Population and Economic Growth
Over the last couple years, I have heard a lot of people talking about how our population growth will keep going, until ‘we are with too many’. But the United Nations World Population Prospects has calculated a world population growth rate that has been declining the last decades from around 2% to now around 1%. And predicting the future, considering a medium fertility scenario, the world population will have its peak and decline around 2080 with around 10,4 billion people. Thus the never ending increase of people on this planet will come to an end.
In addition, McKinsey predicts World ‘Gross Domestic Product’ (GDP) growth rates to slow down over the coming years from around 3,8% (1950–14) to 2,1% (2014–64). So in the coming decades we will see a slow down in growth of our population and overall economic growth, and specifically in the European Union.
Elon Musk
Elon Musk also shared his ‘population decline’ concern, saying that “population collapse is a major risk to the future of civilization.” This was a reaction to Reuters who reported that the country’s Social Security system’s central trust fund’s reserves will be depleted in 2033. In addition, Musk mentioned “population collapse due to low birth rates is a much bigger risk to civilization than global warming.” Interestingly, Elon makes a clear link between population growth and financial and environmental sustainability. So, let’s see if we can describe the relationship between population and sustainability growth.
“Population collapse due to low birth rates is a much bigger risk to civilization than global warming.” — Elon Musk
Sustainable Growth
An important change the world is seeing today is the importance of sustainable growth. One core idea to measure an organization’s performance, is looking at the planet, human, social and financial benefits. Broadly speaking, any financial benefits are generated by humans or by our society as a whole, leveraging our planet to create value. Thus the most simple formula to look at sustainable growth, is ‘People + Planet = Profit’. Originally, “profit” refers to “excess produce or gain beyond what is needed for subsistence and reproduction.”
This ‘P+P=P’ formula also overlaps with newer ideas on sustainable development, for example ‘Doughnut economics’, arguing a ‘just space for humanity’ between ecological and social boundaries. Bringing ‘PPP’ and ‘Douhnut’ together shows a potential lack of (‘Shortfall’) consideration of the ‘People’ factor, and an excess (mis)use of the ‘Planet’ factor (‘Overshoot’), creating the excess gain we know today, and which drives global economic growth.
Impact of Stagnating Population
If we analyse a common formula related to economic growth, the ‘Gross Domestic Product’ will traditionally look at expenditures, being consumption, government spending, investments, and net exports to measure economic health. We could argue that a reduction in population can directly influence amount consumed, produced or exported, and the amount being able to spend by governments. For the last factor, the decrease in working population will have a significant impact. If we look at GDP per capita, indicating the standard of living, reduction or stagnation of population could also increase the standard of living, assuming either absolute GDP grows due to efficiency gains, or stagnates, or lastly by revisiting the calculation of GDP altogether.
Conclusion
The ‘People + Planet = Profit’ formula is inherently dependent on our population growth and planetary usage. We now know that leveraging people and our planet must be done in balance. One driver of progress, being continued population growth, will change, and thus another side of the ‘Profit’ coin will need to be explored, a side which is supports a balance between all P’s.
To come back to the original definition of profit, coming from the Latin word ‘profectus’, meaning “progress,” and the verb proficere, meaning “to advance.” We will keep progressing as a society, including broader qualitative measures of progress, driven by technology and innovation, as it has been for our entire human existence. It will force us in the direction of ‘reduce, reuse, recycle, rethink and restore’, being the ‘5 R’s’ of sustainable development.
