Population, technology and growth


I have been spending a fair amount of time thinking about the costs and benefits of population changes and Tyler Cowen’s examination into the effect of population on technology is an interesting one. I like his immediate focus on the impact on growth rather than technology and ideas  just for their own sake (largely useless in the grand scheme of things).

One variable that seems oddly left out is the effect of availability and efficient allocation of capital. The data and theory behind investment and growth are pretty solid. And what kinds of things make investment and efficient allocation of capital possible? Population is largely a prerequisite, since it allows for specialization of labor and increases efficiency to the point where we can stop chasing animals around all day and instead plant crops (that was the first step). But it’s not sufficient. We also need a sufficiently liberal governing body to protect the physical and intellectual interests of the people without excessive interference into the allocation of capital. This seems to explain relatively cleanly why some states experience more growth than others.

gary

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