This is wonderful, Everald!

But it seems to sit in strong contrast to your pursuance of economic growth as espoused in past articles, not least in the massive opening up of the north and the creation of the great Australian foodbowl, with an enormous increase in population therein.

Clive Hamilton has been over this ground with his wellbeing manifesto and genuine progress indicator: http://en.wikipedia.org/wiki/Genuine_progress_indicator.

It is not just the absurd measure that we call GDP that needs a total and urgent reworking, it is our fetish with growth. Or I should say; our absolute obsession with it!

The maddest thing of all is that we aren’t just pursuing the supply side of the equation, but the demand side as well!! This just promulgates the continuous growth spiral, without it leading to any real gains!

GDP is so utterly flawed as to indicate that things are going well for as long as we have high growth, regardless of whether it is driven by a constantly rapidly increasing demand for everything or by an increase in primary resource exploitation, better value-adding, etc. In other words: regardless of what the average per-capita gain (or loss) is, even as determined by conventional short-term measures!

continued

So Everald, we need to sort out what is the good fraction of growth and what is the bad side, and work towards eliminating the bad side.

In short, we need to greatly reduce population growth.

You talk about world population, but you don’t seem to grasp the importance of this in Australia.

Then with a much lower rate of population growth, and heading directly towards a stable population, we will have the financial wherewithal to significantly improve many of the components of Gross Domestic Prosperity that you list.

But with continued very high immigration, we won’t be able to, because the national budget will continue to be dominated by the need to duplicate infrastructure and services for ever-more people and fix up existing I & S that is under ever-increasing pressure and demand.

Thus, stabilising population in Australia has got EVERYTHING to do with your desire for us to change the terrible Gross Domestic Product indicator into a meaning broad-ranging Gross Domestic Prosperity indicator.

In fact, it simply can’t happen until we get it through our thick heads that a stable population, or at least one that is growing at a very much slower rate, is an essential prerequisite!

Well, it could and or, should. We live on an already quite grossly overpopulated planet; so it is just madness to persist with a mad economic mantra, that can't succeed without more growth and an ever widening gap between the haves and the have nots; and or, even more poverty and want.
Think, in New york city alone, there are 390,000 millionaires and seventy billionaires.
Along with many millions who live with daily want and or unmet need! The only way these rich people are going to get richer, is if the people on the bottom of the socioeconomic ladder have more!
You'd think an intelligent administration, would find a way of putting all those extra trillions they're printing, into the poorest hands; who in turn, would have no other choice but to spend, adding on a hitherto unknown scale, to economy building discretionary spending!
We're flat out like a lizard drinking, trying to feed 7 billion, what is it going to be like trying to feed 9 billion, with far less water, energy and arable land.
Where are these additional people going to live, and how are we going to feed them, without going to war over quite massively shrinking resources, energy and or water!?
We have no other choice than to tackle and end poverty in all its forms and guises, if we would create an economy that serves us, rather than enslaving most of us, who are the poorer for it.
If we focus on alleviating poverty, as an economic tool, we won't need to keep on with the madness of population growth, as the key driver of economic growth!
Rhrosty.

Excellent article though I agree with Ludwig and Rhosty too. I happen to be more pessimistic about our future. I worry that the combined effects of climate change, resource scarcity and population growth will cause very real problems within a fairly short time. Famine looms in many places, especially if there is an extreme weather event (drought, flood, cyclone) in one of the major food exporting nations. We have to pull out all stops now to rein in greenhouse gas emissions to stop us going above 2 degrees warming. Even then it will be difficult slowing population growth without nature doing it for us.

Yet another dog-in-the-manger, I'm-all-right-Jack review of how the world is going to hell in a handbasket, thanks to all those other people being the cause of our downfall.

Mr Compton is not the problem, of course, as he is i) already born, ii) living in one of the most affluent corners of the world, with everything going for him and iii) not going to be around much longer anyway. So he is ideally placed to lecture everyone else on what they should and should not do about it.

Even the starting premise is open to some questions:

"A fundamental and urgent reason for the change is that the world is now grossly overpopulated. Seven billion of us now occupy the planet, rising to 9.5 billion in 2050. When I was born in 1931, there was a population of two billion and, even then, this was considered to be too many."

Ok. First question - if the world is currently "overpopulated", how come everyone on the planet today enjoys a longer life, better medicines, greater affluence, greater mobility etc. than they did in 1931?

Second question (and this could be a tough one) - to what extent this increased affluence, better health etc. attributable to the increased population? After all, we each share in a much larger world economy than we did back in 1931, and it did not just magically appear, you know. It was the result of real work, performed by real people, in real time. To pretend that we could maintain the same level of economic performance with fewer people is to be in a permanent state of denial.

It is easy to forget that the world is actually made up of individual people, and not just a bunch of numbers to be played around with.

More economic illiteracy from Everald

There is no “trickle down” theory of economics. This is a slogan invented to misrepresent the view that growth is good the poor.

No economist would disagree that Gross Domestic Product is an imperfect and limited measure of economic wellbeing. But, there is no measure which captures all dimensions of prosperity. Rather than discard it, let’s leave it in its proper place as one tool among the many needed to build a comprehensive picture of prosperity.

Everald says, “What is clearly evident is that even a very basic living standard will not be achieved just by striving to significantly increase the productivity of every nation.” Really? No country has EVER moved from poverty decent living standards without raising productivity. There is no magic formula.

He also says, “When I was born in 1931, there was a population of two billion and, even then, this was considered to be too many”. Since both population and living standards have risen hugely since then, those who believed in over-population in 1931 were clearly wrong. As they are now.

The idea of a General Domestic Prosperity index is not new. The UN compiles a basic version with its Human Development Index (comprising literacy, life expectancy and per capita GDP). A few years ago, the Australia Institute attempted something similar with its Genuine Progress Indicator. The problem is, these measures are always subjective and imprecise, because there is no common metric by which to measure the different components. Is an increase in literacy worth more or less than a rise in life expectancy? At what point is this offset by a rise in the crime rate, or loss of habitat of an endangered species?

This is why the ABS, for example, tracks lots of economic, social and environmental indicators in its series “measures of Australia’s progress”, but makes no attempt to combine these into a single index.

http://www.abs.gov.au/ausstats/abs@.nsf/mf/1370.0.55.001

“Stability in economics, politics and social interaction” is the matra of a reactionary. It only result will be to be ensure that no genuine progress of any sort is possible.

"What is clearly evident is that even a very basic living standard will not be achieved just by striving to significantly increase the productivity of every nation."

If such prophecy of doom were heeded in the past, nations would not have strived to increase productivity nor have succeeded to feed the growing world population. There is no reason why productivity could not continue to increase significantly.

"this will happen only if we find enlightened leaders for a new world and put them in charge as a matter of urgency. The current lot are obsessed with clinging to power, not being willing to take carefully planned and calculated risks, and living in fear of failure rather than the satisfaction of kicking goals. To be very kind, a charitable description of them is that they are a very ordinary rabble leading us down paths to nowhere."

Yet , we read that Everald " has taken-up a new role as Chairman of the Federal Government’s Panel on Positive Ageing." Going on the above, a suggested conclusion is that our leaders are unenlightened and leading us down the garden path by appointing him.

<< Mr Compton is not the problem, of course, as he is ... iii) not going to be around much longer anyway. So he is ideally placed to lecture everyone else on what they should and should not do about it. >>

That’s not very nice, Pericles!

Can’t you just appreciate Everald’s good intentions in putting his thoughts out there in the public arena on OLO, and debate them without being offensive?

<< Ok. First question - if the world is currently "overpopulated", how come everyone on the planet today enjoys a longer life, better medicines, greater affluence, greater mobility etc. than they did in 1931? >>

Really?? Lots of people ‘enjoy’ these things…. but there’s a huge portion of the global population that doesn’t!

I wonder how the global average compares to 1931? Not ‘greater’ at all, I would think!

"I wonder how the global average compares to 1931? Not ‘greater’ at all, I would think!"

Depends what average you have in mind doesn't it, Ludwig? It is possible that everyone on the planet was hoping they would live through bacterial infections for the next ten years to become the first patient for penicillin:

"The first patient in 1941 had been scratched by a rose thorn. Albert Alexander's whole face, eyes and scalp had swollen. He had already had an eye removed and abscesses drained; even his remaining eye had to be lanced to relieve the pain of the swelling. He was given penicillin, and within a day he began to recover. But Florey's team didn't have enough of the drug to see the patient through to a full recovery. Their efforts to recycle the penicillin by extracting it from his urine failed, and he unfortunately had a re-lapse and died."

Okay, it didn't work for Albert. But he had a better chance than everyone else on earth at the time.

I don't doubt Mr. Compton's good intentions, but humanity has proven to only be competent at forecasting and coping with the future in hindsight.

Maybe we're doomed to keep vainly trying until we think we've got it right... but I bet 'other people' will then stuff it up.

It frustrates me that this population debate has become ideological. Really, it comes down to the number of people the Earth can support at a reasonable (though not excessive) standard of living without drawing down the natural resource base and without going beyond the absorptive capacity of the biosphere. We are certainly exceeding the Earth's capacity to sustain us at the moment with climate change the most obvious manifestation. Our whole civilisation including much of food production is dependent on oil but Jeremy Leggett says in New Scientist this week (Nov 4) that we can expect an oil crisis in the next few years. That has huge implications for our ability to feed even the population we have.
On a more positive note, Prof Thomas Maschmeyer from Sydney University is developing better catalysts such that brown coal my be converted to crude oil. Not good for the climate, of course, but it may stop civilisation crashing.

The only way forward for sustainable population growth, is for productivity from those involved.

The problem is that over the past twenty plus years, more and more are reliant on the contributions from others and this simply has to cease, otherwise we are going to continue to head south.

Growth and sustainability rely on productivity.

Rehctub, if we put all our efforts into productivity, and just allowed the massive rate of immigration to continue, we wouldn’t get anywhere in terms of sustainability. We’d only achieve a very small improvement in gross domestic prosperity or the genuine progress indicator, if any improvement at all, and then only in the short term.

Forever striving to increase productivity, that is: increase the supply of everything and increase our export income, is not going to cut it for as long as the domestic demand keeps rapidly increasing.

In fact, spending all our energies on productivity in virtual isolation of any other considerations actually promulgates the continuous growth spiral, and will ultimately makes things much worse.

Ludwig asks: “I wonder how the global average compares to 1931? Not ‘greater’ at all, I would think”

Certainly the three key measures in the UN’s Human Development index – life expectancy, real per capita GDP, and literacy – are all MUCH “greater” than they we in 1931:

http://e-archivo.uc3m.es/bitstream/handle/10016/8987/wp_10-07_.pdf;jsessionid=959F808A358886C29A4AA0D4925E83CB?sequence=1

Furthermore, broader measures of welfare indicate that the gap in human development between people in rich and developing countries is narrowing. Because developing countries are improving in areas like literacy and health care more quickly than on economic measure like GDP, these broader welfare measures actually show faster reductions in inequality than per capita GDP alone.

Popnperish
You say: “It frustrates me that this population debate has become ideological.”

Coming from you, that’s really a bit rich. Most of your posts reflect a fierce ideological hostility to population growth. The very name you have chosen for this forum displays your obsession.

Predictable, Ludwig.

>>Can’t you just appreciate Everald’s good intentions in putting his thoughts out there in the public arena on OLO, and debate them without being offensive?<<

These were not just "thoughts", though, were they. We were in fact lectured quite directly to "find enlightened leaders for a new world and put them in charge as a matter of urgency." What twaddle. Who, in the twentyfirst century, is going to choose to live in a dictatorship? Our form of democracy, limp and borderline corrupt as it is, does at least contain a modicum of checks and balances.

One of the freedoms we have, and should cherish, is the right to raise a family. Without, I suggest, Big Brother looking over our shoulder. Another is to strive for improvement in our own circumstances, while staying within the law, without being heckled by the do-gooder, holier-than-thou brigade.

>>I wonder how the global average compares to 1931? Not ‘greater’ at all, I would think!<<

You don't need to apply a great deal of thought to this, Ludwig, to realize that in every single measurable category, the world is better off today than in 1931. I'm only surprised that you chose to challenge the idea.

And please, popnperish, if you are going to make massive claims like this, at least have the confidence to back it up with concrete examples.

>> We are certainly exceeding the Earth's capacity to sustain us at the moment<<

The Earth is managing extremely well in sustaining us. Agreed, we are not quite so good at such things as food distribution and political stability in some parts of the world.

But that isn't the Earth's fault.

Pericles,

Conditions are better for a lot of us, largely due to technological progress, not more people, as they have also improved in countries with fairly stable populations.

The US has a lot more people than in the 1970s, but most men are receiving lower real wages than in 1979.

http://stateofworkingamerica.org/chart/swa-wages-figure-4c-change-real-hourly-wages/

Nor are conditions rosier for everyone elsewhere. According to their own government, 42% of India's children are malnourished, and 60% are stunted by past malnutrition

http://www.theguardian.com/world/2012/jan/10/child-malnutrition-india-national-shame

From an article in one of the two foremost science journals (T. Wheeler and J. von Braun, Science 341, 508 (2013)):

"About 2 billion of the global population of over 7 billion are food insecure because they fall short of one or several of FAO’s dimensions
of food security."

You are also overlooking environmental overshoot. The Global Footprint Network is an international think tank of scientists, engineers, and economists that has been trying to quantify our consumption and impact on the environment.

http://www.footprintnetwork.org/en/index.php/GFN/page/ecological_footprint_atlas_2010

It is clear from their figures that we are using up renewable resources much faster than they can be replenished. Something like 190 million people in India and 130 million people in Northern China are completely dependent on unsustainably pumped groundwater. No water, no food.

We are also facing serious problems due to total human impact on a number of different planetary life support systems. To see this, just pick up a few issues of Science or Nature, or even one of the popular science magazines such as New Scientist or Scientific American. These warnings are coming from mainstream scientists who publish in top journals, not hysterical fringe Greenies. This article summarises the main concerns

http://www.nature.com/nature/journal/v461/n7263/full/461472a.html

Open version: http://www.ecologyandsociety.org/vol14/iss2/art32/

No functioning environment, no economy. The UN has recently raised its medium population projection to 10.9 billion. How will the extra people and their demands help? You remind me of the joke about the economist who jumped off a tall building and was heard to remark that everything was fine so far, as he passed the 20th floor.

Ludy, my reference to increased productivity, is to reduce the percentage of hanger oners, an ever increasing problem we face in this country.

As for global population, it's all about birth control for third world countries, as opposed to the il fated, well intended donations that just keep rolling in.

That's an assertion, Divergence, not evidence.

>>Conditions are better for a lot of us, largely due to technological progress, not more people<<

Who caused the technological progress, do you think? Did it just happen on its own, or did people have a hand in it somewhere.

>>The US has a lot more people than in the 1970s, but most men are receiving lower real wages than in 1979.<<

What would it look like, do you think, if you took that graph back to 1931?

>>According to their own government, 42% of India's children are malnourished, and 60% are stunted by past malnutrition<<

I thought we were comparing what was, with what is. How does this figure compare with 1931? And what is the relevance of this sentence, from the same article, in your view?

"The number of underweight children in India has dropped by a fifth over seven years"

>>It is clear from their figures that we are using up renewable resources much faster than they can be replenished.<<

There is nothing wrong with pointing out that we need to pay closer attention to the use of the earth's resources. But to translate this as "we are certainly exceeding the Earth's capacity to sustain us at the moment" is inaccurate, as well as counter-productive on account of it being inaccurate. If the statement was "we are in danger of exceeding the Earth's capacity to sustain us in the future" it would be both true, and (presumably) lead to a call to action.

I suspect that the problem might be that we have become so incapable of analysing facts for ourselves, that hysterical overstatement is judged to be the only way to get our attention.

Shame, really.

Rhian
My position on population growth is firmly embedded in science, not ideology. I first became aware of the impact of human growth on biodiversity when studying Zoology at Sydney University under the late and great Prof Charles Birch. Everything I have read and seen since (overcrowding in developing countries for instance) has simply confirmed the science.

Pericles
Divergence backs up virtually every so-called "assertion" with scientific evidence - more so than anyone else on this forum so don't accuse him/her of making assertions. It's a cheap trick to accuse another of that which you are guilty of yourself.

Popnperish
Many of the most fervent ideologues in the population debate present themselves as taking a scientific approach, and probably sincerely believe this. Paul Ehrlich is a notable example, but there are many others. Their deliberate alarmism, refusal to recognise merit in any worldview but their own, and refusal to change their theories in response to evidence gives the lie to their claims of scientific method.

Divergence’s responses typically find a particular instance of something not consistent with a general trend and attempt to present this as proof that the trend is not there. Yes, real wages in the USA have stagnated, but they have not anywhere else in the developed world, let alone the developing world. Yes, there are still huge problems with poverty and malnutrition in India, but there are no longer the regular famines and death from starvation that occurred a few decades ago. And across the developing world, rates of malnutrition are falling

I'm with popnperish, there are not too many posters who go the trouble of documenting their arguments as well as Divergence.

And speaking as an impartial, mild mannered, yet discerning observer, I find the case she has put here/above very,very convincing.

Cheers

Sorry to hear the Abbott govt has seen fit to axe the Advisory panel of Positive Aging, Everald.

http://www.theguardian.com/world/2013/nov/08/axed-advisory-body-to-seek-crowdfunding?CMP=soc_568

"A government panel on how to deal with the looming issue of Australia’s ageing population will turn to public crowdfunding to finish its report, having been scrapped by the Coalition just months before completing its work.

The Advisory Panel on Positive Ageing is one of 12 non-statutory bodies to be abolished by the government, Tony Abbott stating they had “outlived their original purpose” and did not help meet the Coalition’s goals.

The chairman of the panel, Everald Compton, told Guardian Australia he was “stunned” by the decision, which came just months before it was to hand down a blueprint on how Australia should adapt to the “age tsunami” already facing nations such as Japan."

“I was seeking a meeting with [treasurer] Joe Hockey for some time, but got no response,” Compton said. “Someone in his office called someone in the Treasury who called me to say that I, and the whole panel, were fired.

“I’ve done two and half years work on this plan and I’ve known Joe Hockey for 20 years, so I thought I’d get a phone call at least"

(Apparently panel does not cost $4.7 million -"most is treasury salaries")

Disgraceful behaviour from the govt.

Wish you well with crowd funding.

Thanks for your incisive interjections, popnperish and SPQR.

>>Divergence backs up virtually every so-called "assertion" with scientific evidence - more so than anyone else on this forum so don't accuse him/her of making assertions... I'm with popnperish, there are not too many posters who go the trouble of documenting their arguments as well as Divergence<<

I am reasonably sure that Divergence knows that this is an assertion, not fact, or even evidence...

>>Conditions are better for a lot of us, largely due to technological progress, not more people<<

If there is any evidence to back it up, I'm sure it will be immediately forthcoming.

If Pericles were correct, we would expect the developed countries with the most rapidly growing populations to experience the greatest growth in GDP per capita. I have compared two rapidly growing countries in the OECD, Australia and the United States, with three countries with little or no population growth, Germany, Japan, and Finland. I have averaged annual growth in GDP per capita from 1994 through 2012 for these countries from World Bank figures

http://data.worldbank.org/indicator/NY.GDP.PCAP.KD.ZG

Australia 2.06%, Finland 2.40%, Japan 0.73%, Germany 1.44%, US 1.49%

How the wealth is distributed, however, is just as important as how much it is growing. It is of little benefit to the average person if there is growth, but all of the benefits are going to the folk at the top. The US has had a decent rate of economic growth over the past 20 years, but wages for most of the population have stagnated, as Pericles himself admits. The OECD has ranked its member countries from the most equal to the least equal and given the Gini coefficients.

Australia 26 (0.34), Finland 8 (0.26); Japan 24 (0.33); Germany 15 (0.30); United States 31 (0.38).

http://www.oecd-ilibrary.org/sites/factbook-2013-en/03/02/01/index.html?itemId=/content/chapter/factbook-2013-25-en

Prof. George Borjas (Economics, Harvard) has quantified the effects of mass migration in the US towards depressing wages.

http://www.cis.org/immigration-and-the-american-worker-review-academic-literature

Countries with very rapid population growth by natural increase also tend to be profoundly unequal. The poor countries with the most rapid growth, countries such as Afghanistan, Yemen, and Somalia, tend to be real economic basket cases.

While people are obviously necessary for technological progress, innovation is not proportional to population. It also depends on having spare wealth and a culture that is conducive to it. Just look at the list of Nobel prize winners by country. Australia has 12 in scientific subjects, while Japan has 16 – with 5 times as many people.

Well you see, Divergence, that's exactly where our logic... diverges.

>>If Pericles were correct, we would expect the developed countries with the most rapidly growing populations to experience the greatest growth in GDP per capita<<

Of course, that is absolute rubbish. Why would you expect that? There are so many other factors in the equation - politics, social structures, mineral wealth, climate, education, health etc. etc. - that picking on population growth (or decline, for that matter) as a key contributor to a country's economic situation is to exhibit the most exquisite blindness to reality.

>>While people are obviously necessary for technological progress, innovation is not proportional to population.<<

Absolutely. So why should you assume a correlation between them? Interesting too that you should use Japan, a country whose economy has been stagnant for decades and whose population is currently in decline, as evidence - surely this demonstrates exactly the opposite effect (of population growth) to that which you wish us to subscribe.

Back to the assertion.

>>Conditions are better for a lot of us, largely due to technological progress, not more people<<

Your argument would be stronger if you could show how fewer people would have delivered the same level of technological progress. Care to give it a try?

Divergence

The trouble with picking one or two examples is that they might not be representative. Using the same IMF database and time periods as you (1994 to 2012) for ALL advanced economies with per capita GDP of over US$30,000 (less than half of Australia’s – seems a reasonable if admittedly arbitrary cut off), there is a clear positive correlation between population growth and real per capita GDP growth. Running a regression of these growth rates yields a statistically significant positive coefficient of 0.48 – on average, and additional 1% on the population growth rate adds 0.5% to the per capita GDP growth rate.

Put another way, of 23 countries in this category:
- six had above-average growth in both GDP per capita and population (Australia, Iceland, Ireland, Israel, Luxembourg and Singapore);
- nine had below-average growth in both population and per capita GDP growth (Belgium, Denmark, France, Germany, Italy, Japan, Netherlands, Switzerland and the UK)
- eight had above-average growth in one variable and below-average growth in the other (Austria, Canada, Finland, Hong Kong, New Zealand, Norway, Sweden and the USA).

You say “Countries with very rapid population growth by natural increase also tend to be profoundly unequal.” This may be true, but in all rich, advanced economies, countries with relatively rapid population growth have this due to migration, not natural increase, so the comparison is not valid for Australia or the other countries we are discussing.

Of the 21 countries in my database of rich advanced econonies that are also OECD members, a regression shows a very small and statistically insignificant positive correlation between population growth and inequality. This disappears if Israel is excluded, which seems reasonable to me as the drivers of both its population growth and its inequality are probably due to factors unique to that country.

(I think there may be an error in your calculations – to get an average growth rate between two dates you can’t just average the annual growth rate for each year, as this misses the compounding effect. This should not affect rankings much, though)

Rhian,

Try doing the linear regression on growth in GDP per capita vs. population growth rate without the city states. Melbourne and Sydney have much higher population growth rates than Australia as a whole. Hong Kong is not an independent country and would be a city state if it were. Countries can still perform well economically in any case with essentially stable populations, as I showed with Finland and Germany. Even if you could still show a modest benefit, the GDP per capita figure does not include a lot of other factors that may matter more to people than a few more dollars in their pockets (assuming the gains are widely distributed), such as traffic congestion, the cost of housing, more extinctions as urban development covers habitat, etc. There is also the question of whether strong economic performance is attracting more people, rather than high population growth leading to good economic performance.

I did a linear regression on the Gini coefficient versus population growth rate in 2012 (from the World Bank figures) for the OECD countries. Once I omitted Luxembourg as an outlier (very small and 82% urban, so resembling a city state), I got a positive correlation between higher population growth rate and higher Gini coefficient which was significant at the 5% level given the sample size (r = 0.36). See graph in

http://vassarstats.net/textbook/ch4pt1.html

If I had picked 2009, I would have probably gotten a better correlation. (New Zealand for example, was growing at 1.1% in 2009 and 1.2% in 2010).

It is clear that population growth is not the only cause of social inequality, but the high population growth Anglosphere countries are all in the bottom half of the OECD's inequality rankings that I linked to earlier, and the US is just above Turkey, Chile, and Mexico. Why is high inequality acceptable if it is due to immigration rather than natural increase? Prof. Borjas' article that I linked to earlier explains how the wages of native born workers who compete with migrants are significantly depressed.

Divergence
Removing Luxembourg and Hong Kong makes little difference to the regression.

In the 10 years to 2012 Australia’s population rose at 1.5% a year, Sydney’s by 1.3% and Melbourne’s by 1.8%. The fastest growing capitals were Perth (2.4%pa) and Brisbane (2.3%pa).

http://www.abs.gov.au/AUSSTATS/abs@.nsf/DetailsPage/3218.02012?OpenDocument

WA and Qld also had the fastest per capita GSP growth of the states – again reinforcing the positive correlation between population growth and rising real economic output for Australia.

Gini coefficients are only a partial gauge of economic welfare. As Churchill is reported to have said: “The inherent vice of capitalism is the unequal sharing of blessings; the inherent virtue of socialism is the equal sharing of miseries.” It is not coincidence that in the data you linked to, the highest inequality in the richer OECD countries is in the USA, the lowest is in a former communist country (Slovenia). Despite its comparatively low inequality Slovenia has a much lower overall living standard; personally I’d rather live in the USA.

My own analysis of the relationship between population growth and inequality showed a very weak and statistically insignificant positive relationship; but let’s assume for the sake of argument you’re right. Certainly, the incomes of migrants tend to be lower than the incomes of native-born populations, and this could in theory explain why inequality is higher in countries with higher migrant intakes. But does this necessarily represent a welfare loss? If migrants are willing to do work that native-born Australians are unwilling to do, or at wages they are unwilling to accept, that does not necessarily make the established population worse off (probably better off, if It means we have more affordable aged care, qualified nurses and others in jobs where migrants tend to concentrate). And if migrants have a higher living standard in Australia than their countries of birth, then their welfare is improved by migration (which makes sense, or else they wouldn’t be here). If migration raises living standards for both migrants and the established population, does it matter if it also raises inequality by a very small amount?

Rhian,

Within Australia, where there are no barriers to migration, population growth may be correlated with economic growth because high economic growth attracts people. The same may be true between countries if the government allows high immigration.

Yes, some of the more equal countries were part of the Soviet bloc, but Denmark is number 2 and was never Communist. This graph shows that being in the bottom 10% of the income distribution is better in a number of European countries than it is in the US - in absolute, not just relative terms. How can this be if inequality makes people better off?

http://stateofworkingamerica.org/chart/swa-poverty-figure-7v-earnings-10th-percentile/

You left out a third of OECD countries when you analyzed your data on population growth rate vs. inequality. I put all of them in except Luxembourg. If a country is developed enough to be in the OECD (and Chile thought that it was a really big deal when it was admitted), then that country should count. You were able to show lack of significance not only by omitting data that didn't support your argument, but also raising the r value required for significance due to the smaller sample size. "If you torture the data hard enough, it will confess."

Poverty doesn't stay concentrated among the immigrants as you say. See Prof. Borjas' article that I linked to above.

Cont'd

Cont'd

According to Tim Colebatch, the Economics Editor of the Melbourne Age

“People born overseas have taken almost three-quarters of the net growth in full-time jobs in Australia in the past two years, even though they make up just 31 per cent of the adult population. Analysis of the Bureau of Statistics jobs data reveals that, comparing the six months to April with the same months two years earlier, Australia gained just 131,000 more full-time jobs - one new full-time job for every five new people.

"But in net terms, people born overseas gained 97,000 more full-time jobs, while Australian-born people gained only 34,000. The economy created only one new full-time job for every 10 more Australian-born people aged 15 and over.

"The figures raise doubts about employers' claims that they must hire workers from overseas because Australians are not available to do the jobs.”

Read more: http://www.smh.com.au/national/skilled-newcomers-flood-fulltime-jobs-market-20130614-2o9vm.html#ixzz2i3tNxUVR

If you are an employer, you can hire 457 visa holders and get prime age workers who are already fully trained and experienced. You won't have to train apprentices, and your migrant workers will put up with more because they want you to sponsor them for permanent residence or are ineligible for welfare. The people you pass over end up shuttling between unemployment and low-paid precarious employment. Apart from the suffering of the individuals affected, there are enormous welfare and indirect costs, which are socialised by the employers who profit from the migrants. According to Roy Morgan Research, the real unemployment rate in Australia is now 10.4%, on top of an underemployment rate of 8.6%.

Divergence
You said Sydney’s population growth is “much higher” than the national average; that’s clearly wrong.

Yes, I omitted some OECD countries. I used countries the IMF defines as “advanced” economies. Membership of the OECD is based on geography and politics as well as economic criteria, and it is voluntary. Singapore, for example, chooses not to join. The OECD includes several countries that the IMF considers not to be “advanced” (Hungary, Turkey, Chile, Poland, Mexico) and excludes several the IMF thinks are “advanced” (Hong Kong, Taiwan, San Marino, Singapore, Malta, Cyprus). I believe the IMF criteria provide a more accurate and impartial definition of advanced economies than the OECD’s membership.

Of the IMF’s 35 “advanced” economies, I excluded San Marino (no data) and the 11 countries with per capita GDP of under US$30,000 (Estonia, Slovak Republic, Czech Republic, Portugal, Taiwan, Malta, Greece, Slovenia, Korea, Cyprus, Spain). These countries’ per capita GDP is less than half of Australia’s. They also include a large number of former communist countries who were in transition in the 1990s hand have sunce joined the EU; the worst casualties of the GFC (Spain, Greece); and a couple of newly industrialised Asian economies. These factors, in my view, have dominated their recent economic histories in ways that make them unsuitable comparators.

I used 23 countries. Your earlier post used just 5 examples, if you recall.

The chart shows “the share of each country’s 10th percentile earnings relative to the 10th percentile earnings in the United States”. This is not an absolute measure; it compares the SHARE of earnings accruing to the lowest-paid 10% of workers in each country.

I did not say inequality makes people better off; I said it is possible that high migration may raise both per capita incomes and inequality. Beware the common cause fallacy:

http://www.nizkor.org/features/fallacies/ignoring-a-common-cause.html

I’m not in the least surprised by Colebatch’s data; they confirm that skill shortages make migration necessary for Australia. Beware the “lump of labour” fallacy:

http://en.wikipedia.org/wiki/Lump_of_labour_fallacy

The idea is fanciful that, without migration, jobs growth would be the same but all those jobs would go to native Aussies.

Rhian,

The OECD has strict criteria for membership. It doesn't just take anyone who wants to join. The half of Australia's GDP per capita figure is arbitrary. See these graphs on GDP per capita and happiness

http://filipspagnoli.wordpress.com/stats-on-human-rights/statistics-on-gross-domestic-product-correlations/#11

The only way to get a straight line through the data is by using a logarithmic scale. In other words, as countries get richer, you have to use bigger and bigger increases in GDP per capita to get the same increment in happiness. Once you get to the level of the poorer OECD countries, there isn't that much difference in happiness between them and the rich countries, i.e., people mostly have enough wealth to prevent poverty from making them miserable, so it is fair to count them as developed countries.

If you look at that bar chart from State of Working America again, you will see that it compares gross earnings of the bottom 10% in a number of countries with gross earnings of the bottom 10% in the US. It has nothing to do with inequality within countries or income shares.

I never claimed that there would be just as many jobs without migrants. Tim Colebatch draws the opposite conclusion from you on the need for many skilled workers. Why would you bother training if you don't have to? What is wrong with training some of the people we already have who are stuck in unemployment or in miserable casualised jobs that often don't offer enough hours? What about the issue of wage depression discussed by Prof Borjas and mentioned in the Productivity Commission report into immigration?

Bottom line: I accept that there is a correlation between GDP per capita and population growth among the richest countries, although that does not imply causation and there are low growth countries such as Germany and Finland that have done very well. I stand by my statement that inequality is correlated with population growth, and there is evidence to suggest that the relationship is causal.

Divergence.
I never said the OECD has lax criteria for membership. I said membership is influenced by factors other than economic characteristics, and some rich countries choose not to join, and so its membership is a poorer dataset than the IMF’s “advanced economies” when trying to evaluate economic characteristics.

A look at the countries which are OECD members but not IMF “advanced economies”, shows this to be true. Mexico joined in 1994, the year it signed NAFTA. Turkey is strategically crucial to Europe and NATO. Hungary and Poland are among a group of former communist eastern European countries that joined the EU in the 1990s. These new members had lower living standards and different economic structures than the established ones. All EU members are also OECD members. The membership of both organisations changed significantly as a result.

My choice of a $30,000 was not cherry picking. It is reasonable to expect that the economic drivers of a country with per capita GDP of US$67,000 will be different to one with where it is US$17,000, even if both are “advanced” OECD members. Looking at the actual countries concerned – primarily former communist countries transitioning to market economies and newly industrialised Asian economies – I think their recent economic drivers are so obviously dissimilar to Australia that their inclusion in any regression analysis would invalidate the results.

more follows ...

continued ...

Re chart. The description “share of each country’s 10th percentile earnings” suggests to me the proportion of earnings by country accruing to the lowest 10% of workers. But even if you’re right, my point about common cause remains.

You ask what is wrong with training the people we have. The answer, of course, is nothing. But unless people are willing and able to do that training, the need for workers will go unmet. Employing someone on a 457 visa is far more expensive then employing a local. Businesses do it because they have to.

Re inequality. You admit that small changes in your sample change the validity of your results. My look at the same data shows no significant relationship.

I’m glad you agree on the correlation between growth in per capita GDP and population. The fact that there are exceptions, of course, does not rule out a causal relationship. As I think we all agree, other factors are generally far more important than population growth in shaping growth in living standards.

I refer you to your earlier comment: "If Pericles were correct, we would expect the developed countries with the most rapidly growing populations to experience the greatest growth in GDP per capita." Our regressions show that, on average, this is indeed the case.

Re happiness. Are you proposing happiness as the measure to define advanced economies, or have I misunderstood your point?

Rhian,

Surely, the economy exists to promote the welfare and happiness of the people, or it should.

There are two similar charts in State of Working America. One does refer to shares. The one I linked to is "Earnings at the 10th percentile in selected OECD countries relative to the United States, late 2000s". It just sets gross earnings of the bottom 10% equal to 100% for the US and then compared gross earnings of the bottom 10% in other countries relative to that. Nothing to do with inequality within countries.

From a textbook by James Ros "Development Theory and the Economics of Growth" (p. 295) "Less egalitarian societies have higher rates of population growth at any given level of income." (You can search with Google Books.) The developing countries with the fastest rate of population growth also tend to be the poorest. I think that the explanation for all the data from the different types of countries is that societies can add babies or migrants faster than the economy can create jobs for them, The oversupplied labour market depresses wages and working conditions, increasing the wealth and power of the elite, who can then use their influence to get other measures enacted that favour them at the expense of everyone else. American economist Dean Baker discusses many such issues in "The End of Loser Liberalism". In places like Norway, where the economy has been growing very quickly, it may be able to create enough jobs to absorb the population growth and stay equal. If the economy is dreadful, it may not be able to maintain enough jobs for a stable population, and you get inequality without population growth.

So far as the need for 457 visas and the like are concerned, what is theoretically supposed to happen and what does happen are two different things. See

http://mobile.abc.net.au/news/2013-11-14/investigation-into-claims-hungarian-workers-grossly-underpaid/5093100?pfm=sm&section=nsw

See Prof. Norm Matloff's article at the Economic Policy Institute

http://www.epi.org/publication/bp356-foreign-students-best-brightest-immigration-policy/

See also this video from Youtube, where some lawyers discuss strategies for not hiring qualified Americans so that jobs can be offered to migrants

http://www.youtube.com/watch?v=TCbFEgFajG

Rhian,

I accept that you haven't fiddled your numbers when you compared population growth rates with growth in GDP per capita, but disagree with your choice of countries. You have excluded countries that rank very high on the UN Human Development Index and thus should count as developed. You have also included countries with vast mineral wealth that only has to be divided among a small population and countries like Singapore that are city states. (You only left out Hong Kong and Luxembourg.) With a relatively small number of data points, as in my case, a single outlier can make a big difference, and Luxembourg is small. Without it, I was well over the r value for 5% significance (0.36 versus about 0.30).

The other question is what economic growth is for. You seem to just want to maximize it without being too concerned about how it is distributed. I am concerned that everyone has enough for a decent quality of life with some personal freedom and dignity, without trashing the environment. There is an interesting paper by I. Kubiszewski et al. that appeared in "Ecological Economics" this year. They compare GDP per capita, Genuine Progress Indicator (GPI) per person, Environmental Footprint per person, Biocapacity per person, and UN Human Development Index for 17 countries from 1950 to the present. They found that GDP and GPI increased more or less in parallel up until the late 1970s. Afterwards, GDP continued to increase while GPI stagnated or fell. The only exception where GDP and GPI continued to go up together was Japan. In other words, for the other countries, including Australia, the benefits from economic growth are cancelled out by negative effects on other aspects of quality of life and on the environment.

http://www.academia.edu/3636103/Beyond_GDP_Measuring_and_Achieving_Global_Genuine_Progress