Why we should by wary of politics of GDP and population

In Thomas Malthus’ groundbreaking 18th Century work on population theory, he postulated 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 population growth in some way, either by preventing early marriages among lower classes, or limiting it amongst the better off, for fear that they could not maintain their standards of living.

Malthus’ 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, Malthus can be credited with the invention of population politics. And as the 2019 Kenya Population and Housing Census continues to generate heated politics of resource allocation, it goes back to Malthus’ works on principle of population. His work was based on subsistence, to a very large extent made up of food.

However, in a food secure world, neo-classical population theory replaces subsistence with wealth. Indeed, population politics, especially in the Kenyan context, is about wealth (who gets what, or who’s turn to eat!).

In fact, more often than not, advancement of the interests of the bourgeoisie one perc ent (who own 99 percent of a nation’s wealth), especially interests concerning the preservation of their prosperity, takes precedence.

In 2018, the Kenya National Bureau of Statistics published a 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 and county levels.

Nationally, poverty lines used were monthly adult equivalent total consumption expenditure per person of Sh3,252 ($32) in rural and peri-urban areas and Sh5,995 ($59) 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 10-year period of 2005/06 and 2015/16, fell by 10 per cent to 36.1 percent, which is quite commendable. Additionally, the bureau noted that while the poverty rate declined substantially, the overall total number of the poor declined marginally from 16.6 million in 2005/06 to 16.4 million in 2015/16. In other words, the pace of poverty reduction has only just overtaken the pace of population growth.

Population control worked, right? It’s a visual thing. How about the transfer of national wealth? I note that in the same 10-year period, national wealth, as measured by nominal gross domestic product (GDP), grew by a whopping 16 percent in compounded terms. In essence, the pace of poverty reduction did not overtake the pace of the nation’s wealth growth.

In furtherance of this illustration, in one of my articles a couple of weeks ago, I plotted a beautiful chart of corporate returns versus wage earnings in Kenya over a 15-year period. The results were stunningly illustrative. And so as I tweeted some days back, you should be wary of people, including the government, who peddle GDP growth as a measure of progress.

It’s simply not. Joseph Stiglitz, the Columbia University economist (a Nobel Prize laureate who once taught at the University of Nairobi), calls it GDP fetishism (probably for a lack of better word). Be wary of GDP fetishists.

Consequently, as the government finalises its fiscal year 2019/20 spending plans and in my ideology, isn’t it time our fiscal policy making placed emphasis on trickle-up economics?