America would be happier if it had more people

Tyler Cowen

Here’s one of the most worrisome economic statistics from a year that was filled with them: In 2021, according to the Census Bureau, the US population grew at the slowest rate in history.

This poor performance was due to slowing immigration, low birth rates, and of course a large number of deaths from COVID. The total population grew just 0.1%, or 392,665. Even measured in absolute terms, that increase is less than during the confluence of World War I and the Spanish flu pandemic.

Inflation and unemployment rates get a lot of attention, and for good reason. But this macroeconomic news should be at least equally worrisome. That’s because, in both economies and careers, it is not just the level of achievement that is important, but also the momentum. The goal is to have a series of ascending successes that push you into successively stronger positions.

For all its flaws, America is a wonderful collection of invented and evolved institutions. It took a lot of work to get here. On the side, it has a relatively low cost to allow more people to enjoy and benefit from the Constitution of EE.UU., its favorable business environment and its nuclear umbrella. In economics terminology, the US is a public good. Allowing more people to reside in the country is like allowing more people to occupy the empty seats in a theater that will present an excellent performance: Why not?

A simple implication is that the more patriotic you are, the more you must believe in a large and growing population. Most of America’s founders certainly had that expectation. Alternatively, you might think that American institutions are unremarkable, as many skeptics have argued, and be indifferent to the size of their population. But to reach that conclusion, it must be denied that there is significant value in the basic American framework.

A growing population also brings practical advantages. Consider the year’s debate on the effect of the stimulus on the inflation. It does not appear, with an inflation rate of 6.8%, that the US has struck the correct balance. With a significantly growing population, macroeconomic policy is much easier. The growing demand from an ever-increasing number of workers and consumers is itself a form of economic stimulus. But these demands are not generally inflationary, because they are offset by more work and higher production. These increases in supply would tend to offset inflationary pressures and would also maintain economic growth. A significantly growing population is a kind of free macroeconomic lunch.

More anecdotally, have you ever visited a city and felt a sense of stagnation and decline? For me, that sentiment is more common in a city that is losing residents rather than gaining them. It seems that there are fewer and fewer restaurants, theaters and even street musicians.

In contrast, the most exciting states, cities, and neighborhoods have many new places and new people. Over the past decade, the three fastest growing states, in percentage terms, are Utah, Idaho, and Texas. I recently visited the last two and felt a palpable sense of enthusiasm and ambition.

The relationship between population and dynamism also holds at the national level, although it is more difficult to see because the decreases are not always so concentrated in a single geographic location. But the mood of a country cannot help but be affected by the number of people it has and its ability to make unique contributions to society.

The US population is not declining at the moment, but it is basically holding steady. That brings its own mood of immobility and complacency. And, let me be so bold as to suggest that, more than most countries, the US relies heavily on its own sense of optimism and growth. Otherwise, how are you going to remain one of the top innovators? How will you pay off all your debts?

The most common argument against a growing population is that it damages the environment. But any potential solution to environmental problems involves innovation, and more people means more potential innovators. It is dynamic and growing societies that are most likely to improve green energy.

Yes, America is depressed, and low population growth is both a cause and a symptom. But this crisis doesn’t have to be permanent, and one way to solve it is to simply make and attract more people happy.