Economic and demographic dynamics in perspective

Summary:

On 22 May 2024, the Rafael del Pino Foundation organised the dialogue "Economic and Demographic Dynamics in Perspective: Does Population Growth Lead to More or Less Resource Abundance?org and public policy analyst at the Center for Global Freedom and Prosperity; Deirdre McCloskey, Isaiah Berlin Professor of Liberal Thought at the Cato Institute and Distinguished Professor Emerita of Economics and History at the University of Illinois at Chicago; and Ian Vasquez, Vice President for International Studies and Director of the Center for Global Freedom and Prosperity at the Cato Institute.

Marian L. Tupy: We have evolved and we are zero-sum thinkers. When we lived in groups of a hundred and fifty or so, the hunters would hunt, bring the game to the tribe, and the tribe had to divide it fairly. And if the chief got two mastodon steaks, I went without lunch. We have evolved and we know this better now. If more people come for dinner, those steaks are going to get smaller and smaller. But human beings don't think like that. When human beings go to someone's house for dinner, they bring a salad, an Iberian ham or maybe a bottle of wine. In other words, our steak is a steak that is growing. The interesting thing about human beings is that they don't come into the world with an empty stomach. They arrive with a brain that can work to come up with ideas and with hands to put them into practice.

Deirdre McCloskey: As Adam Smith said, the division of labour is constrained by the limits of the market. So a large society has more people to exchange goods with. The result is that population growth in the modern world is good for us, it's not bad. So more population enriches, there are more ideas. Here we are surrounded by people with different ideas. All of us are very different. Each one of us is unique: parents, background, knowledge, tastes. If we talk to each other, if we trade, I will learn from him and from each of you, I can learn. Language is the key. Without language, without speaking, it is very difficult to manage a society.

Ian Vasquez: The abundance that Juan de Mariana was referring to was in the style of Adam Smith, an expansion of the market, with more division of labour, but not necessarily the increase in abundance and prosperity that we have seen since Adam Smith wrote. The wealth of nations.

Deirdre McCloskey: My books, over the last 15 years, have focused on that. But he didn't get that as well because it hadn't happened yet. After 1776, after 1800 or so, it just kind of skyrockets. It skyrockets impressively, by a factor of, I don't know, 25 or 30, or 100. Critics will say that it may be true that we have grown a lot, it's miraculous. But the important thing is, are we happier, is education better, is health care better?

Ian Vasquez: One thing we do at CATO is replicate the Human Freedom Index, which measures the world's civil, personal and academic freedoms. We look at 86 indicators over decades in a particular country to see how free the world is, as well as individual countries. We can look at indicators of freedom of speech, freedom of trade and so on. One of the things that we have been able to determine by looking at this empirical evidence is the relationship between freedom and indicators of human well-being. The evidence is of course clear: the greater the freedom, the greater the prosperity for countries, the better the well-being if we measure it by any indicator of well-being. So if we go back to the question you were asking, what really matters is that background of policies, institutions, even cultural values, that support these institutions of freedom. When that freedom grows, when that liberal environment is created, that's when we see this explosion of wealth, what McCloskey calls the great enrichment, which has only happened in the last 100 years or so, and which was preceded by thousands of years of stagnant growth.

Deirdre McCloskey: The change came in the 1700s, when liberal ideas appeared. In the old days, in agricultural times, the theory was that kings always win, women always lose. Liberalism says no, let's turn that around and there comes a freedom that is what we think is the element that gives rise to this explosion.

Freedom and equality are not contradictory. All of us here are descended from some very poor peasant, but here we are. If we dignify ourselves, we will not envy each other. We will enjoy each other's diversity, our differences.

Ian Vasquez: The way liberals believe in equality is equality before the law, equality of treatment. But it's much more than that. It's equal rights.

Deirdre McCloskey: Equal rights, which is the same as equality before the law, but it's not the same as equality of opportunity because that's impossible. We are all very different from each other, and that's fine. As St Paul said in Corinthians 12, we have many gifts, which is not a bad thing if we have the opportunity to exchange.

Marian L. Tupy: Equality is like ice cream. The first litre you drink is delicious, the second litre is going to send you to the hospital and the third litre is probably going to kill you. So this is the essence of it. Equality before the law is fundamental is and is compatible with freedom. Equality of opportunity is very difficult to achieve, it is almost impossible. I have the same chance of winning Wimbledon as Roger Federer, but Federer is going to win. Finally, equality of outcome is what has led to hundreds of millions of deaths in the 20th century.

Deirdre McCloskey: Equality at the beginning is unattainable, but equality to participate in the race, wherever we start, yes. If you are a woman, now you can be a commander, you can fly a plane. Not before. If you are poor, like Andrew Carnegie, you can become a steel magnate.

Marian L. Tupy: The more people there are, the more ideas will be produced. But more ideas are not enough. Most of the ideas people have are terrible. That's why you need the market, to separate the good ideas from the bad ones. Overabundance equals population for freedom. We start with human beings with their ideas, the market separates the good ones from the bad ones, the ones that are going to lead to inventions, to innovations, to new things, some good, some bad, but when the market has tested them, what you have are useful innovations that are going to improve productivity and our quality of life, our standard of living. (12:27)

Deirdre McCloskey: Yes, it's a bit like biological evolution. Most revisions in our genes are bad for us. We know that. But some of them are very good and we end up with improvements, or changes, that allow us to be better off. Going back to the issue of happiness, we can't guarantee happiness. We can guarantee what you might call attainment, not being able to do things. Going to college, flying to Disney World, that's reach. But, who knows, maybe our poor ancestors who earned 2$ a day were happy.

Marian L. Tupy: Right, but the key here is the concept of freedom, it's the liberalism that emerged two hundred years ago, that has really shaped the modern world and has led to the explosion of wealth first in part of Europe and then in the world at large, and that is responsible for these striking increases in welfare that we have never seen before in the history of the world.

Ian Vasquez: The pessimistic approach that everything is getting worse is contrary to the evidence. Moreover, and this I think is the most novel thing, we are not running out of resources and population growth is not a problem that is going to lead to more resource scarcity. Moreover, it says something else that is striking, and that is that resources are becoming more abundant, not less, and all this has happened when there has been a population explosion. We have been hearing the opposite for decades, that this freedom in a market economy that is called free market capitalism, well, maybe it does have some good results, but, in general, it is not bad. In the end, it is bad that we have to consume less because the evidence points in the opposite direction. And it's not just population growth. Institutions, policies of freedom, are essential to this process and it is something relatively new in the history of human beings.

Marian L. Tupy: Exactly, what are ideas? It's the creation of new knowledge, and knowledge has a very special property: the more knowledge you consume, the more you're going to have. When you understand that, you can understand how after two centuries of economic growth, after 150 years of using fossil fuels, for example, there are now more fossil fuel reserves. Right now there are more fossil fuel reserves than we had at the beginning of the 20th century. The key to knowledge creation is twofold. First, a functioning market is essential. The market is the only way to differentiate between good and bad ideas. It is the market that can differentiate between good and bad grain. But the creation of knowledge also requires a free society. Freedom of speech, freedom to publish, freedom of association and freedom to listen to other opinions. If you cannot listen to what others say because it has been cancelled, then you are not really free to think because you have not been able to listen to other ideas and incorporate them into your personal thinking.

Deirdre McCloskey: Slaves don't innovate. There has always been a culture of cancellation. It used to be the church that cancelled. For example, I remember academic life in Mcarthy's time in American academic life. Cancellation came from the right. If you were a Marxist, they cancelled you. Now it's not so many people, but yes, indeed, cancellation now comes from the left.

Marian L. Tupy: Part of the reason, many analysts agree, is because monoculture has evolved in American universities. Deirdre's father was at Harvard in the 1950s, heading the Politics department. Then there were conservatives, one or two classical liberals, leftists, but it was not a single culture. However, since the end of communism, in the last 30 years, all the disappointed Marxists have gone to the universities and created an environment where they talk only among themselves. In the 1930s, German universities offered the best quality, the best in the world. German students and professors invented National Socialism and destroyed the country, and the university in the process. Now it comes from the left, before it came from the right. It is not because universities are engines of innovation and intelligence that this is not supposed to happen.

Deirdre McCloskey: Those who talk about overpopulation and the need to decrease are people who are way behind the scientific times. I think it's clear that most economists, most people who think about this seriously, agree with Marian. Population growth is good for us. That's not to say, by the way, that a declining population is going to be disastrous because that's a long way in the future and I don't think it's something we need to worry about now. But this obsession with zero-sum is something that is deeply rooted in human beings, as Marian says, and it is scientifically wrong.

Marian L. Tupy: Public opinion and the media are about twenty years behind economic science, but they have given Nobel prizes to people who subscribe to this point of view. For example, Michael Kerr was awarded a Nobel prize in the early 1990s for advocating precisely this, Paul Rommer very recently. Economists agree that more people produce more knowledge and more innovation. This issue of population and resources is going to be relevant in terms of public debate long after the world's population starts to shrink because, as we get richer, we are going to consume more resources. A relevant question is how population and resources interact. It is a question that we really need to keep in mind very precisely and fight against the dehumanising, anti-natalist death cult.

Ian Vazquez: Liberalism is better at allocating resources, generating knowledge and disseminating virtue, but liberals have the challenge of convincing people who are pessimistic about the world and who believe the dark narrative that everything is getting worse, that we are running out of everything. But we are not and we have to convince them. It is a challenge, true. Liberalism leads to more and better things. This is a materialist argument. Liberals, however, are not like Marxists, we are not materialists. We care about freedom. That is what matters to us. The psychology of a normal person is that they are convinced when you speak to their heart, not their mind. We have a task ahead of us, but we have to focus as liberals on insisting that what we stand for is a just society. What we stand for is justice because that is what matters to people. I don't think most people care about inequality. If a person achieves whatever he wants, Messi for example, if he becomes rich because he is the best football player in the world, I don't think people are envious of that, or if they don't like Steve Jobs, who has benefited a lot of people and has become a multimillionaire. But they do resent the fact that the result is achieved through favouritism and cheating. If people think that others have become rich because the rules of the game have somehow been rigged, it is an unjust society. At the heart of liberalism is that it is not only the best system and the one that works, but it is also the most moral, the most ethical, because it is based on the voluntary exchange of all that is peaceful. It is based on persuasion, not force; it is based on a concept that things are mutually agreed and it is not based on forcing people by force. What liberalism stands for, at its core, is not that it works better than other systems, which is true. What it stands for, above all, is that it is an ethical system.

Deirdre McCloskey: There are a lot of people who think that when I was a Marxist I thought that the government had to come in and redistribute income, make things better for you. But there came a time when I realised, when I finally started studying economics, that the market is the most altruistic system there is, it's the most focused system. You make a new product, you sacrifice yourself, you work hard and you give that in exchange for the hard-earned money to someone else who has exchanged it. This exchange is a win-win. Every year in the United States, there are 30,000 new consumer goods launched. Not all of them succeed. Some go bankrupt. It is the market that selects. Mobile phones, for example, may be the result of this.

Marian L. Tupy: One thing we have learned is that people who shout that the world is coming to an end are listened to more now than people who say that it is in our power to create a better world and it can all work out in the end, as long as we fulfil the right conditions, for example, that of freedom. But there is some human psychology here. If I stand here and tell you that it's all going to end next year, it feels like I'm saying it because I care about you. If instead I tell you not to worry, that everything is going to be fine, you'll think I'm a cheap salesman, that I'm just trying to convince you to buy anything. This is part of why we listen to pessimistic people much more than optimistic, or rather rational optimistic people. We are not irrational. I don't believe that everything is going to work out well, or that everything is going to work out well. But what I do believe is that, considering human history and what we know about human history, having defeated famines, smallpox, chicken pox, epidemics of all kinds, we can do great things in the future.

Deirdre McCloskey: Institutions like the World Bank estimate how fast the world's real income will grow and they have said that for 150 years now it has been growing at about 2% per year. If we don't stop it, if we don't kill it with over-regulation, with wars, it will continue to grow at 2%. That doesn't sound like much, does it? Well, if we calculate the cumulative growth over a hundred years, this gives us eight times more income per capita than we have today. Every single person living at that time will have a higher income than the Swiss have today. These are very optimistic prospects. But as Marian says, in inverted commas, you are a cheap peddler of capitalist ideas.

I would tell the children to be good people. But many of our grandchildren are terrified. They are pessimistic. They have been told again and again that the world is coming to an end, so they won't have children, they are scared. This is very dangerous because then they buy fascism, communism, they buy the ideas of other salesmen and those other cheap salesmen are the ones who believe in coercion.

Marian L. Tupy: I don't normally talk to children, I talk to audiences like today. Maybe I would tell them you know what mum and dad tell you about the monsters that live under your bed at night to help me do my homework. Think about what people tell you about the monsters that live elsewhere, that live in the forest hunting Greta Thunberg. Form your own ideas. Read more. Access the information, which is free, which you have at hand. You have all the knowledge in the world. Just write infant mortality and compare it with what it was a hundred years ago, compare it with what we have now. That's what I would say.

Ian Vasquez: Well, I do have children and I've had this conversation with my children and I use the work of Marian and her team, who put together dozens and dozens of indicators of human progress: infant mortality rates, access to clean water, reduction of viruses, the end of slavery, environmental indicators, the speed at which vaccines can be developed today compared to twenty years ago. In short, you can put it in a graph, and in fact we have done it in a book called "Ten Global Friends", which shows in a visual way what an impressive improvement there is in virtually every indicator of human beings and well-being that you can think of in the last fifty or sixty years, up to a hundred years even. I have read every single page of that book with my children and told them that when things were this bad, people died when they were 35 years old on average, not that long ago. Here I point the finger at when people said the world was going to get worse and turn to the next page, another graph, another topic, and it's gotten better. People said things were going to get worse, when in fact they are going to get better. This always happens in human history. If you look back 1000 years ago, people said things were going to get worse. There is a psychology, which has many reasons, many explanations, partly because, as you get older, your life gets more complicated compared to when you were young. And most of us think that the world when we were twenty was much better than it is now. But no, the world was not better. So we generalise. That's very typical. There are psychologists who say that's one of the psychological reasons why people are pessimistic, even when they see the evidence. A lot of people don't know the history of what mortality was like in childbirth. It is useful to know the facts.

Deirdre McCloskey: Hans Rosling, a Swedish professor of public health who, sadly, is now deceased, gave some fantastic lectures and said just that. He told a very funny story. When his grandmother bought a washing machine, he realised that his grandmother spent every Monday washing clothes, rinsing them, wringing them out. She bought a washing machine. The first time she used it she sat and just watched it through the whole cycle and exclaimed that it was fantastic. One of my great-grandmothers died in childbirth. One of my great-great-grandmothers died in childbirth. It happened a lot then, rarely now.

Marian L. Tupy: Ian, with his story, reminds us all how important it is that parents, when educating their children, explain everything to them. If you want to raise your children happily, you cannot assume that they are being given the right information at school. Fortunately, there are nowadays plenty of books for any child of any age where they can learn the basic facts about how things are best.

Deirdre McCloskey: Narrative is very important, and language. I was an English teacher for a while and language, I assure you, is where it's important. If you convince people that the history of two existing societies is the history of the power struggle or class struggle, you have convinced them to believe in Marxism. So language is important. I don't like the term capitalism because it suggests that the accumulation of capital is what makes us rich. But that's not true, what enriches us is creativity, which comes from freedom. What is important is innovation, ideas. There is an important example, which is the invention of modern universities. Von Humboldt founded the University of Berlin in 1810. The idea was to combine the teaching of what we already know with the creation of new and surprising knowledge. That was a new idea in the West. Today, every prestigious university follows this idea of Von Humboldt. It is simply an idea.

Ian Vasquez: Of course the narrative is important. All theories, all schools of thought, each have their own narrative. The grand narrative of liberalism is that it creates so much prosperity and so many unprecedented improvements in the human being, the central place where the dignity of a human being is. In contrast there is the grand narrative of Marxism, about class struggle, and other grand narratives, such as postmodernism with its variants, which say that all that matters is power structures and this is defined by group identities. There is a group reductionism that defines that these power struggles are the most important ways of understanding society, regardless of whether you are a successful entrepreneur serving your customers, whether you are the owner, your customer is a woman, or someone of another race. This is a power struggle and there is an imbalance of power. When communism collapsed and was seen as a failure, that ideology that was advocated by some intellectuals in Europe and in the United States was what became more prevalent when it started to be taught in universities. This is part of the reason why we talk about what I would call the rise of intolerance, the rejection of anything that doesn't fit the preconceived notion of power structure. There are a lot of things that don't fit with this in this in this philosophy. But this would also help us to explain this culture of cancellation and its roots. Basically, what we say on campus about this culture of cancellation, the reductionism of identities, is the most extreme non-liberalism.

Deirdre McCloskey: Yes, indeed, the apex of the narrative of any philosophy, with the exception of liberalism, is that you are all children and the state, the rightful power, is your mummy and daddy. In liberalism, on the other hand, what we advocate is that we have to be adults, we are adults, we have to behave like adults, we should not be envious of others, we should not be angry with others. You have to collaborate, you have to live in peace, you have to stop hating each other, because all these ideologies, these narratives that Ian has talked about have an enemy, which is the bourgeoisie in Marxism, the Jews in classical German fascism, the migrants for Donald Trump. Hatred is their seed and their fuel. If we behave like adults we have to see where the envious are. We have to learn to behave in a free society without envy and not to say ay, you speak as much English as Spanish, how unfair, that's how it is, drive nails into your brains until you forget English.

Ian Vasquez: When we come to this is when the role of narrative and ideology is very important. Chile as a country was a success story in every sense: economic, political, civil freedom. It went from being a repressed society to becoming one of the freest countries in the world and, moreover, with much more money and with one of the best welfare indicators in Latin America. Even so, in the last two decades there has been a predominance of narratives about Chile that say that this system is unfair, that there is more inequality, that there is no social mobility, that those who have benefited from it are the usual ones and the rest have been left behind. None of that is true, if you go by the facts. Even so, that narrative became so ingrained in Chilean society that there were riots and even the election of a far-left government that promised to reverse what was done in the last thirty years, not because of the facts, but because of the narratives, because of ideology, because of the lack of liberals who would go further in defending the system with more than technical arguments that say that if you lower tariffs, you increase growth. People don't care about that; what matters to them is justice and if they are told that, they believe it and the only thing they hear is that it is unfair, and nobody defends a free society and the institutions that have made people freer and have more money, what has happened to Chileans happens to you. Part of Chilean civil society is liberal, it has woken up and is refuting this with correct arguments. It is an ideological clash and the different narratives are moving. But that's how it is, the world of narrative and ideology can be super important in societies.

Marian L. Tupy: Isn't envy one of the seven deadly sins? I ask because I believe that, to a large extent, human beings have had the ability to choose whether they are happy or not. That depends on which way you look. I'm sitting here, I can look back and compare myself to all those people who were here before me. I can be thankful that I live in a prosperous western democracy in 2024. Or I can look forward to a utopia that no one has ever seen, but that some have imagined, and I can be resentful that I do not yet live in that world where everything is perfect, for everyone, everywhere, at all times. And resentment, according to Nietzsche, is the worst of human emotions and makes people very unhappy. So I always think of a wonderful quote from a British psychologist who says "always compare yourself downwards, don't compare yourself upwards, compare yourself to your ancestors, compare yourself to the people living in the Democratic Republic of Congo, to a 5 year old who has to be in the lithium mine, and be happy where you are". Compare yourself downwards, don't compare yourself upwards because there will always be someone better looking, taller, smarter. It's a trap and I don't know why liberalism should be put at risk simply because some people are not able to overcome their pathologies and remain envious.

Deirdre McCloskey: Shakespeare has a sonnet about envy that says I compare myself with other men, I wish I had this man's fortune, this man's looks, and then I think of you, my sweetheart, and then I feel like a king because love can do all things precious. There is a tremendous Spanish dramatic tradition, not only in the Golden Age but also in the 18th and 19th centuries. It's impressive how many playwrights in Spain at the end of the 18th century began to speak in a way that defended the bourgeoisie. Shakespeare didn't do that. But the Spanish did. Shakespeare was the son of a middle-class glove maker, he himself was a theatrical impresario, but he wanted to become a member of the nobility and in his plays he never says anything good about the bourgeoisie. This changes with Jane Austin, and it changes very quickly in England in the 18th century, and it begins to change in Spain as well. The problem is that we cannot identify the losers because there are too many of them. Any change in society is going to result in someone doing worse. If you write a better book about the history of liberalism, a better book than mine, I am worse off. If the other guy doesn't agree with me anymore, or if he doesn't laugh at one of my jokes, I'm going to call the police and tell him you have to laugh at my jokes. This is the problem. We are interrelated and we cannot make the decision on the basis of whether the rich are going to be able to compensate those who have lost. This is nonsense. There are losers. We have to decide what kind of society we want. Let's talk at a slightly higher level. Do we want a society of adults who look after each other, who take their responsibilities seriously, who are not envious and do not hate each other. Is that what we want or, on the contrary, do we want a society of hatred that many politicians promote? I was watching a report on the BBC about the conflict between the Croats and the Serbs. After what happened in Yugoslavia, politicians saw that it would be great for them if they said they used to be Slavs and now they say no, they are Serbs, or Croats, and we hate the others. So we have to think not in the way economists think, in terms of cost-benefit, but in a more fundamental way. That is, what kind of people are those with whom we want to live.

Marian L. Tupy: I would add that innovation is in itself an act of rebellion. Progress emanates from progress and always the religious, economic, institutional status quo wants to stifle innovation because they want to continue to enjoy the benefits of their situation. So the key is to rely on that market mechanism within the international system, international competition, the ability to point to those countries that are doing things right and say why shouldn't I do it right. When I was a kid in communist Czechoslovakia, we looked at West Germany and said 'why can't we be as rich as the West Germans'. Milai says to his people, to his people, you used to be the fourth richest country in the world, and today you are in seventieth place. The key here is to be open-minded, to learn from competition, to learn from other people's examples. This is essential for today's world leaders.

Deirdre McCloskey: Argentina tried it with Peronism for eighty years. They tax you to give me a subsidy. They tax me to subsidise you so we're both better off. This is absurd. Yet this is what Argentines have been told for years. Milei has been president for six months. Please, let's let him breathe, let's give him a chance.

Ian Vasquez: I think there is confusion in the international press about what it stands for. We have seen the rise of the new right of the alternative right, in many countries around the world. Turkey, Hungary, the United States with Trump. These people have illiberal ideas, such as protectionism, lack of trust in institutions and the free market. This is not what Milei says, nor is it reflected in the policies he advocates, the policies he has included in his programme for Argentina. What he is trying to achieve is a limitation of power and equal treatment before the law. This is very ambitious for a country that has been living under the Peronist corporatist state for eighty years now and the power structures are very entrenched. So it's going to be very difficult. We were talking about cultural change and Deirdre pointed out how in the past culture can change rapidly, from one year to the next, in a very short time. It may not be a profound cultural change, but it is profound enough to make a difference, something that is happening in Argentina. What Milei has introduced is not just the idea that there have to be different policies. He is promoting a paradigm shift away from the corporatist state, to replace it with a liberal system with a limited state. What he is trying to achieve is a change of culture that supports these political and institutional changes in Argentina.

The Rafael del Pino Foundation is not responsible for the comments, opinions or statements made by the people who participate in its activities and which are expressed as a result of their inalienable right to freedom of expression and under their sole responsibility. The contents included in the summary of this conference are the result of the debates held at the meeting held for this purpose at the Foundation and are the responsibility of their authors.

The Rafael del Pino Foundation is not responsible for any comments, opinions or statements made by third parties. In this respect, the FRP is not obliged to monitor the views expressed by such third parties who participate in its activities and which are expressed as a result of their inalienable right to freedom of expression and under their own responsibility. The contents included in the summary of this conference are the result of the discussions that took place during the conference organised for this purpose at the Foundation and are the sole responsibility of its authors.

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