From: lessgovt@gmail.com   
      
   In Defense of Speculation   
   by Max Kummerow, Ph.D., [Reprinted from a World Bank internet discussion, 11   
   Dec. 1998]   
      
   Real estate can be thought of as a part of applied economics. Economics can be   
   thought of as a subset of biology (in that it studies living creatures, namely   
   us). A risk of specialisation that we all face is that we get trapped in our   
   narrow disciplinary    
   perspectives and thus miss important aspects of a broader picture. I've   
   recently read Joel Cohen's excellent book "How many people can the earth   
   support." A discussion of poverty and land should not omit at least a mention   
   of the denominator of the per    
   capita income equation, GDP/population. Since the earth has a finite land   
   area, we should also consider the same denominator in the land/population   
   ratio, whether the numerator is arable land, housing units, or natural   
   resources in general. The most    
   easily controllable variable in the long run is the denominator.   
      
   Population dynamics are clearly one of the most powerful economic forces, and   
   reducing population growth is the sine qua non or necessary condition of   
   economic development in poor countries. Most of the land, land institutions,   
   and land services problems    
   are simpler if there are fewer people. So by the indirect approach of   
   controlling population, a country can dissolve the problems of housing,   
   pollution, political repression, urban sprawl, and poverty that seem so   
   difficult to solve by other means.   
      
   Reproductive behaviour is also a key change agent in rich countries to a far   
   greater extent than usually discussed. Anecdote: Two people in America. 1)   
   Myself--middle class, PhD, employed, one kid, born when I was in my late 30s.   
   2) Rosa Lee (subject of    
   a Pulitzer prizewinning documentary by Leon Dash)--poor, uneducated, on   
   welfare most of her life, 8 kids by age 21, deceased (AIDS) in 1998. This is   
   social change. Rosa has about 50 living descendents, I have one. Run those   
   numbers forward a couple of    
   generations and America will be a poor country. The rich get richer and the   
   poor have children. Different population growth rates are causing dramatic   
   changes in the compositon of the human family and these are closely linked to   
   economic outcomes and all    
   sorts of other issues.   
      
   Classical economic theory makes growth a direct function of labour force. In   
   simple form this leaves out the big investment in human capital needed in a   
   modern workforce. But countries with fewer children per family can invest more   
   in capital goods (   
   including human and physical capital), less in child maintenance. Moreover,   
   slower demographic growth takes pressure off land use and construction,   
   freeing resources for other uses. Slower growth makes it much easier to manage   
   city planning and    
   infrastructure. Resources are freed from building more houses and so can   
   create other capital projects, giving productivity increases that will   
   increase per capita income.   
      
   The history of land use regulation provides an important analogy. When the   
   U.S. Supreme Court ruled (in the 1920s) that zoning is constitutional, Justice   
   Sutherland referred to changing conditions making new institutions necessary.   
   As density of land    
   uses increased, land uses began to impinge more on each other. As   
   externalities became too large to ignore, land use regulations were enacted.   
   In the same way, as human populations have grown, your decisions to have   
   children come to have more effect on    
   the life outcomes of my child. The fact, for example, that 1.3 billion Chinese   
   provide a labour force that works for a few dollars a day, has an effect on   
   prices and wages in the rest of the world. There are many other congestion,   
   crowding, and resource    
   competition externalities whereby your children affect prices paid,   
   opportunities encountered, pollution, congestion, and other aspects of my   
   child's life. Think of this every time your child stands in a queue or   
   competes for a position. It makes a    
   difference whether there are 200 million Americans or 300 million. It takes   
   longer to drive to work, at a minimum. Domestic oil supplies last 20 years   
   instead of 30. And so on.   
      
   As environmental limits are reached or surpassed, economics' tendency to   
   abstract from the real underlying physical processes becomes less viable. E.F.   
   Schumacher remarked that in ignoring environmental limits "the economic   
   problem regarded as solved is    
   not." Everywhere I've travelled around the world, I have observed   
   environmental damage that may reduce long run carrying capacity of the earth   
   for humans. Certainly the damage reduces the diversity, stability, and beauty   
   of our experience. Example: A    
   debate in the journal Science a couple of years ago about whether 5% or 15% of   
   the earth's agricultural soils had already been lost through erosion. A very   
   long list of similar losses, some irrevocable such as species extinctions or   
   depletion of ore    
   bodies, could follow. Humanity can be thought of, at the moment, as performing   
   a set of experiments along the lines of "How much can we change the world and   
   still have it habitable? How much pollution before we get sick? How many   
   threads pulled out    
   before an ecosystem unravels?" The pace of change is too fast, risks are too   
   great and too poorly understood.   
      
      
   [continued in next message]   
      
   --- SoupGate-Win32 v1.05   
    * Origin: you cannot sedate... all the things you hate (1:229/2)