Conceptual brief: The Malthusian Doom

The Malthusian Doom is really problem number one in the study of Economics; not unemployment or The Great Depression or Stagflation. The problem comes in two or three different flavors, the most basic being the simple observation that population has a tendency to compound, and grow in a geometric pattern, while production of necessities has no such tendency and so grows more or less linearly. If a population is growing, its growth tends to actually accelerate, simply because if each couple produces an average of 2.5 children (for example), the following generation is larger, and so the following round of 2.5 children per couple is applied to a larger number of couples, and so the growth is compounded each generation. The danger of this is that eventually such acceleration must cause population to overrun the production of necessities, and starvation begin to hit.

That is the most basic version, in fact I heard it elementary school. In that description, the crisis point seems to be projected way off in the future somewhere. A subtler version of the same problem is to suggest (during the bad times this is sometimes suggested) that we have already hit the crisis point, and that the level of economic hardship in the world is a consequence of population being too great. The implication of this conception of the Malthusian Doom is that we are witnessing population straining to grow higher but being held back by scarcity. This implies that any effort to reduce the scarcity will fail to improve quality of life, but will succeed in increasing population. If a million more bushels of wheat are produced, they will not, in this vision, reduce hunger at all because more mouths will simply be produced to consume that wheat, and we’ll be right back where we started.

To me, the most interesting thing about the Malthusian Doom is how wrong it is about everything. Population does not necessarily grow geometrically; production does not necessarily or even generally grow linearly. The revelation that economic growth is a compounding phenomenon has been a great ray of hope to economists, but it has long been known that procreation is a voluntary function and not bound to behave in any particular way, especially a self-destructive and counter-incentive way. The stabilizing or even declining populations of modern societies unaffected by starvation simply makes empirically obvious GK Chesterton’s remark on Malthus in 1927: “Nothing depending on the human will can proceed by geometrical progression, and population certainly does not proceed by anything of the sort.”

Conceptual brief: Negative Rights

In Idealistic thought about what human rights are, the Negative Rights view is the position that a Right is a moral veto on actions by another, a sacred domain of each individual which no other individual can touch. Obviously this would be the reverse of a Positive Right, or a right which is not a veto on another’s action, but a requirement or entitlement. Freedom of Speech is conceived as a Negative Right by those who say that it means that one must not censor or suppress or interfere with the words of others. It would be conceived as a positive right if we said, say, that Freedom of Speech guaranteed everyone the use of a printing press or a megaphone, meaning that we are morally bound to provide these things, where in the Negative Rights scheme we were only restrained from confiscating or breaking them. The Negative Rights position has a huge practical advantage as part of a philosophy, and that is that it entirely avoids the “Ought implies can” problem you almost immediately encounter with the alternative.

If the Rights of my neighbor are negative, I am unconditionally and entirely capable of fulfilling the moral obligations involved in these rights in every case. I will never be without the resources necessary to withhold my hand from violence against his rights, for withholding my hand is a duty I can perform without even having a hand, without even living. So in that sense the burden of respecting Negative Rights is much lighter than that of fulfilling the obligations involved in a proposed Positive Right; one might say that you automatically owe your neighbor neglect under the Negative Rights scheme, and call that a cynical or selfish view of morality. But consider the real meaning of a law founded on Positive Rights, on the belief that there are specific services a man must do for his neighbor else he breaks the law. If we really did say that Freedom of Speech meant that everyone was owed a printing press, where would one get all those printing presses? It would not be very hard to effectively argue that you were excused from the duty of providing the printing press, because you yourself had none. If we proposed to tax to provide printing presses for those who did not have them, it would not be hard to argue that those in poverty should be excused from the tax, because of the repugnance of snatching away their survival for the sake of printing presses. Yet if we called the Positive Right a right at all, we have proposed that to go against it is fundamentally immoral and an abuse of the individual who goes without a printing press; and in so proposing we have immediately entangled ourselves in a series of exceptions. We have perforated the protections of the right by trying to force it to cover more things than it should. In the end it becomes a real policy question which portion of humanity will be forced to bear the full burden of the rights of others; the universal human right is transformed into a highly specific set of obligations, imposed on specific people. And this is exactly what we see in Progressive thought: Rights are believed to be positive, and as a consequence, the Progressive spends a lot of time telling one group they have an obligation to another group who has no obligation to them. The Rights, which we naturally consider an element of our fundamental equality, are thus made into a weapon for inequality before the law. The Positive Rights scheme, like so many other Liberal thoughts, reaches its full maturity in the form of a monstrous contradiction of the original purpose: The equal and universal Rights of human beings are the basis for preferential and unequal treatment of human beings.

So the Negative Right scheme, though it appears to offer far less in terms of free lunch, free healthcare, free phones, etc. offers far more in terms of the justice which it is the true function of the law to defend. Because the Rights are conceived in an intellectually disciplined way, driven not by sympathy but by a conception of what obligations a human being really can have because he really can always keep them. By demanding of men only what they surely can do, the Negative Right is a much stronger voice as to what they must do.

Conceptual Brief: Cost Displacement

Cost displacement is the general term I’m using for when cost-benefit analysis is confused because a portion of costs are borne by someone other than the person doing the analysis, who may not even be aware of them. We are familiar with this in the form of a negative externality, as when your machine drains its sludge onto your neighbor’s land instead of yours. That is, the familiar part is how you are wronging your neighbor; what we forget is that your cost benefit analysis is going to be totally wrong if you do not account for this cost as a cost. You will incorrectly identify optimal efficiencies because your scale of returns will be using the wrong denominator.

Say you have to choose between using two machines, one which costs $8.00 per unit of production, and another which costs $7.00 per unit of production but imposes a cost on your neighbor which we can estimate at $4.00 per unit. You can see where I’m going with this: Quite apart from having wronged your neighbor, if you produce a thousand units and sell them for $10.00 each, you will be comparing net profits of $2000.00 from the $8.00 machine with $3000.00 from the $7.00 machine. Your return on investment for the run of production on the $8.00 machine will be 25%, for the $7.00 machine it will be over 43%! However, a full reckoning of the costs reveals that the $7.00 machine has a net negative utility: That your run of production has done more harm in the form of externalities combined with normal costs, than it has done good in the form of production and satisfaction of desires. You have actually (if these values are correct) done a run of negative production, as if you were merely out vandalizing things. But because the nominal, partially calculated profits are high, your cost-benefit analysis is quite likely to mislead you into considering the $7.00 machine the optimal, productive method!

Critically, externalities like pollution or accidental consumption of nearby resources are not the only means by which Cost Displacement can occur, leading to incorrect behavior. Subsidies are the other great, unrecognized offender, and I intend to elaborate on both categories in the coming months.