By Martin Hutchinson*
The Trump administration recently announced a substantial tightening of the “public charge” rules by which immigrants drawing welfare would be ineligible for permanent resident “green card” status in the United States.
It was Milton Friedman who had wisely observed: “It is just obvious you can’t have free immigration and a welfare state,” so this is good policy. However, it made me wonder: Shouldn’t the other developed countries apply the same principle on a global basis, and if so, how?
The U.S.’s past record
It is important to point out that Friedman’s objection to the combination of a welfare state and unlimited immigration differed from those of immigration restrictionists.
He did not reject immigration. His ideal was the pre-1914 U.S. immigration system, in which immigrants flowed into the country in huge numbers but received absolutely no welfare services after they arrived.
That system eliminated the welfare costs of high immigration. However, it produced very impoverished immigrant and low-skill ghettos with low wages, even in a society that generally had the highest living standards in the world, or close to them.
Only after the restrictionist Immigration Act of 1924 did U.S. wages at the low-skill end increase. Soon after, the country became a paradise for ordinary working people with limited skills.
Of course, unrestricted immigration, which for such an attractive country as the United States produced very high immigration, also had a distinct direct side effect: It produced a highly unequal society and one with shockingly poor living conditions at the bottom end.
Allowing completely unrestricted immigration, as some voices in the U.S. debate now argue, might increase overall GDP. However, GDP per capita would be diminished considerably and the overall happiness and social stability of U.S. society would be badly affected.
Globally, the same economic logic holds. Rapid population growth produces great poverty in those countries that are presently subject to it, making their societies yet more unequal and even less stable.
However weak the rudimentary social security and unemployment benefit systems are that even relatively poor countries may have put in place today, rapid population growth puts huge stresses on those systems. It impoverishes the society as a whole, preventing spending on other critical needs.
Education in particular tends to suffer if the size of the population is growing rapidly, squeezing the society’s ability to pay for adequate schooling for its oversized population of young children.
Global population growth up again
A dozen years ago, it appeared that the global population problem would resolve itself. Even though the world’s population had increased from 2.6 billion in 1950 to six billion in 1999, projections in the early 2000s showed that the global birth rate was turning downwards.
It appeared that the world population level would peak around nine billion in 2045 or so and would then start declining. In such a case, the economic and environmental costs of global overpopulation would be containable.
As technology improved, one could hope to provide all of the necessary resources for nine billion of the world’s inhabitants with a decent standard of living.
Now alas, that picture has changed. By the latest UN estimates, global population is expected to continue increasing, to 9.7 billion in 2050 and 11.2 billion in 2100.
By any reasonable estimate, whether of global resources or of global satisfaction, whether economic, hedonic or environmental, the world will be less prosperous and more polluted in 2100 with 11.2 billion people than with the current 9 billion.
The extra 2.2 billion people represent a net cost to the entire world, on a per capita basis. Even leaving aside the additional environmental pressures, they subtract from human happiness and make the future of our species more unpleasant and less assured.
As with those immigrants to the United States who presently cannot support themselves, the extra 2.2 billion people will be a “public charge” levied on the rest of humanity.
Quantifying the global costs
We can quantify the cost of this. World GDP today is about $70 trillion. Allow it to grow at 1.5% per annum in real terms to 2100. With a global population of 9 billion, global GDP would then reach a total of $234 trillion, or $26,000 per capita.
Now suppose that the costs of the additional 2.2 billion people are equal to their net benefits, taking into account all the additional facilities they would require and the environmental damage and resource depletion they would cause.
Then, the GDP with the higher population level would again be $234 trillion. However, GDP per capita with an 11.2 billion population would be $21,000.
The cost of the additional population to each of the original 9 billion people would thus be $5,000. And its cost to humanity would be 9 billion times $5,000 or $45 trillion per annum.
That figure, equaling 19% of 2100 world GDP, is far higher than the central estimate of the cost of global warming, even on the United Nations’ alarmist projections.
Whether or not that rough calculation is close to accurate, there are clearly plenty of resources that could be used to reduce the surplus population, which in the aggregate produce little or no additional value in economic terms and impoverishes everyone else.
Applying resources in the right way
The difficulty will be to get resources applied to the problem in an effective way. To avoid abuses by international bureaucracies or violating norms of freedom and individual self-determination, the most effective way to achieve this is to use a multitude of channels and methodologies to reduce global population.
This work should be carried out by individual nations and programs wherever possible, with the private and non-profit sectors fully involved.
Simply put, babies born into a society with a very high rate of population increase are likely to be net drains even on their own societies. These often lack the required infrastructure to educate, feed and house them properly already at the current lower population level.
The potential gain to the world from birth reduction, and especially the direct gain to inhabitants of poor countries with high birth rates, justifies an almost total diversion of resources from other international aid programs.
A reduction in births in a poor country that currently has a pathologically high birth rate and a rapid rate of population growth will produce far greater long-term benefits than infrastructure or even health projects (the latter, however well-meant, often make the population problem worse).
Cash payments and pensions
The most effective way to reduce population pressure in poor countries with high birth rates and poor education systems is through various incentives. To reduce further births, payments should take two forms: A modest cash bonus up-front and in addition a pension benefit, payable from the age of 65 or 70.
In that way, the normal wish of poor country citizens to have large families to ensure a comfortable old age would be circumvented. Participants in this program would enjoy a modestly comfortable old age without leaving the world the burden of a large inadequately provided for family.
By making most of the incentive payment a pension, rather than an up-front payment, the donors would avoid the problem of individuals taking decisions they later regretted because of short-term financial difficulties.
Any such decisions would be truly voluntary. For the recipients, the pension would be guaranteed by a major international bank or insurance company, thus relieving them from worries about changes in political will among the donors.
Poor country host governments should in general be happy to have their population problems alleviated and their pension obligations partially relieved.
Inevitably, there would be a few recalcitrant countries whose governments were hostile to the programs or where civil wars were in progress.
However, this is a clear case where solving 80% of the problem produces if anything more than 80% of the benefit from its solution. Over the decades, the few hold-out countries would see the benefits of participating in population control programs as their neighbors became richer and happier.
Conclusion: A good Trump idea going global
Through application of the “public charge” principle to massive global programs of population reduction, the incomes of poor country inhabitants would be directly increased.
Rich country inhabitants would benefit as well, especially from an enormous reduction in the global demand for resources, species loss and environmental degradation.
This is by far the most useful activity for the rich world’s foreign aid budgets, producing long-term economic and social gains that would generally be a huge multiple of its costs.
*co-author of Alchemists of Loss: How modern finance and government intervention crashed the financial system (Wiley, 2010) and a Contributing Editor at The Globalist. [New York, United States]
** First published in theglobalist.com