Demographic Growth is Economic Growth by Drew Benson

Thomas Malthus had it all wrong.  He believed that population growth would outstrip the earth’s fixed supply of resources and therefore cause famine, poverty, and starvation.  History proves him wrong as the U.S. population more than tripled during the twentieth century along-side unprecedented growth in living standings. 

Although Malthus was right that the earth has a fixed supply of resources, he underestimated the ingenuity of mankind.  As the population grew, so did the number of innovative minds and hardworking hands.  While resources are fixed, we continue to discover new resources, and we have vastly multiplied the usefulness of old resources.  Malthus discounted the role of the entrepreneur.

Entrepreneurial innovation soared in the latter nineteenth and twentieth centuries.  Advanced farming techniques, such as irrigation and fertilization, have expanded our agricultural yield exponentially.  Also, people are now able to store thousands, if not millions, of pages worth of information on tiny microchips.  Consider how much paper we are saving.  

High rates of immigration allow the American population to thrive and grow.  The U.S. has a population growth rate of 0.915% (World Bank). 

The growing demographics in the U.S. will become increasingly more important as the baby boomers enter retirement.  The United States government has approximately $100 trillion (in today’s dollars) of unfounded liabilities on Social Security and Medicare.  One way, among many, to help remedy this ballooning conundrum is further increasing the rate of legal immigration in order to expand the tax base. 

Here at ITR, we have found a direct correlation between growing demographics and economic growth.  If the U.S. ever decides to reduce immigration rates, it will not bode well for Social Security and the overall economy.