Kennon-Green & Co. Global Asset Management, Wealth Management, Investment Advisory, and Value Investing

I love population statistics and studying them. I would have been content (provided I was financially independent) being a sociologist. Back in September, I shared with you a few surprising facts about the population of the United States. Today, though, I was thinking about population and its implications for our understanding of history and economics.
World Population Facts

Modern Day New York Contains 10x the People As Everyone Living in the United States During the Revolutionary War

Think about something for a moment.

  • In 1770, the Colonies of the United States of America had a population of 2,148,100 people
  • In 1770, Great Britain, from which we declared independence, had a population of 6,400,000 people.
  • Today, the New York City Metro Area alone has 22,235,000 people.

That means that, today, the New York City Metro Area by itself contains 1,000% more people, or 10x, the total people who lived in the United States during the Colonial area right before the Revolutionary War was fought.

Even Though The Growth Rate of the United States Population Continues to Decline, More Actual People Are Born

This is one of those areas that trips up folks who don’t understand the mathematics involved in compounding.  If you have 10 million people and you grow 10%, you add 1 million people, right?  But if you have 300 million people and you add 1%, you add 3 million people, or 300% more people even though your growth rate has declined by 90%.  The reason is that you are working from a much larger asset, or in the this case, population, base.

Much has been said about the decline of the growth rate of the population in the United States.  But few commentators seem to note, or even realize, that the actual total human beings in the United States continues to climb.  In fact, since I was born in the 1980’s the population of the United States has grown by nearly 80,200,000 people, or 35.4%.

That means that if our population grows by 1% in a year, the absolute total people in the country expands by more than those who were here during the Revolutionary War.

Roughly 94% of All Humans Who Have Ever Lived Are Dead

As of a few years ago based upon the work of Carl Haub, it is estimated that approximately 110 to 115 billion humans have lived.  That would mean that, based upon the data available at that time, 94% of all humans who had ever lived were already dead and only 6% of humanity was alive on the Earth at the time.  Of course, a very substantial percentage of those people would have been children that died shortly after childbirth or in the first few years of their life back before modern medicine resulted in a much lower infant mortality rate.

If Poverty Were Eradicated and the Standard of Living Around the World Became Equal, the United States Would Only Account for 4.5% of World Economic Activity, Not the 50% It Does Today

If the rest of the world emerged from poverty and had the same average income as the United States, basic mathematics tells us that the total share of the economy for each nation would be equal to its overall population size relative to the global population.  In the United States, that means we would be responsible for only 4.5% of the global economy, down from 50% today, even though our standard of living wouldn’t have been affected at all – not by one penny.

Do you understand the implications?  People who decry the decline of the United States relative to other nations are effectively hoping (and praying) that most of the world remains in poverty.  But we already talked about this in Why the Chinese Economy Is Destined to Be Bigger Than the Economy of the United States.  Personally, I don’t believe economics is a zero-sum game.  I don’t think it is mathematically necessary for children in Indian to go to bed starving on a  stone floor for us to maintain our standard of living.  That’s just not how wealth creation works.