The Resurrection of Malthus: Jeffrey Sommers Professor of Political Economy & Public Policy Senior Fellow, Institute of World Affairs The Resurrection of Malthus: space as the final escape from the law of diminishing returns

’Nasty, Brutish and Short…’: Secular Stagnation and life before 1800

Energy Revolutions

Robbing Thomas Malthus: Industrialization and Defeating the Law of Diminishing Returns: 1780-1980

1970’s Crisis: Stagflation and Supply-Side Solutions Structural limits Exogenous shocks (oil and decolonization) Arguments: Economy was investment starved Top marginal and capital gains tax cuts needed to increase savings that would translate into investment Redistribute income upward, as wealthy don’t spend increased income/wealth, they invest Did it work? Did investment rates increase resulting in greater economic growth?

Economic Orthodoxies meet Secular Stagnation Low interest rates = high rates of investment High savings rates = high rates of investment Above inoperable Currently interest rates are near zero, yet investment is low Savings glut, but investment rates low Savings flow to assets, not investment

Finance Profit as % of all Corporate Profit

US Corporate Profits as % of GDP vs. Wages

US Govt. R&D

R&D Public vs. Private Private Sector R&D often Fictitious (Tax Write-Off, or only Applied Research)

In short, economies starved of demand and investment In 20th century, governments supported emerging expensive technologies as customers, e.g., aircraft. Government then becomes the major funder of new technologies as time horizons to profit, not to mention, risk, become too great for business to support. Austerity in 21st century is cutting public research precisely at point when it needs to increase.

Need for an Investment Turn? Restore Infrastructure (physical and human) Demand-side economic policies Re-balance what John Kenneth Galbraith termed society’s technostructure Discipline finance Re-direct resources to space investment

Conclusion We Risk Returning to the World of Pre-1800, if not pre-1500. In short, market fundamentalism risks returning us to the world of Thomas Malthus. Space-led investment might prove the escape from the gravitational pull of the law of diminishing returns.