The NYT Discovers That Excessive Population Growth Can Be a Problem

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Sunday, 22 August 2010 07:14

Last week, the NYT highlighted the fact that China's GDP had surpassed Japan's to become the world second largest economy, an event that had happened many years ago using more realistic measures of purchasing power parity. Today the NYT tells readers that India's population growth: "threatens to turn its demography from a prized asset into a crippling burden." 

Actually, India's population has long been a crippling burden on the country. All its natural resources are severely taxed. The country has almost 4 times the population of the United States with considerably less land. Large portions of the population do not have access to clean water. Continued rapid population growth will make the situation worse, but the size of its population is already a serious problem.

The article includes the bizarre statement:

"With almost 1.2 billion people, India is disproportionately young; roughly half the population is younger than 25. This “demographic dividend” is one reason some economists predict that India could surpass China in economic growth rates within five years. India will have a young, vast work force while a rapidly aging China will face the burden of supporting an older population."

It would have been interesting to see the names of the economists to whom the article refers. Economists usually concern themselves with per capita GDP growth. The fact that a country enjoys more rapid overall growth because it has a growing population, while another country may have a stagnant or even declining population, would not be seen by most economists as a virtue. This is especially the case since the more rapid population growth will be associated with environmental degradation.

The reference to China facing a "burden" of supporting a growing population of retirees is also bizarre. First, what matters is the change in the ratio of dependents, both young and old, to workers. With children comprising a smaller share of China's population, this ratio will not be increasing very rapidly.

Furthermore, if China's rapid growth continues, there is no reason that both workers and retirees cannot enjoy substantial improvements in living standards through time. An increase in the ratio of retirees to workers of 0.5 percent a year would be very rapid. China's economy has been growing at a 10 percent annual rate. Even if this rate were cut in half to 5.0 percent, only a tenth of its growth would be absorbed by the need to support a higher ratio of retirees to workers. The notion that this is a serious burden on a rapidly growing country is silly.