Robert Samuelson Is Worried That the United States is Becoming Less Crowded

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Monday, 09 August 2010 04:05

Yes, in the strange but true category, we have a columnist with a major national newspaper worrying that population growth in the United States could slow or even reverse. Yes, I have the same fear every time I push my way into the metro at the rush hour or get caught in a huge traffic jam. Imagine how awful it would be if cities were less crowded. It could make housing cheaper, reduce pressure on water and other resources and cut greenhouse gas emissions. Shortages of workers would drive up wages as the least productive jobs go unfilled (e.g. the midnight shift at 7-11 and parking valets at upscale restaurants). It's  a looming catastrophe if ever there was one.

Samuelson bizarrely thinks that slower or negative population growth will hurt the economy. He thinks that it will slow demand growth. There are two simple problems with this story. First, we are in an international economy, so if demand in the U.S. economy is growing less rapidly then we can sell our output elsewhere. The other problem is the big "so what?"

If we can produce everything we want in the United States and still not fully employ our workforce then we can all get longer vacations and have shorter workweeks. In a functioning economic system, having too much is not a problem -- you just work less. In the Netherlands they figured this out -- they use work sharing rather than layoffs to deal with inadequate demand. As a result its unemployment rate is close to 4.0 percent. In Germany, work sharing has been so effective that its unemployment rate is lower today than it was at the start of the downturn.

See, this is really simple for countries that have competent people guiding their economy. It is only inept economic policy that makes a shortage of demand a disaster for people and the economy. Too bad Samuelson won't discuss this failure of economic policy.