Malthusian intuitions are destroying our politics

In the modern world, more people means more prosperity

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One piece of pushback I got on Monday’s assertion that deporting a large share of the workforce will make inflation worse was that doing this would reduce housing demand and, therefore, alleviate cost pressures in that sector.

It’s pretty easy, I think, to show that this is wrong.

Unless you are spending over 100 percent of your labor income on housing, you are, by definition, producing more of whatever it is you produce than you are consuming in housing. The people whose physical presence in the country is inflationary are non-workers — primarily retirees and children — and I don’t think anyone is proposing mass deportation of the elderly.

But more broadly, I think this is an example of the widespread quasi-Malthusian intuitions that dominate so much of politics. This sometimes takes the form of leftists exaggerating the role of imperial plunder in explaining which countries are rich today, and historically, imperialism was fueled by rightists exaggerating the role of imperial plunder in sustaining modern prosperity. More recently, though, there is all kinds of mainstream suspicion about trade and lots of paranoia on the right, not just about “border security,” which is a valid concern, but about orderly, legal flows of people across national boundaries.

I haven’t written about “One Billion Americans” much lately, but I think that as more people become more seriously concerned about the balance of power in the Pacific, they ought to come around to the idea that the literal scale of the Chinese population is very relevant to these issues. The US-China gap in shipbuilding capacity, for example, is clearly much too large to be explained solely by population. But if China’s population is triple ours, wouldn’t you expect them to be able to build three times as many military ships? If you’ve got a fight between three guys and nine guys, the nine guys are probably going to win. The good news on the ships is that American allies like South Korea and Japan do quite a bit more shipbuilding than we do; having allies is valuable. Still, China is bigger than the US and South Korea and Japan put together, so they are likely to be able to build more ships and artillery shells and airplanes and everything else.

To avoid that outcome, we need to embrace population growth. To collaborate effectively with allies, we need to embrace some version of free trade. And to accomplish either of those things, we need to rid ourselves of Malthusian intuitions.

And I think the best way to start to do that is to acknowledge just how deeply rooted these intuitions are.

Human history is mostly Malthusian

It’s easy to forget just how modern the modern era of (mostly) continuous economic progress is. But it’s very new, dating back roughly 250 years in the United Kingdom and less than that for many other countries. Indeed, in much of the world, it’s barely begun.

For most of human history, the vast majority of the population worked as farmers. They ate what was on hand and were exploited by relatively small, parasitic governing classes that expropriated a share of their food via raids or taxes or enslavement. Life expectancy was short, and people were often too malnourished to have children. If food was plentiful, the population would tend to expand until it was no longer plentiful. If the population crashed due to a plague, food generally became more plentiful.

This world featured a particular relationship between labor, land, and population size.

Certain parcels of land are suitable for rice cultivation, and rice cultivation generates a very high quantity of calories per cultivated acre, with the proviso that it takes a lot of hard work to cultivate that land. So places that are rice-suitable developed much higher population densities than places with other staple crops. But even though almost everyone was poor everywhere, living standards were lower in the denser rice zones because people needed to work harder to avoid starvation. Note that this is pretty specific to the dynamics of agriculture, which is more dependent on external factors than most other kinds of work — at a certain point, a farmer needs to let the crops grow and hope that they do. It’s not that effort doesn’t matter. It matters a lot. But the capacity of additional effort to generate additional food is limited by fundamental aspects of the terrain and plant biology.

In this Malthusian world, the only way to get rich was to essentially steal from someone else, because stealing is quick and efficient compared to growing food.

And on a political level, expanding your territory so that you rule over a larger swathe of agriculture land was an efficacious way to make your polity richer. There is, after all, only so much taxation/raiding/confiscation that a given area can endure. Spain got rich by 16th century standards (it was still incredibly poor compared to any modern industrial society) because its rulers were able to appropriate an enormous amount from a vast empire in the New World.

This was the basic human condition for thousands of years of agricultural society. And before the dawn of agriculture, the even longer period of hunter-gatherer societies had this same feature in an even more acute form. If you’re hunter-gathering somewhere with only a few people in your band, everyone can eat the tastiest fruit and try to hunt a little big game. As the population expands, you start to run out of tasty fruit and big game and need to eat less-tasty stuff and put in the time to hunt small game. At some point before starvation, you’ve got people eating bugs. But if you can kill a neighboring group and move onto their land, maybe you get out of the bug zone.

Precisely because this went on for so long, it’s how we’re built to think about the world, even though it’s not how the modern world operates.

The wealth of modern nations

Reading Adam Smith’s work with a critical modern eye, it’s interesting the extent to which he doesn’t really talk about economic growth in the modern sense.

What Smith is on about, as he founds the discipline of modern economics, is how to allocate resources efficiently. Like other classical economists, he’s interested in the idea that market exchange lets people specialize more and increase production. This is, of course, fully compatible with a Malthusian vision of society. It’s probably not a good idea for every single person in the band to take turns performing every possible role in a hunter-gatherer society. Some people specialize in hunting, others in gathering. Maybe one person is more efficient at fashioning garments out of animals skins than anyone else, so they also spend a lot of time on that task, and in exchange, others help him out with food. Organizing everyone’s time in a sensible way yields more food, and your terrain will, to an extent, be able to support a larger population.

But while that larger population will come in handy in the event of a fight with a neighboring band, it doesn’t change the fact that your per capita living standards eventually converge with the carrying capacity of the land.

Malthus wrote his book in 1798, after Smith’s “Wealth of Nations” (1776), and that was his point: Good policy could raise living standards temporarily, but a population with higher living standards would see more people reach reproductive age, and eventually living standards would decline again. Malthus was, of course, aware that technology had improved over the centuries. But in his view, these improvements wouldn’t address the underlying issue any more than Smith's clever policy optimizations. If someone figures out how to build windmills that grind grain more efficiently, in the short term you end up with more bread. But in the long term, more bread means more people, and the amount of bread per capita decreases.

The game changer happened right around the time Malthus was writing — the speed of technological change accelerated.

Between 1798 and 1898, technology advanced a lot, to the point where living standards genuinely rose. And in modern countries, this is what drives prosperity: the pace of technological innovation, but also the speed at which those innovations can be deployed.

Those are, of course, different things. Traffic jams are an annoying problem. They’re also a problem that we have the technology to solve using road pricing, but we mostly don’t deploy it. As an economics fan, there’s nothing I like better than paying a toll to drive on the I-395 express lanes during a period of high traffic congestion. But most voters are unduly suspicious of this idea, so we underutilitize it. Still, we’ve had enough innovation, plus enough borrowing of innovations from abroad, that the United States in 2023 is dramatically wealthier than the United States in 1923, even as the population has exploded.

Recreating scarcity for no good reason

The idea of fighting inflation by deporting immigrants doesn’t make sense, but it clearly is true that, ceteris paribus, immigration increases housing costs. This is a non-fake, non-hysterical downside to migration in many contexts.

But it does raise the question of why that should be true.

If a bunch of new hunter-gatherer migrants arrive on your hunting grounds, they may eat all your fruit, leaving less fruit for you. If a bunch of new immigrants arrive in a country in 2023, they’ll for sure need a place to live… but why not just build a place for them?

It could be that the cost of constructing a new dwelling simply exceeds the earning capacity of the migrant, so it doesn’t pencil out. But we know that’s not actually the case. Instead, not only are there tremendous regulatory impairments to the very cheapest housing types — trailers and SROs — there are massive impairments to good old-fashioned mid-rise apartments. Huge swathes of the country are even hostile to something as traditional as a detached single-family home on a small lot.

The cumulative scarcity induced by all of this is completely artificial. We have developed lots of useful technologies for alleviating land scarcity, but we drastically curtail their usage.

People give a lot of different reasons for rejecting various proposals to increase housing abundance. But I think it’s important to understand the scope of the entire field of housing supply restrictions, because its sheer breadth suggests there’s more going on than any particular objection to any particular reform — I think it’s driven by a Malthusian fear that more people nearby means less for you. This occasionally takes a very literal form, like last year’s California court ruling that college students are a form of pollution, which allowed nearby residents to raise a California Environmental Quality Act objection to student housing in Berkeley.

But it’s often less explicit — just a vague sense that proximity to other people is going to be immiserating — that I think is driven by this deep-rooted fear of running out of berries.

The flywheel of abundance

The irony is that Malthusian-inspired fear of new housing generates the Malthusian circumstance whereby an influx of new residents results in higher housing costs.

Washington, DC, where I live, is currently going through a rough patch, having lost population due to Covid and struggling with a high murder rate. But for the first 17 or so years that I lived here, housing demand was constantly rising. And it generated a lot of complaints about “gentrification” and all the harms of newcomers. The truth, of course, is that some longtime residents did suffer due to higher rents (though it’s also the case that a large number of longtime residents benefitted from appreciating real estate values), but this was wholly preventable. The city has, in fact, added a lot of housing over the past 20 years, mostly in quasi-greenfield locations, but it has never allowed the most expensive residential parcels to be redeveloped at higher density. Doing that would unlock a financial windfall for incumbent homeowners (they could sell their houses to developers and make a lot of money) and also ameliorate rent growth. People simply didn’t want to do it, so fear of an influx of people actually made the influx more problematic than it otherwise would have been.

Now that demand for DC living has fallen over the past three years, though, the city is learning that the only thing worse than rising demand is falling demand.

It’s nice that rents have moderated, but it’s a problem for the tax base and for city services and for local businesses. Because this is not a Malthusian society in which we are dividing up a pool of rice; most DC residents make a living providing services to other DC residents. When the pool of residents is growing, that means more customers and more scope for specialization and the division of labor. Other human beings are the main resource we need, so more means more, rather than less.

But this works best if we truly embrace it. If you fear population growth, you put in place policies like zoning restrictions designed to prevent it, and you undermine its economic value.

If you change the rules to facilitate population growth, then you make population growth even more beneficial. This is all particularly salient in the case of immigration or city-to-city moves since that involves fully-formed adults showing up, but it’s equally true of babies. If you think other people having kids puts a burden on society and adopt anti-growth policies, you end up making children more burdensome. It’s not a coincidence that the Satmar Hasidim aggressively pursue upzoning in their neighborhoods. That doesn’t mean we all need to become Hasids or embrace open borders; people want immigration controls in place for lots of non-economic reasons. But I do think Malthusian intuitions also lurk behind a lot of our reasoning on these topics.

The truth, though, is that we can have more immigrant doctors and lower health care costs. And we have can have more zoning reform, plus more immigrant construction workers, and more abundant housing. We can have more immigrant child care workers and make raising families more affordable. And this would all make more and better services available to more people in a modern dynamic service economy that is fundamentally unlike the models that have prevailed for the vast majority of human existence.