Population boom heralds big global economic shifts

Wed Oct 26, 2011 2:29pm EDT
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By Alan Wheatley, Global Economics Correspondent

LONDON (Reuters) - Few economists have been as spectacularly wrong as Thomas Malthus, who predicted in 1798 that unchecked population growth would doom the Earth to starvation.

As the number of people on the planet reaches 7 billion, his modern-day peers are cautiously confident that the English clergyman will remain synonymous with unwarranted doom and gloom.

With the global population headed for the 9 billion mark by 2050, economists are pinning their faith on continued technological innovation and the invisible hand of market prices to lead to a more efficient, sustainable use of finite natural resources instead of a deadly fight to the end for the last barrel of oil and drop of water.

"Malthus has been proven wrong for the past 200 years, so why should he be right in the next 100?" asked Robert Aliber, a professor of international economics and finance at the University of Chicago.

Part of the answer to that rhetorical question presupposes uninterrupted advances in technology and productivity of the sort that Malthus, writing before the Industrial Revolution, was unable to foresee.

As Willem Buiter, Citi's chief economist, put it, the world would have been doomed long ago if it had been stuck with the largely artisanal modes of production familiar to Malthus.

For a start, if cars and trains and bicycles had not replaced horse-drawn transport, London would be buried now under a deep layer of horse manure.

"There is always a Malthusian scenario that will cause the world to collapse. It has been a race between the exhaustibility of resources and innovation, and so far innovation has won," Buiter said. "We have several thousand years of human history to support us on that, so I'm reasonably optimistic."   Continued...

<p>A man watches the skyline of Shanghai from the Shanghai Financial Center building, October 25, 2011. REUTERS/Carlos Barria</p>