Nov 06, 2019

Be wary of population and GDP fetishists

In Thomas Malthus’ groundbreaking 18th century work on population theory, he postured that the world’s finite resources can’t cope with an increasing population, alluding to the fact that restrictions on population growth are crucial for a nation’s prosperity.

In fact, he claims that no State in history has existed which did not try to limit the growth of population in some way, either by preventing early marriages among the lower classes, or limiting it amongst the better off, for fear that they could not maintain their standards of living. Thomas’ groundbreaking work kicked off a series of population control programmes in the 1960s (some of which left undesired consequences up to date, especially in China and India).

But critiques of his work point to some weakness(es) in his theory; most notably, technological advances in agriculture which have enhanced food security globally. Criticisms notwithstanding, Thomas can be credited with the invention of population politics. Indeed, technology has given birth to precision agriculture, where the practice of farming and has become more accurate (think of a greenhouse where all conditions required for food growth can be artificially controlled in terms of timing and quantity).

And as a heated debate around the results of 2019 Kenya Population and Housing Census continues to swirl, it goes back to Mathias’ works on principle of population. Malthus’ work on population theory was based on subsistence, which, to a very large extent, is made up of food. However, in a food secure world, neo-classical population theory replaces subsistence with wealth. Indeed, modern population politics, especially in the Kenyan context, is about wealth. Who gets what, or who’s turn is it to eat.

In fact, more often than not, the advancement of the interests of the wealthy one percent, who own 99 percent of a country’s wealth, especially interests concerning the preservation of their prosperity, takes precedence. In 2018, the Kenya National Bureau of Statistics published report on Wellbeing in Kenya, which it based on its 2015/16 Kenya Integrated Household Budget Survey. It covered food security, overall poverty as well as extreme poverty rates, both at the national as well as county levels. Nationally, the poverty lines used was monthly adult equivalent total consumption expenditure per person of Sh3,252 (USD32) in rural and peri-urban areas and Sh5,995 (USD59) in core-urban. Persons below the two lines are considered to be overall poor or live in “overall poverty”. In summary, the bureau found that national poverty rates in the ten-year period of 2005/06 and 2015/16, fell to 36 percent, from 46 percent, which is quite commendable.

Further, the bureau noted that while the poverty rate declined substantially, the overall total number of persons living below the poverty line declined marginally from 16.6 million in 2005/06 to 16.4 million in 2015/16. This growth quantum is also higher than the 2.2 percent intercensal growth rate recorded in the 2019 Kenya Population and Housing Census results. In other words, the pace of poverty reduction has only just overtaken the pace of population growth. Did population control work? You make the call. How about the transfer of national wealth? In the same ten-year period when the Wellbeing survey was conducted, national wealth, as measured by nominal gross domestic product (GDP), grew by a whopping 16 percent in compounded terms.

Resultantly, both the pace of poverty reduction as well as population growth did not overtake the pace of the nation’s wealth growth. In essence, the national wealth creation grew faster than population growth, which implies that the per capital wealth should be higher. But does per capita wealth translate into household wellbeing? Of course it doesn’t.

A couple of months back I put out a tweet (on my twitter handle @GeorgeBodo) that you should be wary of people, including the government, who peddle GDP growth as a measure of progress. Because it’s simply not. Joseph Stiglitz, the Columbia University economist (and a Nobel Prize winner), calls it GDP fetishism (probably for a lack of better word). Consequently, it should be a worry that even as wealth creation outpaces population growth, this wealth continues to remain in the hands of few (and the gap between the rich and the poor continues to widen). This also calls for a paradigm shift in some of the country’s economic policies. For instance, Kenya’s fiscal policies over the past five years has placed little emphasis on trickle-up economics and has instead overburdened the working class with taxes. But bottomline, be wary of GDP fetishists.

A summarized version of this article first appeared on the Business Daily’s Market Curve column on January 31, 2019.

Last modified on Wednesday, 06 November 2019 14:38

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