27 Aug 2015

Go Forth and Multiply

Economics, Shameless Self-Promotion 18 Comments

My latest at FEE. An excerpt:

To illustrate the shortcoming of a naïve natural scientific perspective on these issues, consider an anecdote from my high school years. I remember that my biology textbook asked us to consider a petri dish with a population of bacteria that would double every day. By stipulation, the bacteria would completely fill the dish — and thus hit the ceiling of its “carrying capacity” — on the 30th day. The textbook then delivered the stunning observation that on the day before this crisis, the dish would only be half full. The textbook’s point, of course, was to warn that trends in biology were not linear, and that crises could develop rapidly out of apparent tranquility and abundance.

If my classmates and I learned this principle in high school biology, then presumably at least some traders in the Chicago agricultural commodities markets have thought about it, too. If Earth’s population will grow more rapidly than food production over the next decade, then the spot prices of wheat, soybeans, and beef will eventually skyrocket as the crunch sets in. If the crisis of population growth is “obvious” to academics the world over, then this growth would be factored into market prices and food prices would already be high in anticipation of the future disaster.

18 Responses to “Go Forth and Multiply”

  1. Josiah says:

    Well said.

    • Z says:

      What did the well say?

      • Harold says:

        I was supposed to be a chimney, but they got the plans upside down.

  2. Z says:

    I would say this is correct. When it comes to the growth of organisms, in particular cancer cells, the simplistic model of exponential growth doesn’t really hold true. It’s being accepted in bacterial growth as well. Exponential growth models are gradually being replaced with what are called Gompertzian type growth models.

    • Andrew_FL says:

      The mathematical term is “logistic curve” of which Gompertz is a specific type.

      • Z says:

        Go back to your Caltech library, nerd.

        haha just joking. yeah i specialize in biology, i only occasionally dabble in mathematics if it’s sometimes related to what I’m working on.

  3. Jim says:

    Good article.

    I was surprised there was no reference to what’s going on in the demographics on western countries. Prosperity tends to reduce family size in subsequent generations. I’m not sure why. It seems to make sense though. Large families are required in societies with higher childhood mortality. Now, rather than having 12 kids and spreading a families limited resources across them in the hope that 1 or 2 can carry on the family legacy, families can have only the one or two and dedicate more resources to their maturity.

    Now, we have alarmists on the other side decrying Japan and various European country’s declining population as a problem. At the same time there’s still ZPG crazies demanding a centralized solution and praising China’s one child policy.

    Of course, there’s always the “Idiocracy” problem

    • E. Harding says:

      Adam Smith noted that in his time, richer families had fewer children, but still considered Malthusianism to apply to the general population. As Jaymans points out, idiocracy (for White Americans, at least) has been at least temporarily averted:

    • Harold says:

      I was speculating about this the other day. There are basically two equilibria – low income / low education/ high number of children and high income / high education / low number of children. In the former, parents spend little resources on their children, but instead rely on the children as a source of income for the family. This happens in poor countries. In the latter, the cost of having children is high (if you educate them), so you switch to a low number of children / high cost equilibrium. (Incidentsally, this is one way that child labor laws could in principle be beneficial for children in the future – it could flip the system from one equilibrium to the other).

      In the second model, parents limit the number of children because each one costs a lot, and the survival rates are very high. We are more or less in this phase now in the developed world. People ar delying child bearing and having few children.

      However, what is the next phase? As prosperity increases further, the cost of having children will fall in relative terms. People should be able to afford more children and educate all of them. Since reproduction is a basic instinct, I see no rason why this would not occur.

      So I predict a period of rising birth rates at some point when (if) average wealth rises sufficiently.

      This should be observable already with higher birth rates among the very wealthy. Anyone have any data?

      • Jim says:

        Hi Harold. Like I said, I don’t understand the causation, but the correlation seems obvious; economic prosperity seems to correlate to low to negative population growth.

        I don’t see any evidence for your prediction but I’m no expert and haven’t been looking either.

        Given the evidence it seems like ZPG people ought to be screaming for more economic freedom in the world since that’s the demonstrated means to curbing population growth rates.

        You first paragraph almost sounds like a statement of the “Idiocracy” problem. Thanks to +E. Harding we now can see the deep concern may be unwarranted.

        For those that don’t know what the Idiocracy problem is:

        Starting from here: https://www.youtube.com/watch?v=WTqYftNZ6js&t=31

        … for about 2-3 minutes.

        • Harold says:

          I enjoyed idiocracy when I saw it. Particularly the transmogrification of the coffee chain name. Reveals the sophistication of my humour I suppose.

  4. Transformer says:

    So the EMH can be used to prove that fears about future food production are unfounded, but not that the S&P500 is correctly valued at any given time because of fed monetary manipulation.


    • Andrew_FL says:

      We’re talking about different time horizons, but:

      Bob is specifically stipulating that the information necessary to properly price food is widely known, that it is taught in schools to children.

      The information necessary to correctly price stocks in an environment of monetary expansion has to be discovered. Monetary expansion destroys information. What is so hard about this? Do you think figuring out what the natural rate of interest is is a trivial task? Do you think figuring out prices in general is a trivial task?

      Does EMH vindicate Market Socialism??

      • Transformer says:

        My comment was really meant as a joke in the light of Bob’s posts on EMH and stock market corrections.

        I need to think about it a bit more carefully (this is area where in terms of the pure economics Bob is almost certainly correct) but aren’t current food prices likely to be set in the spot market not the future market ?

        If potatoes sell for $1 a pound, and scientists discover that global warming means that 90% of potato production will be impossible in 100 years time, would that really have a major effect on the spot price of potatoes now ?

  5. Gil says:

    If there’s one thing against more people it’s more people equals less and less value per person. If 1 billion people died in 1850 then humanity would come close to extinction. If 1 billion people died in 2016 it wouldn’t mean much except for the nearest and dearest of the 1 billion. After look at the way Stalin threw away millions and millions of lives to win WW2 because he simply had access to so many people.

    • Harold says:

      This supposes that human extinction would be a loss of value. Oh – I am starting to saound like Z.

  6. Ghost of Christmas Past says:

    Hey Bob, it’s trivial to demonstrate a society at the Malthusian limit without statism: Somalia.

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