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Myles Horton

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Is population growth economically beneficial to a country and its people?

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  • Feb 5 2013: If you can assume a lack of constraints (like resources and power), then population growth and economic growth can grow in tandem. For each new citizen you have an additional labour resource plus an untapped consumer.
    Our monetary system reflects this when capital is extended and paid back with interest. This assumes a growth in the part of the lenders client which ripples through the system.
    However, simple inspection shows this to be an unstable pyramid because of changes in fertility, longevity, increasing health of an aging population, saving vs. investing rates and resource restrictions, you can easily get negative factors.

    There are many positive and negative aspects on the subject, like economies of scale with a rapid population rise creates an extensive transportation system that leads to economic growth, and supply and demand curves shift when the population increase causes shortages of necessary products, a rise in prices with an associated limitation of purchasing power and hardship.

    I don't think our understanding of the complex and dynamic systems we are trying to model is advanced enough to give more than a solid maybe as an answer.
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      Feb 5 2013: interest and growth is not related. get this right.
      • Feb 5 2013: I am referring to a debt based monetary system that requires economic growth to service debt. In the long term, this requires a population growth (somewhere in the world) to expand production to meet the debt servicing obligations.
        If I can quote from the web site "Positive Money" (http://www.positivemoney.org/consequences/environment/)

        One of the greatest pressures being placed on the environment today is due to the need to sustain the required economic growth that ensures the stable functioning of our current economic system. Since the beginning of the industrial revolution economic growth has been accompanied by increased resource use and pollution as well as more general environmental destruction.
        One of the fundamental system drivers that force economic growth on us is the debt based money system. Under this system debt is not a choice – for there to be money, there has to be debt. The system is based on ensuring access to credit (i.e. debt) for government, business and individuals, who all borrow money from the banks. Currently the total debt owed to banks stands at £2.1 trillion. In order for a business or an individual to borrow they are required to present either collateral or evidence of future earnings.
        To then service that debt requires future earnings over and above what is required merely to continue the existing level of economic activity. So economic growth, often in the form of more debt, must accompany debt service. In addition in order to ensure growth, anytime that the money supply contracts or declines, more borrowing is needed to create the additional money required to service the debt and enable economic growth.
        Herman Daly, the eminent economist and environmentalist, expressed this perfectly when he said that:
        We are accumulating more and more debt to finance economic growth, and we need more future growth to repay the debt
        Herman Daly

        Cheers
        Gordb
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          Feb 5 2013: i'm still not sure what you are referring to. i heard the term "debt based" to describe fractional reserve and the money creation process of central banks. but it has nothing to do with growth. or you refer to the fact that governments empty their credit cards, do not plan to pay it back, and hope to grow out the interest servicing costs. these are two independent concepts, and i agree that both are terrible.

          however, none of these are related to loan interest rates. even if we had solid hard money, and fiscal prudence, interest rate would still exist. and vice versa, interest rates do not cause new money creation. just for example, the problem today is that we have too low interest rates. they are artificially lowered by central banks.

          and none of these are related to economic growth. governments promise growth, but that's it. they can't deliver, they are just riding the wave, if there happens to be a wave. currently, there is not. but that does not stop governments to borrow and to inflate. another "sorta" relation would be that inflation sometimes can be disguised as growth. but of course it is not growth in the sense of total produced stuff. it is only nominal, a boom that bursts sooner or later.

          economy can be built on solid foundation. we could have hard money, we could have balanced budgets, we could have free and honest banking system. we could have unlimited growth in the quality of life. and to a certain limit, we can support much more people on this planet. all it takes is technology. and to have technology, all it takes is time and effort.
      • Feb 5 2013: A debt based monetary system just means that money comes into existance with the issuing of credit and the acceptance of that credit to for a debt.
        Fractional reserve banking is just a simplistic ponzi scheme and we can ignore it for now.
        Interest rates require that the debt plus a little bit extra is paid back to the lender to discharge the debt. This is usually done by charging more for the product and reducing profit, becoming more efficient or assuming more debt.
        Eventually you will run out of efficiencies and expansion is required. When you think about it, how many business say "we are just the right size and don't want to grow" There is always the desire to open a branch in a new city, franchise, expand the current plant, etc.
        This type of expansion requires more workers to man the new business ventures which is reflected in population growth.
        I don't mean anything that. Perhaps its wrong but I have always thought that in the long term, interest payments on debt would always drive up population but not by any funtional relationship (i.e. interest rates go down, the population falls, etc). Its just that the existance of interest drives population growth, either through fertility rates or by immigration.
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          Feb 5 2013: so you were talking about the fractional reserve. it is a legalized scam, no arguing here.

          but interest rates mean nothing you imply. it is easy to simply simulate it with gold coins and imaginary participants, and you can see that it is all perfectly balanced and round.

          of course there are many implications, for one, there has to be losses. some people will lose some, in order for others to earn more. all this, of course, is in money turns, because everyone wins additionally as the economy produces more stuff, so everything becomes cheaper.

          also the desire to expand does not mean that everyone expands. some firms want to expand, but they are not able to, and shrink. the total number of employees, obviously, will not grow. you make the mistake to look only the successful companies, and overlook the failing ones.

          it is advisable to look from the other side. we have X people willing to work, and let's assume that this number slowly increase due to population growth, and slowly decrease due to increased demand for leisure. the result is some slow time variation of X. meanwhile, standing capital grows, thus the product of one work hour grows, thus the consumable product per capita grows. and within these boundaries, we have the "creative destruction", that is, jobs, companies, products constantly appearing and disappearing.

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