This is a deviation from my normal genre of posting but relevant
nonetheless. Whilst we compare the two contrasting theories of population
growth, there are similarities in the business world that we can prepare for
and prevent.
The first is from Malthus, who was writing at the end of the 18th
century. He believed that only bad could come from population growth.
Population he said grows faster than food supply. This he said was because food
supply can only grow arithmetically, for example, 1 then 2 then 3-4-5-6-7-8
but, population grows geometrically 2-4-8-16-32-64.
Consequently, there is no way food supply can keep up with population
growth.
Therefore, population will inevitably exceed food supply.
He then went on two say that there are two possible outcomes.
Firstly, he
said population could exceed food supply only to be positively
"checked" (reduced) by famine, war, and disease.
Population
exceeds food supply and is kept in check by war, famine, or disease. It then
drops below the food supply. As the population recovers, so the cycle
continues.
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Here, as population starts to approach the limits of the food supply, so growth slows. Malthus says this slowing is caused by delayed marriage. |
Boserup, on the
other hand, said that food supply would increase to accommodate population
growth. As a population found that they were approaching food shortages they
would identify ways of increasing supply whether through new technology, better
seeds, and new farming methods.
So who is correct? The following table lists
arguments for both sides:
Evidence
for Malthus:
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Evidence
for Boserup:
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Famines
are frequently happening in less developed world countries. These are also
often in countries that have a fast growing population.
|
There
is enough food to feed the world - this is an indisputable fact. The problem
lies with distribution - it is not always where it is needed.
|
Whilst
a very old theory Malthus can be adapted for today if we say that increasing
population cannot be sustained by the environment. The 'Club of Rome' applies
Malthusian ideas to the modern world and says that if population continues to
grow our attempts to cater for it will lead to great environmental disasters.
This would include global warming, oil spillage, ozone depletion, and
desertification.
|
Famine
is more likely to be the result of a natural disaster, war or the country
growing too many cash crops. Cash crops are grown to sell overseas - such as
cotton or tea. In times of famine the countries are often producing large
cash crop harvests. They need the money to try and pay off foreign debts.
|
Malthusian
supporters argue that everything at the moment may appear ok but this doesn't
mean we won't face future disasters.
|
New
farming machinery and re-organisation has greatly increased the efficiency of
farms and consequently the yields.
|
A lot
of people believe that future conflicts could be fought over water supplies.
Is Malthus' idea correct except that he should have replaced food with water?
|
The
green revolution produced seeds that could increase yields by up to eight
times.
|
As modern environmentalists, scientists and
politicians debate the future of the world’s climate and resources, we must
hope that Boserup was right to believe that human beings are capable of remarkable
ingenuity in the face of a problem.
Similarities
in modern Business
Barclays Capital has a chapter on commodities in its
epic research note, the Equity-Gilt study, which concludes that
“Malthus may turn out to be right, but with broader
implications than he may have imagined”
Adding that
“We are depleting the global stock of natural
resources, i.e. commodities in the broadest sense of that term, at an
accelerating pace, with the rise in per capita commodity consumption vastly
accelerated by rising prosperity in the developing economies.”
Were Chinese oil consumption to reach US per capita
levels, its demand would rise nine fold, while Indian consumption would have to
go up 23-fold. That would push global oil demand up to 260 million barrels per
day, compared with just under 90m barrels a day at present. Clearly, that's not
going to happen. But along the way, some combination of much higher prices, a
setback to developing nation growth or a switch to alternative fuel sources
might be needed; all of which could be very disruptive.
The key factor is that US demand is no longer crucial
for setting the global price of all commodities. For example, China's share of
global copper demand is double that of the US. In 2010, global oil consumption
increased by 2.9 million barrels a day; 85% of that increase came from non-OECD
countries. A fall in US demand thus does not automatically lead to a fall in
price. In effect, this is a supply shock for developed economies and a supply
shock is always negative. It also creates policy dilemmas as the UK is
discovering, with the Bank of England torn between dealing with above-target
inflation and falling fourth quarter output.
Part of the problem is that new sources of supply are
more expensive to develop. One more statistic from the study is striking; the
global energy industry needs to invest $33 trillion between now and 2035 to
replace old sources of supply and to meet incremental demand.
Technology
versus Unemployment
Historically, humans have contributed muscle and brains
to production but we are now being outcompeted by machinery, in both areas, in
many jobs. It is argued that this supports the conjecture that massive
unemployment is a likely result. It is also argued that a basic income
guarantee is a minimal remedial measure to mitigate the worst effects of
technological unemployment.
Technological advances allow society to produce more
output from the existing mix of resources. These advances may take the form of
less costly methods of producing existing output or may result in the
production of new (or substantially improved) commodities (such as DVD players,
HDTV, anti-lock braking systems, and similar innovations). Society clearly
gains from the production of either more output or more highly valued output.
But, how do these technological advances affect employment?
While the effect of technological change on the
unemployment rate is ambiguous, this may be little consolation to those workers
whose job skills have been rendered obsolete as a result of technological
change. One of the issues that every industrialised society has to deal with is
the extent to which the government should be involved in the retraining of
structurally unemployed workers.
by Grant Stanley 2015
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