5. What can one man do for the entire economy to make it work?
Labour Force
Labour force is one of the key points in each economy. It consists of a large part of what is
called population. So, the amount and quality of labour force depend largely on the tendencies
that affect population, which, in its turn, influences production.
In the years from 1950 to 1990 the world's population doubled, and now it is over 5,500 billion
people. Only about 14 percent of the population growth was in developed countries, with around
86 percent in less developed countries. In developed countries this growth was caused by
fertility and age distribution, while in less developed countries the main reasons were higher life
expectancies and high birthrates. Life expectancy in developed countries was 74.0 years in
1990 as compared to 65.7 years in 1955 (62.0 and 41.0 respectively in less developed
countries). By the 1900 the birthrate in developed countries fell to 1.9 births per woman. In the
less developed countries it is 3.9 births per woman, which is still high enough to contribute
substantially to population growth.
Lower birthrates and longer life lead to «population aging» which is most rapid in the developed
world. The median age here rose from 28.2 in 1950 to about 35 close to the end of the century.
In less developed countries the median age at present is only around 22.
The fear of population aging leads governments to introduce policies which aim at inducing
people to have larger families (banning contraception and abortion, offering financial aid for
women with babies, etc.)
At the same time many people still fear that global population growth will overwhelm the
capacity of economies, and destroy the global ecosystem. Since Thomas Robert Malthus many
economists believed that the growing number of people would make land increasingly scarce,
and the rising food prices would leave the growing population starve.
The reality showed that those fears were poorly grounded. Cultivated land has become less
important as the agricultural productivity has been boosted by fertilizers, pesticides, insecticides,
new seed varieties, irrigation, mechanical draft power, and education. In its turn this made food
prices fall, and the production per capita rise, quite contrary to the predictions of the former
economists.
Hunger and malnutrition still exist in many parts of the world, but they result more from poverty
and uneven income distribution than from population growth.
To convert population into labour force certain investments into human capital are supposed to
be made. Education, good up-bringing, expenditures of medical and health care are also
capital, as they raise earnings, improve health, and add to a person's quality of life over much of
his lifetime. Therefore, economists consider expenditures on education, training, medical care,
and so on as investments in human capital. Studies show that high school and college
education greatly raise a person's income, and this is true for hundred countries with different
cultures and economic systems.