course, pecuniary externalities will matter if you care about distributional effects, even though they wash out in the aggregate. (They may also matter when partial internalization throws the balance off: if the technology is costly and the folks who develop it have significant exposure to the gold-demanding sector, then the outcome may not be socially efficient, because it will include a rent-seeking incentive.)

      • Jeffrey Soreff

        Are you saying that “gains and losses are always in balance”
        just for cases where the number of players is unchanged?
        The primary issue for for this posting is where the number
        of people is changing, possibly drastically. Also, no one gets
        a say in whether they are born. No one has presented
        a clear argument for why making the parents “financially responsible”
        (to what degree? for how long?) for their children is supposed
        to cancel out all of the negative effect that their children
        will have on overall living standards.

      • Sister Y

        The problem with this is that the beneficiaries of the gains are in this circumstance “new entities,” who need not exist and are not harmed by not existing. On the other hand, existing people are harmed by those new people existing and taking away their utility.

  • Evan

    As I pointed out in my comment on Caplan’s post about this on Econlog, it seems like virtual reality would be so cheap for ems that they would be able to live quality lives even at near subsistence level. They could work half their time and spend the other half of the time hanging out with their friends in Superstimulus World.

    Vladimir M., while much of your analysis is sound, I don’t see how that scenario can “await most of us.” It is true that market actions sometime damage people, but generally they always damage a minority. Synthetic gold would be a boon to the majority of the population, even if it hurt a few people. I suppose that the difference might be that you aren’t counting ems as “us.” I think that is a mistake, ems would be “us” for all intents and purposes.

    • Hedonic Treder

      They could work half their time and spend the other half of the time hanging out with their friends in Superstimulus World.

      Or they could work all their time with frequent introduction of false memories about Superstimulus World.

  • Gil

    If Libertarians reckon that a growing population is a wealthier population then the current drop in birth rates around the world in mostly well-off nations will translate into wealth destruction. Presumably fewer people with more wealth per person will create lazy, disinterested people who won’t be able to keep their wealth thus impoverishing society and starting the process of wealth creation from scratch. Likewise presumably had the birthrate stayed high and there was a risk of overpopulation then great minds would continue in technological progress to keep one step ahead of a Malthusian tragedy. By Libertarian reckoning to achieve true space travel requires human overpopulation for which there can be no Earthbound solution – create interstellar travel or perish. Actually by all Libertarian reckoning – overpopulate and create the need for an anti-Malthusian solution or perish (or at least be mired in Malthusian poverty).

  • rapscallion

    Non-robotic future humans might be subsistence poor, too, if artificial womb technology takes off.

  • josh

    “But he neglects the far more important effect on innovation. … ”

    This obviously depends on who is having the babies and what they are likely to do with their lives. Perhaps the next generation will invent new ways of agitating for other people’s money if they innovate at all (see, the third world).

    “As long as parents are financially responsible for their children… ”

    What’s with this guy? Does he actually interact with the actual world in any capacity?

  • josh

    Okay,

    Bryan Caplan apparently believes war is about to “whither away” based on a 60 year trend (with the most barbaric episode in human history as its starting point. Talk about unwise use of data. Perhaps it could be useful to understand *why* we have seen fewer war deaths since 1945 before we determine this trend will continue forever. What are this man’s genuine insights beyond the (false) notion that it is acceptable for a college professor to wear sandals to work?

  • Abelard Lindsey

    To believe this:

    Clark is right that in the long run resource scarcity dominates living standards – that applied for most of human history, and will apply to most of our descendants. Our special dreamtime era of rapid growth and rising living standards can’t last long – probably within a few centuries (and certainly within ten millenia), average consumption will be way down from today.

    And to believe this:

    But Caplan is right that fertility has a net positive externality. Yes property rights are not perfect, so people can hurt each other. But people help each other far more via innovation and scale economies. Yes those will dwindle in the long run, but so will property rights violations.

    Is logically self-contradictory.

    The first implies a zero-sum situation that, in turn, implies that property rights violations will increase, not decrease in the future. How can property rights violation not increase in a zero-sum situation?

  • Abelard Lindsey

    I disagree with Caplan on two points.

    First, I do think that modernization and economic growth has eliminated the genuine threat of overpopulation and that we can flush this whole argument down the toilet and move on. Its an irrelevant issue as far as I’m concerned.

    Second, I consider health, prosperity, and liberty to be net positive values in their own right. I do NOT consider fertility, in and of itself, to be a net positive value.

    I see absolutely no reason at all to change my attitude about these two points. I think Caplan is walking off the map.

  • Aron

    It’s interesting that Caplan tries to characterize Clark’s position as underweighting more recent trends, but then ignores Clark’s comment regarding the future insufficiency of oil, which is a much more recent trend than Caplan’s. Tyler’s stage progression model seems more apropos, and the timing of such progressions will largely dictate whether Caplan looks right or not in hindsight (but either way it won’t be because of his model).

    Otherwise, Vladimir nails it. Also, I wouldn’t mind a Caplan Hanson->English translation more often.

  • http://daedalus2u.blogspot.com/ daedalus2u

    In the “long run”, the average human will have only produced subsistence levels of goods and services.

    Some will produce more, some will produce less (i.e. will actually destroy goods and services), but the average will be subsistence with no surplus.

    The reason I can be so confident of this assertion is that the alternatives are not realistic. We know if the average falls below subsistence levels then humans will become extinct. If the average is above subsistence, then each person contributes (on average) to an ever increasing store of goods and services.

    What form does that accumulating surplus take? What accumulated surplus is left from times past? What is the value of that “accumulated surplus”? There are very few artifacts left from the past. Most artifacts have a useful life, when that life is over they must be disposed of at some incremental cost. Once disposed of, there is no accumulated surplus.

    What kinds of goods and services could humans produce that would retain value in perpetuity? The Pyramids? Even the Pyramids will eventually wear out.

    The only way the average can be positive is if new humans continue to produce more incremental goods and services than they consume. If the average is positive, then eventually humans will be born into a world where the per capita accumulated surplus is many times what they could possibly produce or consume in their lifetime. How do we expect such people to act? Do they only do positive sum transactions where the net accumulated goods and services only increases? Or do they do zero-sum or negative-sum transactions to increase their personal supply of goods and services by exploiting goods and services away from others?

    A big problem is that generational transfers can be both positive and negative. There is much concern (actually faux) about the US debt burdening future generations. That would be easy to eliminate administratively. However that is not the only negative transfer to the future that can happen. When global warming melts Greenland and sea level goes up 7 meters, all the assets that are flooded are lost. If there is a spill of toxic material, the spill has to be cleaned up, which has a cost.