Monday, August 17, 2009

The Plutonian and Economic Growth

Irredeemable #5 by Mark Waid and Peter Krause (2009)

In Mark Waid's series, Irredeemable, former God-like superhero, The Plutonian, goes on a killing spree throughout the world, exacting revenge for a yet unknown series of events that had led him to turn into the world's greatest supervillain. In a recent issue, he ponders the number of people that he had killed so far in his rampage, and concludes that the number is well over 8 million, which includes the destruction of virtually all of Singapore.

What would be the effect of such a large-scale and sudden population decrease on the world economy? Well, we can imagine that the destruction of an entire nation would lead to a decrease in overall labor, which would lead to a decrease in world production. In addition, despite its small size, Singapore is the fifteenth largest trading partner of the United States, and in fact generates much of its revenues from the exports of electronics and chemicals, including petroleum products, food/beverages, telecommunications, transport equipment and others. Further, Singapore has a large biotechnology industry, which includes aggressive manufacturing of pharmaceuticals. With Singapore destroyed at the hands of the Plutonian, this will interrupt the world's trade balance.

Speaking of production, there have been many theories that have attempted to detail the relationship between population growth and economic growth. Malthus, for instance, feared that population growth would lead to the exhaustion of the world's resources, and thus theorized that significant population growth would one day lead to massive famine and death. The Simon-Steinmann Economic Growth Model poses that an increase in total population would lead to increase in total number of researchers, which would produce more innovation yield a greater per-capita income.

Some of the most interesting research, in my opinion, has focused on this relationship. For example, this paper by Charles I Jones of Stanford University points out that this intuition of population growth leading to long-term per-capita growth goes against 20th century empirical evidence of the postwar OECD boom, in which increased R&D was associated with stagnant growth.

Alwyn Young of the University of Chicago proposes a different model to attempt to explain this:

This paper modifies models of endogenous innovation to allow for the possibility that a rise in the profitability of innovative activity could lead to an increased variety of differentiated solutions to similar problems. An increased variety of technologies (e.g., an increase in the number and types of contraceptives) will increase the level of utility of the average consumer. If, however, continued improvement of this increased variety of technologies requires increased research input, a rise in the scale of the market could raise the equilibrium quantity of R & D without increasing the economy's growth rate.

So, one potential impact of the Plutonian's reign of terror is less overall technological innovation. Although research suggests the effects of this on economic growth are dubious, such a large and sudden disintegration of the world's population is almost sure to send a deep shock to the economy. After all, some historians have argued that the Black Death had intensified a recession that had already been underway in the European economy since the beginning of the 14th century. Perhaps the Plutonian's ultimate goal, then, is to conduct a massive empirical study of economics. He could be granted an honorary doctorate.

One thing is for sure, as the Plutonian himself points out...


39 comments:

Michael T said...

I tend to favour the boom result. While the plague did make 14th century "nasty, brutish and short," it also opened the door to the Renaissance. Real wages skyrocketed, the feudal system toppled and was replaced by growing urbanization and eventual development of specie and modern banking. When the door closes on Singapore, perhaps it just opens again on South Korea, or Vietnam.

ShadowBanker said...

You seem to have adopted a common villainous scheme. I think this was the train of logic that Ozymandia used, as did Ra's Al Ghul in Batman Begins.

Doc_Loki said...

The destruction of Singapore would have a number of effects based on its position in the region:
* the island itself would most likely be reabsorbed by Malaysia (or possibly invaded by emigrants from Indonesia)
* Jakarta and KL would probably both experience upticks in tourism (assumiing that people were not scared away, these are the nearest two international airports)
* there would be an increase in piracy in the area, due to lesser patrolling and also the increased attractiveness of the route without docking fees in Singapore.
* Likewise, media piracy, drug trafficking and people smuggling would probably all increase in the area.

And probably more besides, but that's plenty to start with.

ShadowBanker said...

Doc_Loki -- All good points! There's always an increase in drug trafficking when a country is destroyed by a supervillain.

Anonymous said...

What effect would billions of people
evacuating cities in terror have?

ShadowBanker said...

Good idea for a post, anonymous. More curiously, where are they headed? It's not like the Plutonian can't fly anywhere.

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