Tuesday, November 11, 2014

The Distributionist Mirage

If someone breaks into your house and steals all the copper wire and water pipes, they can make a quick profit by selling it for scrap.  However, fixing the damage will cost you much more than the profits of the thief.  Taking the profits from the thief and giving them to you would not undo the harm.  A similar effect occurs with forced population increases.  If the rich engineer a population explosion they will make great profits, and also greatly increase the inequality in their society.  But you can’t fix this by redistribution of wealth, because there is not enough to go around.  The math does not work.  The maldistribution of wealth is a symptom of the creation of mass poverty, and a few rich benefit from this inequity, but the inequity is not the prime cause, nor can poverty be eliminated via purely redistributionist mechanisms.

In the year 2010 India had a record grain harvest of 235 million tons.  The population of India is currently about 1.2 billion.  Per-capita annual grain production is therefore about 0.2 tons, but 0.3 tons is the minimum for subsistence.  This is inexact: it ignores non-grain food production and fishing, but grain is the main source of calories, and the bottom line is that India does NOT have vast amounts of food poorly distributed.  It has very little food that is, for now, surprisingly well distributed.  Certainly there are a very small number of extremely wealthy people in India, but if you take all that they have and distribute it uniformly, it would be like adding a drop of water to the Pacific Ocean. 

Yes, India can import food, but that is not guaranteed, and what happens if the entire world becomes like India?  Will we solve the problem of not enough food by redistributing from wealthy Martians?  This doesn’t make sense.  The bottom line is that modern agricultural production is not a limitless magic trick, populations really are pushing up against the limits, and the core problem is not a lack of equitable distribution.

Meanwhile India’s food production is being threatened with a draining of the aquifers and topsoil erosion, suggesting that future harvests may actually fall, yet the population continues to grow by about 20 million new people a year, and population growth in other countries is making imported food harder and harder to come by.  Maldistribution of resources within Indian society is not the problem.

It is important to remember that food production has almost no relationship to human labor.  Plant growth is limited by fresh water, fertilizer and minerals, soil, warmth, and sunlight.  When there is very little land per person, a farmer can grow just barely 0.3 tons of grain for each living member of his or her family.  When there is abundant land and other resources, a single farmer can easily grow many hundreds of tons of grain.  The plants do the work.  Automation only allows a single person to manage a lot of plants: automation applied to subsistence farmers cannot make the plants grow faster.  Increasing a population does not allow more food to be grown, it just increases the number of mouths to be fed.  If the population of India was just the 150 million that it was at the end of WWII, total food production would be about the same as it is today…   only per-capita production would be very much higher.

If someone has no food, eventually they will die of starvation.  That will happen.  However, everyone who has ever died of starvation has done so with some reserves of fat still remaining.  The human body is a wonderful machine, but it cannot distribute resources with 100% efficiency.  In fact, as the body nears collapse, the efficiency of resource distribution will fall.  Does this mean that if the human body could distribute resources with 100% efficiency, people could live without food?  That’s silly.  If we could magically make the human body 100% efficient at allocating resources, it would prolong the life of a starving person by perhaps a few hours or days, but they would still starve.

If we could magically take a third-world society and make the distribution of food 100% uniform it would boost the level of the poorest people for a while.  But the increase would be so small that it would likely be wiped out by just a year or two’s population growth.  It’s not the solution.

In every society where people are dying for lack of food – or more typically, are chronically malnourished - there is still some food left somewhere.  And as societies collapse, the distribution typically becomes worse: transportation breaks down, people start hoarding what little they have, gangs of thugs steal from people and eat more than their share.  But this does not mean that if we could make the distribution of resources 100% equitable – which is impossible - that people could live without food, or that famines are always caused by poor distribution and never by not enough food. 

There may well be times that the distribution of food is so inefficient that it is a primary cause of hunger (the Irish potato famine comes to mind, where significant quantities of food were exported even as people were starving).  By analogy, there are diseases of the human body that can so distort the distribution of resources that a person can biologically starve to death even with plenty of food.  But this does not mean that, just because there is still some food left while people are badly malnourished, the primary cause is imperfect distribution.

Liberals often say that the way to solve poverty is to reduce income inequality.  Quite apart from the fact that this won’t work if there is not enough to go around even with 100% equitable distribution, how do they think that just making noises about inequity will solve anything?  If you really want to reduce inequity you need to do something other than beat your breast about it.  Ultimately the only sure way to reduce inequity is to create a tight labor market.  This, and this alone, will produce powerful market forces putting more money in worker’s pockets and less in their employers.  In the long run the only way to do this is to make sure that the population does not grow too quickly.

Moderating population growth helps to ensure that there is plenty to go around, and naturally increases income equality.  Too-rapid population growth ensures that there is not enough to go around even if resources were uniformly distributed to everyone, but also grossly increases inequality as a side issue.  Little things like tax policies, labor unions, etc. can nibble around the edges of this problem but cannot in the long run overcome supply and demand. 

This author is not opposed to moderating income inequality.  While in principle a rich person who invents a new industry could be said to have fairly earned their wealth, in practice people with great fortunes inevitably come to game the system, and to simply bribe politicians to shovel more of the public wealth into their pockets.  It’s easy to sing the praises of capitalist competition, but honest competition is hard, and when it’s your fortune that is at risk somehow free enterprise is only for little people.  Many others far wiser than this author have pointed out that moderating (not eliminating) income inequality in a society can prevent the accumulation of large fortunes that distort and corrupt politics.  It is possible that reducing income inequality may also reduce the incentive and power of the rich to drive down wages by forcing population growth.  Ideally, if everyone works for a living, then there would be no incentive to destroy the value of labor…  BUT reducing income inequality cannot create prosperity when there is not enough to go around, that’s impossible.

In summary: reducing income inequality may well be a good thing (at least as long as it does not proceed to eliminate reasonable incentives for hard and effective work).  But reducing income inequality can not overcome the poverty that comes from too-rapid population growth: rather, reducing too-rapid population growth is the single surest way of reducing income inequality.  Which is why the rich work so hard to jam in ever more people.

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