Freeman

ARTICLE

Food, Famine, and Free Trade

Ehrlich Fails to See That Incentives Change Behavior

APRIL 01, 2000 by JAMES PERON

For decades population doomsayers have been predicting that massive famines were around the corner. Yet the United Nations Population Fund recently released its report “The State of the World’s Population 1999,” which says, “The world’s population is healthier from infancy through old age than it ever has been.”1 In a press release the United Nations admits that “More people are being fed adequately today than ever before.” In fact, “food production grew from the equivalent of 2,300 to 2,700 calories per person” between 1960 and 1991.

The Population Fund says this is because “Malthus’s theory [of over-population] was overtaken by quantum leaps in agricultural technology which have kept food production ahead of population growth.” In October 1999 the U.N.’s Food and Agriculture Organization said that during the period 1995-97 the raw number of hungry people was 790 million or 13 percent of the world’s population. In 1970 the U.N. said that the number was 918 million, or one third of the world’s population.2

The trends have been in this direction for years, but the doomsayers haven’t changed their tune. While their dire predictions are repeatedly wrong, they have offered up new arguments. The grandfather of the population-bomb hysteria, Paul Ehrlich, even came up with a new definition for overpopulation:

The key to understanding overpopulation is not population density but the numbers of people in an area relative to its resources and the capacity of the environment to sustain human activities; that is, to the area’s carrying capacity. When is an area overpopulated? When its population can’t be maintained without rapidly depleting nonrenewable resources (or converting renewable resources into nonrenewable ones) and without degrading the capacity of the environment to support the population. In short, if the long-term carrying capacity of an area is clearly being degraded by its current human occupants, that area is overpopulated.

Ehrlich adds, “By this standard the entire planet and virtually every nation is already vastly overpopulated.”3

Ehrlich says we know an area is overpopulated when it is “rapidly depleting nonrenewable resources.” But if a resource is being depleted, the price of the resource, all things constant, will rise. The way we know a resource is being depleted relative to demand is through increasing prices.

Ehrlich understood this at one time. In fact, his famous 1980 wager with the late Julian Simon was based on this fundamental economic principle. Ehrlich picked five resources that he said were being depleted and predicted that their prices would therefore increase. Simon said they would decline in price and thus, in economic terms, become more bountiful. After ten years every one of Ehrlich’s choices had declined in price in real terms.

If, as Ehrlich says, resources are being depleted in virtually every country of the world, the most basic laws of economics have to be false. His conclusion can only be true if the depletion of resources somehow leads to a reduction in price.

Ehrlich also claims that a nation is overpopulated when it isn’t self-sufficient. He uses the Netherlands as an example, arguing that since the Dutch import many products and resources, it is wrong to say that “the Netherlands is thriving with a density of 1,031 people per square mile . . . [because this] simply ignores that those 1,031 Dutch people far exceed the carrying capacity of that square mile.” Thus, that the Dutch import beans proves that the Netherlands is overpopulated.4

Trade and Population

With this argument Ehrlich enters the twilight zone. Ehrlich ignores how the Dutch have access to the world’s resources. Were the beans charitable donations given because the growers felt sorry for them? Or did the Dutch exchange something of value for the beans? Ehrlich ignores that trade is a two-way street.

The people of every nation trade with the people of nearly every other nation. We all import some things and export other things. Canadians imports bananas from Panama, and the Panamanians may in return purchase computers built in Canada. Does this mean the Canadians and Panamanians are exceeding the carrying capacities of their countries? Nations are not equally rich in resources just as people are not equally talented. Because of the uneven nature of talent and natural resources, we trade to improve our standard of living.

Nations specialize in much the same way that people do. You may live in a manufacturing community that produces a large number of shoes. It may import grain from communities that have a lot of grain but are short on shoes. According to Ehrlich, this is proof that your community is overpopulated. Thus a tiny farm community that produces enough corn to feed a small nation is considered overpopulated because it doesn’t produce enough shoes for a handful of people.

Ehrlich seems to be condemning the division of labor. Yet, as Ludwig von Mises noted, the division of labor turns the self-sufficient man “into the social animal of which Aristotle spoke.”5 Hostility in a society or world with a division of labor (and resources) is more costly than in a world of self-sufficiency. A world that fails to meet Ehrlich’s definition of “overpopulation” is a world more likely to go to war. As Mises wrote: “Self-sufficient farmers, who produce on their own farms everything that they and their families need, can make war on one another. But when a village divides into factions, with the smith on one side and the shoemaker on the other, one faction will have to suffer from want of shoes, and the other from want of tools and weapons.”6

The very process of complex trade relationships that Ehrlich condemns is to a large degree responsible for the decrease in military conflicts. As the trade boundaries expanded people found it increasingly absurd to make war. Where village once made war on village, free trade meant they now benefited from each other’s existence. They cooperated and prospered. Trade is a process where we discover the mutually beneficial relationships that exist between all peoples and all nations. The division of labor increases the level of productivity of each individual while encouraging voluntary, peaceful cooperation.

The world that Ehrlich yearns for would be a primitive one. By returning to a self-sufficient society without a division of labor, and thereby not “overpopulated,” we would be returning to a time that predates even the dark ages. The mutually beneficial relations between regions and nations would degenerate. The worst kind of tribalism would arise once more.

Opposition to the division of labor and free trade would in fact create the very problems Ehrlich lays at the door of increasing populations: mass starvation.

While we humans are able to mitigate the disastrous cruelties of nature, we are not able to abolish them. We can reduce the death rate but not abolish death. We can increase food production but not abolish droughts or freezes. We are able to handle minor instances of drought or some freezes, but we will still suffer under severe, naturally occurring weather anomalies. In the past when a drought ravished a country the entire populace suffered. The destruction of crops meant mass starvation. Today when a drought hits the American midwest it hurts the farmers’ bottom line and may slightly increase food prices for others, but nobody starves. This is so because most Americans are not farmers. The fact that most American people produce something other than food allows them to trade those products for food produced in countries or regions that aren’t suffering drought. Because the American people aren’t self-sufficient they don’t suffer from famine. On the other hand, the bulk of Africans are peasant farmers producing the foods they consume. If drought hits, they starve. They don’t have other goods and services to trade for food.

The division of labor coupled with free trade allows us to spread the risk of famine. Free trade is like an insurance policy that pools the risk among many individuals. It seems odd that so many people want coercive, mandatory social insurance and are opposed to this much fairer system. With free trade a nation receives the benefits of social insurance without the drawbacks of a coercive system.

The market solves the problem in several ways. First, it spreads the risk so that no one starves but everyone pays a bit more. The increased prices encourage people to consume less or purchase foods not in short supply. The increased prices also encourage increased production by farmers. The reduction in consumption is a short- term solution; increased production is a long-term solution. Anyone who is truly concerned about the plight of the world’s hungry should be in the forefront to encourage the division of labor, free trade, and free markets. But the doom-sayers are, in fact, proposing measures that increase the likelihood of famine.

Ehrlich forgets that in the economic realm man responds to incentives. Human behavior is not set in stone, but can go in many directions. When prices rise humans consume less. But because of Ehrlich’s contempt for economics he can’t understand, or refuses to understand, how economic incentives can change behavior. This is why he says, “overpopulation is defined by the animals that occupy the turf, behaving as they naturally behave, not by a hypothetical group that might be substituted for them.”7

Sheep will graze a field until it is no longer able to sustain them. As they graze there is no change in the price of grass because sheep don’t have a price system. They cannot plan for the future. To Ehrlich human beings are no different from sheep.

It should therefore come as no surprise that Ehrlich has not made one major correct prediction regarding resources, population, famine, and so on. Even psychics have better track records.


Notes

  1. The State of the World’s Population 1999″ (New York: United Nations Population Fund), p. 19.
  2. Associated Press, “Third-World Hunger Slightly Alleviated,” Business Day, October 15, 1999, p. 2.
  3. Paul and Anne Ehrlich, The Population Explosion (London: Arrow Books, 1990), p. 38.
  4. Ibid., p. 39.
  5. Ludwig von Mises, Liberalism in the Classical Tradition (Irvington-on-Hudson, N.Y. and San Francisco: Foundation for Economic Education and Cobden Press, 1985), p. 25.
  6. Ibid., p. 25.
  7. Ehrlich, p. 40.

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April 2000

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