Two posts I’ve seen relate to the idea of if the US is underpopulated and disadvantaged by that. The most readable follows, another here is also interesting. The second post suggests that economic activity will necessaily gravitate to where people are, and that in Asia, not the North Atlantic. Europe and North America only are as big a share of wealth and income as they are through historical accident of making some innovations first, but over time activity will tend to gravitate back to Asia the center of population. None of this mean we’ll be pooerer, but they will be richer relative to us. Finally immigration is a plus not a negative our economy.
A recent editorial in The New York Sun argues that all this political bickering about immigration among Republican candidates misses an important truth: America is actually underpopulated. From the article:
[N]ot a single Republican candidate has spoken up for the idea that America is an underpopulated country. In terms of population density, it is, at 83 persons a square mile, an impoverished country, barely a quarter of the rich density of China, which is running way behind India. America just has enormous room for population growth.
And a desperate need.
What do you think, readers? Is America under-populated? Would Montana and Wyoming, for example, benefit from a few more people?
(HT: Paul Kedrosky)
America, the Underpopulated?
Fri, 21 Oct 2011 14:08:34 GMT
Core and Periphery
But the problem is especially acute for America, and here’s why. Let’s think about Cores and Peripheries. Take a look at this population density map of the world:
Suppose all of those people had the same purchasing power. If you were a factory owner, and you wanted to minimize transport costs, where would you put your factories? The answer is a no-brainer: China and India. Some others in Europe, Japan, and Indonesia. Perhaps a couple on the U.S. East Coast. But for the most part, you’d laugh in the face of any consultant who told you to put a factory in the U.S. The place looks like one giant farm!
It may be that American manufacturing strength was due to a historical accident. Here is the story I’m thinking of. First, in the late 19th and early 20th centuries, our proximity to Europe – at that time the only agglomerated Core in the world – allowed us to serve as a low-cost manufacturing base. Then, after World War 2, the U.S. was the only rich capitalist economy not in ruins, so we became the new Core. But as Europe and Japan recovered, our lack of population density made our manufacturing dominance short-lived.
Now, with China finally free of its communist constraints, economic activity is reverting to where it ought to be. More and more, you hear about companies relocating to China not for the cheap labor, but because of the huge domestic market. This is exactly the New Economic Geography in action.
Sustain Points and the Great Recession
Actually, the story could be even worse for us. There is another interesting feature of the New Economic Geography theory: hysteresis. I.e., history matters. A place that becomes a city will not easily turn back into a farm. There is a "sustain point" in the economic forces that make an agglomeration viable, and as long as a Core region stays above that point, its initial good luck in becoming the Core will keep it safe from turning back into a backwater.
BUT, a severe shock can knock you down below the sustain point. If your Core no longer has a good reason to be the Core – if it remained rich and built-up only because it would have cost too much to move it – then a big recession (or a devastating war, or a natural disaster) will cause economic activity to leave permanently. Think about the permanent shrinkage of New Orleans in the wake of Katrina.
In this light, the Great Recession of 2008-whenever might be a lot more ominous than even the Great Depression. What if this gargantuan shock has finally made it worthwhile for the center of world industrial activity to relocate to the North China Plain, where nature says it ought to reside?
Great Stagnation…or Great Relocation?
Sun, 18 Sep 2011 21:39:00 GMT