Old fallacies die hard. In 1798, Thomas Malthus published An Essay on the Principle of Population, where the disenchanted Anglican cleric shared his fears that unbridled sexual passions had doomed humanity to always return to the subsistence level of primitive hunter-gatherer tribes. At a time when most people on earth were living under some form of serfdom, it was reasonable to forecast such a gloomy future-after all, why would you excel in creating wealth when most or all of the above-subsistence "surplus" would be confiscated by your local lord or taxed away by the state.
A friend of mine, being a computer geek, told me about the ability of his equipment to process the most ludicrous data and produce results. The only problem was that the output information was deeply flawed and often made no sense. My friend called this GIGO, "garbage in, garbage out." The reason why Malthus made the wrong prediction is simple: He started with the wrong assumption that humanity would always live in serfdom. Providentially, with the spread of capitalism over the past two centuries, billions of people have tasted economic freedom. This unleashed the entrepreneurial potential of the masses and brought undreamt prosperity.
Despite the fact that human ingenuity in finding new resources and better ways of creating wealth has kept us well ahead of pressures from the growing population, versions of the old Malthusian "garbage" ideas still circulate in the 21st century. One particular fear arises from the fact that oil and other fossil fuels are limited, and that with our taste for SUVs and ACs we are fast approaching the end of civilization as we know it. Just like Malthus 214 years ago, modern day doomsayers fail to envision how higher prices of diminishing resources will give birth to innovative solutions to our energy problems.
But there is one area where Malthusian analysis is appropriate. To see what I mean, I restate a section of his old essay on population in the following way:
The power of unbridled government growth is so superior to the power of the people to produce goods and services, that political and economic crises must in some shape or other visit the human race. The vices of bureaucracy are active and able ministers of economic ruin. They are the precursors in the great tide of impoverishment, and often finish the dreadful work themselves. But should they fail in this war of extermination of freedom and prosperity, taxes, bailouts, red tape, and stimulus spending advance in terrific array, and sweep off their millions and tens of millions. Should success be still incomplete, gigantic inevitable quantitative easing stalks in the rear, and with one mighty blow levels the domestic currency with the Zimbabwean dollar.