Some good news on inflation – Healthcare Economist

The Economist has an interesting review of the book Superabundance: The Story of Population Growth, Innovation, and Human Flourishing on an Infinitely Bountiful Planet. The book makes an argument that having more people in the world is a positive development, not a negative one. In recent years, China has used the one-child policy to slow population growth; Alexandria Ocasio-Cortez questioned whether having children is ethical because of the added environmental impact.

However, more people mean more innovation, and often more abundance and lower prices than more scarcity. Additionally, larger population has historically resulted in lower prices:

It was the inspiration for a bet between the late economist Julian Simon and Paul Ehrlich, a population alarmist, in 1980. Mr. Ehrlich was certain the world was running out of stuff, meaning a basket of commodities (chrome, copper, nickel, tin and tungsten) would become more expensive over the next ten years. Simon assumed that human ingenuity would unlock new resources, making them cheaper. Simon won the bet.

The authors also show that prices have fallen in recent decades. Instead of attempting to adjust for inflation using government statistics, they use the number of hours worked to purchase a good as a measure of price changes over decades.

The average time price of a basket of 50 commodities, from uranium and rubber to tea and shrimp, fell 72% globally between 1980 and 2018 they exploit are invented. The time price of many manufactured goods fell even faster. In 1997, it took a typical worker in America 828 hours to purchase a flat screen TV; by 2019 it had dropped to 4.6 hours.

But has growing population increased inequality between countries? Authors Tupy and Poole argue that the answer is no.

According to the authors’ calculations, in 1960 a typical Indian had to work seven hours to put rice on the family table, while a typical American had to work one hour to buy enough wheat. For her grandchildren in 2018, those numbers had dropped to 58 minutes and 7.5 minutes, respectively.
In 1960, for example, Indians worked seven times longer to buy groceries; That ratio rose to 7.7 for his grandson, suggesting that inequality has increased. But another interpretation is that the Indian was gaining 362 minutes a day while the American was gaining a seventh of that. “The temporal disparity between the two has decreased dramatically,” the authors judge. “When basic necessities are plentiful, the poor benefit most.”

I look forward to reading the book in the future.