Higher Populations, More Trade Leads to Progress, Higher Living Standards

Rationally optimistic.


Last week, at the Cato Institute, Matt Ridley and Reason's Ron Bailey discussed Ridley's latest book, The Evolution of Everything: How New Ideas Emerge. In it, Ridley further develops the main contention of his best-selling work, The Rational Optimist: How Prosperity Evolves. In The Rational Optimist, Ridley argued that rising living standards depend on "exchange." When people trade with one another, their "ideas have sex" and that leads to innovation and material progress. It will sound counterintuitive to those who think that overpopulation is a problem that progress depends on the size of the population involved in exchange. Fewer people, in other words, equals slower progress. And, population decline can lead to a reversal in well-being. 

Thus, on page 78 of The Rational Optimist, Ridley writes, "The most striking example of technological regress is Tasmania. A population of less than 5,000 hunter gatherers divided into 9 tribes after reaching this island over 35,000 years ago. They fell steadily and gradually back into a simpler toolkit purely because they lacked the numbers to sustain their existing technology… They had no bone tools, no cold weather clothing, no barbed spears, no fish traps, no spear throwers, no boomerangs… Most of these had been made and used by the very first Tasmanians. The first Tasmanians caught and ate plenty of fish, but by the time Westerners first contacted them, they not only ate no fish, but had not eaten any in over 3000 years."

Here is a HumanProgress chart that shows the correlation between the size of the British population and British GDP per capita (in 1990 dollars) from year 1 to 2000. Clearly, population growth, which took off in the 18th century as a consequence of better hygiene and nutrition, is highly correlated to income growth.

Explore more data like this at HumanProgress.org.

NEXT: World Peace

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  1. What an absolute lie. The average american lives are worst: no raises, no security, sky high rents, worthless home values, Gotcha’s, and being shaken-down from american business predators. The whole system is corrupt-banking, policing, healthcare,education, the corporate media and of course elections, all rigged. The Oligarch and Plutocrats are doing fine.

    1. And you, sir, are a liar — by omission. You neglect to even mention those of us who have it worst of all…college students! Everyday we contend with the harshest conditions a human can be asked to face. Our closely-held worldviews are assailed by information that others us and triggers us, we are surrounded by an institutionalized rape culture in which as many as one out of four of us will be sexually violated by an unwelcome look or compliment, and many of us are even incurring debts that we may one day actually have to pay back! And yet you dare talk about the hardship of “average American lives?”

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    2. Those problems have nothing to do with trade or population, and everything to do with onerous government regulations and central bank idiocy.

    3. “…being shaken-down from american business predators….”

      Why, just yesterday, I was grabbed in front of a stationary store, forced to go inside and buy some ball-point pens!

  2. A population of less than 5,000 hunter gatherers divided into 9 tribes after reaching this island over 35,000 years ago. They fell steadily and gradually back into a simpler toolkit purely because they lacked the numbers to sustain their existing technology…

    Finally, someone explains why the lights went out on The Walking Dead.

  3. I’m sorry, but this theory does run up against a pretty solid body of empirical work suggesting that, at least beyond some point, diminishing marginal productivity means lower per capita GDP (i.e. standard of living). Also, to accept this, one would have to explain why China and India aren’t the world’s economic powerhouses with incredibly rich populations. And the historical and anthropological evidence, at least that presented here, does look like it suffers from a causation fallacy.

    1. Easy to explain
      Free trade was disavowed (China) or hampered by protectionism (India)

      1. And if Tupy had focused on the level of (foreign and domestic) trade, I’d almost certainly agree with her. But, then, the claim would be a lot less interesting. Population is a poor predictor of affluence.

    2. His theory only works if you use the word “freedom.” Communicating ideas is important, and the free market is the best way we’ve found so far as a collective to do that, but it’s not the market that drives it. It is freedom to chose how to interact with that market that does.

      Look at it this way: Let’s say the government bans selling eggs in packages of more than two. You now cannot buy one of those large boxes of 25 eggs to prepare for your son having a camp out with friends in your backyard this weekend. It’s incredibly more cumbersome to buy them two at a time, but no one can offer an alternative and see if it succeeds in the market. No innovation, for no other reason than the lack of freedom, even if there is a market ready, waiting, and eager to get the innovation.

      Also, his focus on GDP, while probably one of the only tools he can use for a wide swath of history, is too blunt a tool. A lot of GDP rise came from the introduction of power-magnification technologies during the industrial revolution – and certainly not from the standard of living going up because of those technologies.

      So, i would modify his generalization before I could accept it. Something like: We need people to be able to freely exchange ideas for technology to improve, as well as allowing the lesser classes improve their station (and standard of living) – either by participation and enrichment or by deposing those that seek to minimize their freedom.

      1. I think Deaton uses different (micro) elements to measure prosperity. I haven’t yet read his recent book, but it’s pertinent.

    3. “at least beyond some point, diminishing marginal productivity means lower per capita GDP”

      Um okay. How does this contradict the article?

      1. Accounting for public goods (non-rivalry) could complicate things, but lower per-capita GDP indicates lower per-capita living standard. Then higher population does not necessarily cause higher living standards.

  4. I assume there’s an optimal – limited- population size (correlation does not equal causation, and populations may grow in response to wealth, esp. when there’s redistribution in a welfare system). And GDP isn’t the ideal measure. – By the way, check out Sowell’s Wealth, Poverty, and Politics – An International Perspective, 2015.

    1. I hope I haven’t overstated the negative case. Actually, I think optimal population is probably more something that can only be measured relative to the other factors of production. If you’re adding, say capital and technology (broadly defined) at a faster rate than population, adding more people is going to make you richer. If you’re adding more people to the same capital and technology base, well, that’s a lot less clear. And, under certain circumstances (free markets and free people), population increases probably do add to the pace of technology growth.

      1. I agree with that, Bill. This extends to social (including moral) factors. — I wonder whether extremely large population size makes societies more robust, or more susceptible to catastrophic risks (“black swans”).

  5. The Aboriginal Tasmanians found it easier to live a landlocked hunting lifestyle than a coastal fishing lifestyle on an island, which is a very rare thing. Bone tools work well if that is all you have, but stone if it is around is better at cutting meat.

    IMO They did not need a large population to propagate their society, and it was environmental factors that led to the adoption of a new toolkit.

  6. Holy Hell. All the infographics on that page that are passably intelligible and Reason picks that one?!

  7. Strange that some people can’t take some good news without whining about it. Can’t you at least simulate ‘cautious optimism’?

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  9. To someone that works in manufacturing, this seems obvious. The infrastructure needed to maintain even “simple” technology is actually quite large and spread out.

    Think of something extremely common, like a screw – multiple industries are involved, from mining, chemistry, shipping, industrial machinery, material processing….. no one person can just go out into their back yard, dig up some ore and “make” one. However, with a large industrial infrastructure in place they are produced by the millions each year and are readily and cheaply available.

    1. I, Screw…

  10. I prefer a higher quality of life to a higher standard of living.

    But that’s just me.

    1. The two often go hand-in-hand. Or do you think shitting in the woods instead of using an indoor toilet provides higher “quality”?

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  12. Shed a tear for the poor benighted Swiss, who insist on growing citizens rather than importing them. They must all live in mud huts and eat dirt, according to this theory.

  13. Wow. A great dose of the real world on the “overpopulation” myth. Finally.

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