I just returned to the United Stats from an exciting short trip to Iran. One thing that grabs your attention more than anything else when you travel to the major cities in Iran is overcrowding, best displayed by chaotic traffic and the proliferation of residential high-rises. Almost everyone complains about this social evil and how the presence of others in big cities like Tehran has made his or her life miserable and how other people do not deserve to live in Tehran.
In other words, they are not shy to express their lack of tolerance for others. They tell you stories after stories about traffic accidents, caused by other careless drivers, and how lucky they feel after returning home from work without being involved in any such accidents. You can see the most visible sign of overcrowding in the streets of Tehran, a colossal number of automobiles moving confusingly, alongside the motorcycles and pedestrians, in any possible directions. Many of them are so noisy in substandard condition.
I was so jittery getting a joy ride from a friend in his brand new Toyota Camry. I asked him, aren’t you afraid of getting involved in an accident? He told me accidents and tickets are the implicit costs of driving your car on the streets of Tehran. A portion of my monthly budget is devoted to such precautionary expenses, he declared amusingly.
In defiance of conventional wisdom, I want to argue that overcrowding should not be viewed as a curse, but rather a blessing. If you decide to live in a crowded city, you do so voluntarily. You enjoy the life amenities that are only available in big cities: restaurants, fast food, cultural events, fancy stores, shopping malls, etc.
You benefit from these amenities at the expense of some inconveniences, and of course higher prices. When I was a student in Tehran nearly 38 years ago, there were no elaborate services that most people enjoy today: fancy electronics, cell phones, SMS, condos, ethnic foods, computers, residential towers. We were lucky to find a typewriter with a delete key so we could erase our mistakes while typing our papers.
People live in bigger cities to earn more income. But, remember the main sources of higher income are other people. We produce wealth and boost our income by using productivity-enhancing technology, and technology is created by individuals. All the life-enhancing ideas originate from individuals.
Therefore, the bigger the number of people who live with you, the better is the prospect for new technology and the greater is the chance for additional income. No doubt, population is the source of technology and economic progress. Only people can discover new ways to transform new ideas into wealth and income generating schemes.
Historically, human life started to improve as soon as we began to live together. We became urbanized, richer and wealthier. We live longer and make more and better products. While we work less, we produce more. Progressive technology enables us to benefit from high-tech products like a refrigerator that can send grocery stores an electronic signal when you are about to run out of milk or meat.
The spillover benefits of population I believe outweigh its spillover costs. However, the advantages of a large population are not automatic. Look at those who live in Dhaka, Bangladesh, or Calcutta in India. Most live below the poverty line. The benefits of population accrue persistently unless improper government policies take them away.
Improper government policies can simply ruin the advantages and create an atmosphere of uncertainty and often chaos. The benefits of creativity and voluntary trade will simply be eliminated. What is left then are the vulgarities of big population. If overcrowding per se was a hindrance, China should be the most backward nation in the word. It is not. On the contrary, it is economically the most flourishing country.
Living in a big city is advantageous not only economically but also otherwise. We like to chat with our neighbors, we borrow things from one another, we do business with each other, and we help one another when a need arises. We draw satisfaction from association. Of course, the only time you wish that I were not living in your corner is when I become a social nuisance, a thief or con-artist, someone who tries to rip you off.
Even though people nag and complain about living in a crowded city, they usually don’t mean it. That is why they live in such cities to begin with. You live in a crowded city because you like the ample of opportunities that exist only in big cities. Doesn’t that mean the crowd? If my courageous brother has eight kids, you benefits from his sacrifice. You gain at his expense. These kids do not make the resources any less available to you. On the contrary, they spend money helping your business, driving the wage rate down, and doing work that many of us don’t want to do.
Whether they are the result of choice or chance, the children are good for the society. They contribute to new ideas; most of them become productive citizens, the future leaders, the movers and the shakers. They contribute to creative ideas, diversity at no costs to the society. All the costs stay with my brother who is responsible for raising them. The resources available to his family will, of course, be divided over a bigger number of kids diminishing the share of each. However, the overall level of resources will not diminish.
In summary, the benefits of more kids are externalized; the costs, however, are internalized. It is, therefore, erroneous to assume that everyone is worse off because my brother has more children. He may be worse off, but society as a whole is not. By having a large number of children, his consumption of resources does not have any impact on his neighbors as long as his kids grow up to be productive; produce and trade. When you contribute to production and trade with others, you make someone better off by giving him/her something that he/she values highly.
The mistaken judgment is that if I were not born, everyone else would be better off. The truth is that if I were not born only the rest of my family would be better off, not anyone else. Everyone else would the same. Unless I am a bandit, my resource consumption has no external cost for anybody in society.
Overcrowding is not a cost to anyone because it is voluntary. You don’t have to live in a crowded city if you don’t want to. Life is like a cell phone, you enjoy it more if there are enough people using it. The more people using their cell phones, the more you enjoy yours. If the only thing I can do is to say “hi” and brighten your day by smiling at you, it is worth to live by me.
Reza Varjavand, PH.D, is Associate Professor of Economics/Finance at Saint Xavier University, in Chicago, Illinois.