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 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.
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.
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 numberof people is changing, possibly drastically. Also, no one getsa say in whether they are born. No one has presenteda clear argument for why making the parents "financially responsible"(to what degree? for how long?) for their children is supposedto cancel out all of the negative effect that their childrenwill have on overall living standards.
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.
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.)
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.
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.
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?
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.
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 ofconfiscation. We haven't been successful at keeping ourbanks' foreclosures within the law. Ifsomething that is so strongly a creature of property andfinancial law as a bank cannot be made to comply with it,the claim that property law has great strength to shape thefuture is absurd.
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?
"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?
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).
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.
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.
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.
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 numberof people is changing, possibly drastically. Also, no one getsa say in whether they are born. No one has presenteda clear argument for why making the parents "financially responsible"(to what degree? for how long?) for their children is supposedto cancel out all of the negative effect that their childrenwill have on overall living standards.
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.
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.)
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.
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.
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?
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.
Yes, this. Defining real, perceptible, measurable harm as not-harm.
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 ofconfiscation. We haven't been successful at keeping ourbanks' foreclosures within the law. Ifsomething that is so strongly a creature of property andfinancial law as a bank cannot be made to comply with it,the claim that property law has great strength to shape thefuture is absurd.
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?
"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?
Non-robotic future humans might be subsistence poor, too, if artificial womb technology takes off.
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).
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.