Population growth is irrelevant: institutions and incentives matter

The UK now has one of the fastest-growing populations in Europe, according to a new report by the Office for National Statistics. In just one year, the population grew by over 400,000 people (to a total of 63.7m), adding the equivalent of a city the size of Bristol.

A growing population means growing demand for a range of services, which, as several commentators frantically warn, will put pressure on a lot of sectors. A spokesperson for the retail trade association has expressed fears that the sector may not be able to cope with the extra demand so quickly. Empty supermarket shelves, and long queues at the check-outs, could soon become a reality.

Trade associations representing the catering industry have also expressed concerns about a shortage of kitchen and waiting staff. The days when people can just walk into a restaurant, and expect to be seated straight away, may be numbered. Pharmacies have warned that access to medicine may become a problem if new staff cannot be recruited and trained quickly enough.

As you have probably guessed, the above statements are fictitious (of course). We do hear warnings of demand-side pressures caused by population growth, but these refer either to the socialised sectors of the economy (like healthcare or education), or to sectors where the supply of key inputs is determined by government regulation (like housing and transport).

If we lived in a free economy which had no such sectors, population growth would be no more of a problem than changes in consumer preferences or technology. It would require the kinds of adaptation and adjustment made by market actors all the time. Government planning, however, does not easily lend itself to flexibility, experimentation, and decentralised responses.

That is not to say that unless we move to a free-market utopia (or dystopia, depending on your inclinations), we cannot cope with a growing population. But even without a complete departure from current arrangements, there are steps that could be taken to make us more adaptable to demographic challenges.

In education, the government needs to turbocharge its timid free school reforms, especially by opening the sector to for-profit schools and school chains. We need equivalents in healthcare – like new ‘free hospitals’ and ‘free clinics’. The NHS could still fund most healthcare, but it should leave its provision to for-profit, cooperative, and charitable organisations. Building and planning restrictions should be largely abolished, so that the housing supply can grow where the demand is. Large parts of transport infrastructure can also be moved to the private sector, and the remainder should be funded from locally raised taxes, which would boost accountability and responsiveness.

We have been here before. At the end of the 18th century, Thomas Malthus predicted that the explosive population growth he witnessed would soon lead to misery and starvation. At the time, the UK had around 20m inhabitants.

This article originally appeared in City AM.

Head of Political Economy

Dr Kristian Niemietz is the IEA's Head of Political Economy. Kristian studied Economics at the Humboldt Universität zu Berlin and the Universidad de Salamanca, graduating in 2007 as Diplom-Volkswirt (≈MSc in Economics). During his studies, he interned at the Central Bank of Bolivia (2004), the National Statistics Office of Paraguay (2005), and at the IEA (2006). He also studied Political Economy at King's College London, graduating in 2013 with a PhD. Kristian previously worked as a Research Fellow at the Berlin-based Institute for Free Enterprise (IUF), and taught Economics at King's College London. He is the author of the books "Socialism: The Failed Idea That Never Dies" (2019), "Universal Healthcare Without The NHS" (2016), "Redefining The Poverty Debate" (2012) and "A New Understanding of Poverty" (2011).

6 thoughts on “Population growth is irrelevant: institutions and incentives matter”

  1. Posted 12/08/2013 at 13:50 | Permalink

    The population of Great Britain at the first census in 1801 was only 10.5 million. But point taken!

  2. Posted 12/08/2013 at 16:27 | Permalink

    …Building and planning regulations should be largely abolished………
    Oh,right,ok.lets plaster hundreds of thousands more hectares,with Noddy boxes.
    This is typical comment from a think tanker,someone who sits in an office,pontificates.
    Take a look at what is happening to this country……………..this overpopulated island.
    We don’t need any more people,and we certainly don’t need MILLIONS MORE MICKEY MOUSE BOXES.
    What does housing do………IT CONSUMES,GOBBLES MORE OF THE LAND.
    Have you noticed we aren’t producing more land.
    Lets desecrate this island with millions more boxes.
    Stop the population madness!

  3. Posted 12/08/2013 at 17:53 | Permalink

    Horatio, since you don’t seem to like people and houses around you, have you considered moving to the north of Norway? Somewhere in the Finnmark region, just south of Hammerfest, that might be your kind of place. No consuming masses, just trees and elks.

  4. Posted 17/08/2013 at 08:25 | Permalink

    Most of the planet – with the exception of cities and towns – is empty. Fly at evening or night over most of the world and see the vast areas of dark. Horatio has a choice – for example go for warmth and in most of North Africa you won’t find a soul for hundreds of kilometres in any direction. I remember in the 1970s it was a recurrent theme of popular street fear that uninhibited population growth would mean that “we” meaning the person speaking and friends presumably, would run out of room food water money etc. in the near future, meaning as far ahead as they could see, or by my reckoning, about 18 months. This irrationality has ever been with us. The truth – the entire present human population of Earth given a one square yard box to stand in and all brought to London at the same time (granted a serious logistical problem) would not fill the area enclosed by the M25. Horatio could have the rest of the planet, but ….hold on, he already does. The reality – the planet could support many more multiples of the billions of Homo sapiens alive now at the start of the Anthropocene but will not have to. Unlike economics, population studies and outcomes are based on science and hard factual data, so that future planetary and national population levels are (within a tolerable error) eminently predictable. Excluding all out nuclear multinational war or a lethal viral pandemic total human population should reach mid point bell curve peak about 2050 and fall thereafter…..

  5. Posted 17/08/2013 at 09:19 | Permalink

    Unlike economics population studies are relatively fact based with reasonably predictable outcomes (excluding total nuclear war, large meteors or lethal viral pandemics) and the consequences are inevitable on a national and global level regardless of your school of economic thought. Free market or communism aside the world population will peak out at 2060 and gently drop thereafter. Not really a big problem to deal with regardless of economic or political philosophy.

    Malthusian irrationality and related fears have been with us forever, but the simple truth is that most of the planet is empty and under exploited. Logistical problems apart given one square yard each to stand in the entire human race would not fill an area enclosed by the M25. In the Anthropocene we could handle many multiples of the expected maxima with ease.

    And if you want room to breathe with sun and a warm sea just stick a pin on any map of the North African coast and go – usually there is not a soul in sight for miles.

  6. Posted 19/08/2013 at 10:11 | Permalink

    How long want you stand it? Isn’t it a question that human being will stay “another” 300,000 years or more on earth? Isn’t it another question, that it will last this time too, until we find perhaps another habitable planet? And the last question: want you really leave the earth the natural condition again, were animals reign?

Comments are closed.