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> I recall being fascinated by these paradoxes caused by wealth and substitution effects

For your intellectual safety, just be sure to exclude "population growth" from your list of effects. People really really seem to hate it when anybody points that one out.

https://en.wikipedia.org/wiki/Thomas_Robert_Malthus

If history is any guide, they'll strawman your "-ism" until even the most general observations about feedback loops and population become twisted into a freakishly specific (and easily dismissed) reinterpretation. Even today, most people think that historical increases in food production since the 1800s "disprove" the Malthusian thesis.

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> Even today, most people think that historical increases in food production since the 1800s "disprove" the Malthusian thesis.

No, what disproves the Malthusian thesis is the simple fact that this...

"humans had a propensity to use abundance for population growth rather than for maintaining a high standard of living"

...is not what we actually observe. Once people are able to have a high standard of living, as they do in the developed world, they start using more abundance for that instead of for population growth. The people on Earth who have the highest standard of living also have the lowest birth rates.

  > "humans had a propensity to use abundance for population growth rather than for maintaining a high standard of living"

Is this quote directly from Malthus? Or did you copy a second-hand source, for which I already warned about ubiquitous phenomenon of erasure-by-mass-strawmanning?

> Once people are able to have a high standard of living, as they do in the developed world, they start using more abundance for that instead of for population growth.

And so far, the only way people are able to have a high standard of living is by making other people far away (or not so far away, in some cases) have a low standard of living.

This is the inconvenient truth of "development." After you finish Malthus, maybe check out Confessions of an Economic Hitman.

In effect, our low population growth is only possibly because we're "exporting" high population growth to the poor colonial satellite nations we rely on.

> Is this quote directly from Malthus?

It's from the Wikipedia article you referenced.

Yes I know. The question was rhetorical.

Point is, don't entrust any second-hand source to paraphrase Malthus. They have pretty much universally been twisted into unrecognizably distorted strawmen.

As I said, this is one of the historically verified perils of going against the intellectual grain. Even if you're right, your opponents will rewrite history (including your own thesis!) to make you "wrong" in the end.

Caveat cogitatoris, friends...

> so far, the only way people are able to have a high standard of living is by making other people far away (or not so far away, in some cases) have a low standard of living.

No, this is not correct. People in the US creating wealth does not at all prevent people in other places from creating wealth, including places from which the US imports resources. Nor does wealth creation in the US require a low standard of living in other countries.

The primary cause of low standard of living is misgovernment. People who are poor are poor because the governments of their countries steal everything, so no one has an incentive to create wealth, and the world community in general allows this misgovernment to continue, and even rewards the corrupt governments (Robert Mugabe was applauded at the UN's world food summit years ago at the same time his people were starving because he and his cronies were stealing all the food for themselves or to sell abroad on the black market). This could be fixed without changing wealth creation in developed countries at all.

> No, this is not correct. People in the US creating wealth does not at all prevent people in other places from creating wealth, including places from which the US imports resources. Nor does wealth creation in the US require a low standard of living in other countries.

Asserted without evidence.

Also asserted in the face of almost utter contradiction with the historical record.

It is true that someone in the US "creating wealth" by baking delicious cakes does not stop someone in a country with lithium reserves from creating wealth through mining.

But it is not true that someone the US "creating wealth" by using cheap local labor, corruption and impenetrable market access to mine that same lithium is not interfering with local wealth development.

> The primary cause of low standard of living is misgovernment.

This is absurdly myopic. Countries with low standards of living generally have GDP levels low enough that even distributing it evenly would not move them noticeably out of the classification. People in the world who are poor are poor because (a) other people have taken resources the poor might have used to improve their own conditions (b) other people have created barriers (social, civic, physical, cultural) to poor people accumulating wealth (c) other people in the world have a vested interest in there being poor people.

Some of that is tied up with governments, some of it is not. Rich, selfish greedy people exist under all forms of government, though some forms of government deal with them more effectively in terms of neutering their ability to negatively impact a lot of people.

> Confessions of an Economic Hitman

That book is a fine illustration of misgovernment and how it prevents people in underdeveloped countries from creating wealth. (And, btw, plenty of the misgovernment is in the US and other developed countries, not just the underdeveloped countries.)

What it isn't is a demonstration that any of that misgovernment is necessary in order for people in the US and other developed countries to create wealth. If all such people were thrown in jail for life tomorrow, wealth creation in the US and other developed countries would go on just fine. In fact it would probably improve, since shutting down the misgovernment would include doing it in the US, where it also impedes wealth creation.

> Malthus considered population growth as inevitable whenever conditions improved

Interesting how the most developed nations have the lowest birthrates. I don't think his findings in the late 1700s have withstood the test of time.

edit: the trend also applies for population growth, not just birthrates

Malthus could not have foreseen the development of the Haber-Bosch process or the green revolution.

He literally did. Read him. Malthus foresaw and mentioned the possibility of improved farming techniques. After all, it's not like improvements in farming hadn't happened before!

In reply to this predictable objection, Malthus..... well, I suppose you'll just have to read it to find out. :)

https://archive.org/details/essayonprincipl00malt

thank you for linking to source material, but I don't think it's very useful to reply with teasers expecting us to read a book to understand one tightly constrained topic of conversation/debate.

Someone already answered that he in fact did foresee developments in food production but that is totally irrelevant to hist point which is: "The power of population is indefinitely greater than the power in the earth to produce subsistence for man"

  > Interesting how the most developed nations have the lowest birthrates.

Hard to say this isn't merely an unstable temporary intermediate state. Low birthrate populations (by definition) are replaced by high birthrate populations, per evolution. Various and growing migrant crises worldwide seem to bear this out.

The usual "solution" offered is that eventually 100% of nations will become "developed." This is probably fantasy anyway, but it's not even clear if this is a biophysical possibility. Thus far, the only way "developed" countries have been able to support their existence is by systemic organized theft of resources from the "developing" countries (this is another thing people really really don't like when you point it out :-D).

> the only way "developed" countries have been able to support their existence is by systemic organized theft of resources from the "developing" countries

No, this is not correct. The way developed countries support a high standard of living is by creating enormous amounts of wealth. That wealth wasn't taken from anywhere; it did not exist before the developed countries created it.

Again, this may or may not be a transient condition...

Currently we create a lot of wealth, but that wealth is highly pinned on farming lots of actual labor of to places with high population/cheap labor and keeping the expensive labor here.

If we are unable to convert those jobs to automated tasks before the standards of living increase in those high population/poor countries then we are going to have a big problem, because there will not be anyone to farm that work off to cheaply (as we see with China starting to purchase cheaper labor from African countries). There will be a massive bout of stagflation at some point.

It's quite true that wealth creation is not guaranteed, and that there are many ways of messing it up.

That does not change the fact that wealth is created; there is not a fixed pool of wealth on the planet that will never change. There is nothing impossible about creating enough wealth to give everyone on the planet a first world standard of living. That doesn't mean it is guaranteed to happen; but it does mean it can happen.

I mean, I can click a button on a computer, and boom, you're a billionaire. But if I do it for everyone, without the corresponding increase in production of things that are wanted then inflation explodes.

Some things like software don't have to follow these inflationary paradigms, but things like land definitely do. This is what I'm warning about that we're running on borrowed time with cheap labor unless we replace it with automation. All your 'wealth' will quickly disappear in inflation.

> I can click a button on a computer, and boom, you're a billionaire.

So you work for the Federal Reserve? They're the ones who are allowed to print money. (Which, as you note, will cause inflation if we don't increase the production of goods and services. But even if we do, it is still a transfer of buying power from those who don't get the newly printed money to those who do. Which means from everyone who isn't a financial institution, to financial institutions. Which is why the financial institutions lobbied to get the Federal Reserve created in the first place.)

> things like land definitely do

I'm not sure what you mean by "inflationary paradigm". Land is one of the few things of economic interest that (a) actually does have a finite, limited supply, and (b) can't be replaced by other substitutes for important uses. But that has nothing to do with inflation. It would be the same if the money supply were fixed forever.

> we're running on borrowed time with cheap labor unless we replace it with automation

Which will happen (in fact it has already been happening for decades now) due to natural economic incentives as labor becomes more expensive (which I agree will happen over time as more people gain access to a higher standard of living). The biggest obstacle to it continuing to happen is, as I said, misgovernment.

Shmaybe, but if you look into it, it sure looks like the "wealth creation" in the West falls primarily into one of the following categories:

- Accounting tricks - e.g. most software-created wealth is here, and it's increasingly apparent that it doesn't improve productivity, but rather diffuse the work so it's hard to track, resulting only in "mysterious", "unexplained" drop of productivity overall;

- Use of natural resource - that one has always been a source of wealth, because it's an actual input to the economy;

- Population growth - i.e. the other fundamental input to the economy;

- Outsourcing approximately all manufacturing to countries with cheap labor and low safety and environmental standards.

I'm sure there's plenty of honest-to-$deity pie growing, but can't think of a single example right now. Agricultural efficiency improvement maybe?

> I'm sure there's plenty of honest-to-$deity pie growing, but can't think of a single example right now.

You must be joking. The US produces a huge quantity of genuine goods and services every year. You buy groceries, right? That's wealth creation. You have electricity in your home, right? (Otherwise how would you be able to post here?) That's wealth creation. You buy clothes, household goods, etc.? I could go on and on. And since we're here on HN, how about all of the software that is created and updated by US programmers? All of that is wealth creation too.

Of course none of this vast amount of wealth creation makes the news, because it's all "dog bites man" so the media isn't interested in it. They'd rather talk about the crooks and the parasites because that's what captures eyeballs. But that doesn't mean wealth creation isn't happening.

Groceries definitely get counted in the same bucket as "natural resources" — the term "primary sector" is the usual term to encompass all extraction & production of raw materials, including farming, logging, fishing, forestry and mining.

Electricity overall isn't much of a "growth" sector, as the total hasn't changed much in developed nations in recent decades, only the sources:

* USA: https://www.statista.com/statistics/220174/total-us-electric...

* Germany: https://en.wikipedia.org/wiki/File:Germany_electricity_produ...

* Poland: https://en.wikipedia.org/wiki/File:Poland-electricity-source...

And even then: if the new stuff is PV imported from China, it's not really western nations doing the wealth creation.

> You buy clothes, household goods, etc.?

I think their point was these are increasingly outsourced…

> how about all of the software that is created and updated by US programmers?

…while these are accounting tricks. (I don't actually agree with this claim, but that is how I read the comment you are replying to).

> Groceries definitely get counted in the same bucket as "natural resources"

Really? You can just go pick groceries out of the ground in your backyard without any processing whatsoever? Because that's what "natural resources" means.

Groceries in your grocery store have gone through a huge supply chain to get there from the point where they are "natural resources". That supply chain is wealth creation.

> isn't much of a "growth" sector

Wealth creation is not the same thing as "growth"; it's much broader. For example, electricity that was produced and used yesterday is no good to you today. More of it needs to be produced because what was produced before got used up. That is wealth creation. Much wealth creation has to happen simply to make up for the wealth that gets used every day to support our lives. That doesn't mean it isn't wealth creation.

> if the new stuff is PV imported from China, it's not really western nations doing the wealth creation

Sure it is. Goods in China are no good to you in the US. Shipping goods across the world is wealth creation.

If you want to argue that maybe we shouldn't trust goods from China, I have no problem with that. But that's a different discussion.

> these are increasingly outsourced

Or automated. That's true. It still doesn't mean these things aren't wealth creation. Trade is wealth creation.

> these are accounting tricks

No, they aren't. Producing software that meets people's needs is wealth creation. (You appear to agree with that.)

> Really? You can just go pick groceries out of the ground in your backyard without any processing whatsoever? Because that's what "natural resources" means.

First: That's what a vegetable garden is, my parents had one. I also enjoy picking fruits off blackberry bushes, and those things are invasive weeds that grow basically everywhere in both city and countryside.

Second: Your statement exceeds the requirement to be in the primary sector of the economy: https://en.wikipedia.org/wiki/Primary_sector_of_the_economy

Note also that TeMPOraL's comment said "primarily", and agriculture composed 0.7% of the UK economy, 1.12% of the US economy, and only 5.9% of the global economy: https://en.wikipedia.org/wiki/List_of_countries_by_GDP_secto...

> Goods in China are no good to you in the US. Shipping goods across the world is wealth creation.

I'm not denying that shipping is on the service-goods continuum.

It's also: (1) not much of developed economies (~5% of USA for all logistics combined, including local transport); (2) not necessarily supplied by the western economies that receive the goods (where does the line get drawn? It's not as clear-cut as, say, looking at who owns the logistics firm); (3) useless in the absence of things to ship; (4) historically speaking, when desirable goods exist but cannot be shipped, the customers move.

> Or automated. That's true. It still doesn't mean these things aren't wealth creation. Trade is wealth creation.

Then you agree with, or are overlooking, the specific caveat "in the West" that was in TeMPOraL's comment?

> That's what a vegetable garden is, my parents had one.

Did you get all your groceries that way? What about people who don't have vegetable gardens? You were claiming that all groceries are "natural resources". That claim is obviously false. If all you are saying now is that some groceries can be thought of as natural resources, since some people grow some of their own groceries, of course that's true, but it's a much, much weaker statement than the claim of yours that I objected to.

> Your statement exceeds the requirement to be in the primary sector of the economy

So what? That has nothing to do with what I was saying. Not to mention that such definitions are arbitrary anyway.

> I'm not denying that shipping is on the service-goods continuum.

I'm talking about wealth creation. If you agree that shipping is wealth creation, good.

> It's also: (1) not much of developed economies (~5% of USA for all logistics combined, including local transport); (2) not necessarily supplied by the western economies that receive the goods (where does the line get drawn? It's not as clear-cut as, say, looking at who owns the logistics firm); (3) useless in the absence of things to ship; (4) historically speaking, when desirable goods exist but cannot be shipped, the customers move.

None of these contradict anything I was saying. (See further comment below about "western".)

> Then you agree with, or are overlooking, the specific caveat "in the West" that was in TeMPOraL's comment?

Neither. First, "Western" countries trading with "non-Western" countries gives wealth to both, not just to the "Western" countries. (For example, a "Western" firm paying a "non-Western" firm to ship goods to the "West" creates wealth for both.) Second, you do know that "Western" countries trade with other "Western" countries, right?

How do you define wealth? From first principles, wealth is just the accumulation of resources used for production: oil, gas, water, lumber, minerals. The next abstraction would be the accumulation of productive labor from these resources: buildings, vehicles, electronics, materials.

How many of these things are the wealthiest nations net exporters of — or at least breakeven on, eg they produce enough for self-sustenance?

> How do you define wealth?

The basic economic definition is that wealth is possibilities: the wealthier you are, the more things it is possible for you to choose to do.

Resources and productive capacity are kinds of wealth, since they make it possible to do things, but not the only kinds.

> How many of these things are the wealthiest nations net exporters of

The wealthiest nations export all kinds of wealth. Wealth is not limited to the narrow view you are taking.

> The basic economic definition is that wealth is possibilities: the wealthier you are, the more things it is possible for you to choose to do.

Never heard of that definition, most definitely not as a basic economic definition. Where did you hear it?

Anyways, if we use your definition of wealth then we must definitely define what "possibilities" in this context mean. To me it seems that there is far less wealth today than in the past. The only possibility for me right now is to sell my time to someone else so that I could ensure my survival. I can't grow my own food since I don't have the money for it. Can't move since I don't have money for it... you get the picture. It seems, by your definition, I'm poor as any man has ever been.

If by "possibilities" you meant how many different beers they have on offer in my local pub then I'm one of the wealthiest people in the world.

> Where did you hear it?

I've given it in an unusual phrasing, but what I've said is equivalent to what you will find in, say, David Friedman's Price Theory.

> we must definitely define what "possibilities" in this context mean. To me it seems that there is far less wealth today than in the past.

Nonsense. To give just one example: say you get a bacterial infection. A century ago your only option was to drink fluids, rest, and hope your immune system could fight it off--which in lots of cases it couldn't. Today you can get antibiotics. As a result of advances like this (and others like vaccinations for common diseases), the death rate from disease is vastly lower today than in the past, because of all the possibilities for fighting disease that exist today that didn't exist then. That is a huge amount of wealth creation.

To give another example: say your family lives across the country and you want to visit them. A century ago you could take a train that would take about a week to get there. Today you can get in an airplane and be there in a few hours. As a result, there are many more possibilities for events, from business meetings to family gatherings, that simply could not have taken place at all in the past. That is wealth creation.

For one more quick example, the discussion we are having now could not have taken place a few decades ago, nor could billions like it. That is wealth creation.

We tend to forget such things because we take our current level of wealth for granted and don't stop to think about the vast number of possibilities open to us that were not open to our ancestors. But they're there, and they represent wealth.

> by your definition, I'm poor as any man has ever been

No, you (and I) are far richer than the vast majority of humans who have ever lived. See above.

Birthrate in the modern world is a choice not a heritable trait for the most part. It’s a consequence of effective birth control.

Are you referring to more efficient food production leading to increased numbers of children (at least surviving ones)?

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