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Ryan Avent at the Economist explains much more clearly than I the wrongness of the claim that low population growth will make us better off:
The point concerning government spending is simply bizarre. Projected growth in federal spending is largely due to rising spending on entitlements, especially Medicare and Medicaid. Slower population growth isn’t going to limit this spending growth; it will just increase the dependency ratio and the expected per capita burden of taxation….
…Indeed, all of the above is precisely what has been observed in Japan, where population growth slowed, halted, and eventually reversed. Per capita incomes have risen only very slowly, government debt is enormous, households are heavy savers, and deflation is endemic.
Also in the comments Andy Harless tries to provide an explanation for what Johnson may be thinking:
(1) fewer immigrants mean less competition for jobs in the short run (assuming immigrants don’t create enough domestic demand to support their employment), and (2) fewer children mean less drain on governments. Of course fewer children do also mean less demand and therefore fewer jobs, but this is obviously endogenous: children are just a manifestation of the multiplier effect, an expense that people choose based on their income. OTOH immigration is also endogenous, so all the first argument is really saying is that it’s a good thing people aren’t dumb enough to keep coming to the US when there are no jobs.
I think this is quite possibly what Johnson is thinking, and I like Andy I think there are some big problems with it. I won’t rehash the arguments here, but there are a lot of other reasons why more immigration would make us better off.
Commenter Adam and Matt Yglesias (via twitter) also point out that an economy based mainly on some scarce natural resource or agriculture could have diminishing returns to labor even in the long-run as capital adjusts, which would explain higher real wages as population grows. However as Matt, Adam, and I agree, this a very bad model of the U.S. economy.
Karl addresses the monetary impacts in the comments:
More worker would imply an increasing demand for money. If you are thinking of the money stock as fixed this will tend to be deflationary and worsen our condition.
However, we have a rate target so increasing money demand should be met by increasing lending. More population should supply more credit unconstrained borrowers who can profitably take out loans at the prevailing interest rate.
Overall I am less puzzled by what Johnson could be thinking, but don’t see a plausible case for why he could be right.
The Kauffman foundation has produced the results of its latest survey of economics bloggers. Included in the survey was a question at the request of Bryan Caplan that I found quite interesting. The survey asked:
The net externality of the birth of an additional child in the United States is… [POSITIVE, ZERO, or NEGATIVE]
The results show that a majority of econo-bloggers believe the externalities to be positive:
This begs the question of the externalities of immigrants. After all, positive externalities for natives probably don’t start appearing until after high school or college, and before that they are on average consuming far more than they produce.
Since the average immigrant age is around 30, that means when they’ve arrived they are already past the stage when they just consume society’s resources, and have begun producing externalities. Doesn’t this suggest that positive externality of immigrants is even larger than that for natives? If you’re going to claim that the average lower education level of immigrants reduces their externalities, keep in mind that immigrants are also more likely to be small business owners and PhDs than natives.
It’s interesting that when immigration is discussed economists quickly jump to the debate about the impact on native wages. I doubt that the 72% of economists above believe that the average externality of people is smaller than 6% of the wages of highschool dropouts, which is around the lowest credible estimate in the literature, so why don’t economists accept that externalities of immigrants trump wage effects and quickly move to arguing for more immigration?