I’m been spending quite a bit of time recently contemplating why UK productivity growth has been slow in the recent decade and how we can boost economic growth over the next few decades. Marxists are ready at hand with their narratives for subdued growth and whilst I think most of them are hugely debateable they are on to something when they wonder whether the traditional engines of capitalist innovation might be slowing down.

Those of us who believe in the power of markets and what Deidre McCloskey I think calls Innovatism (the power of enterprise and new ideas to effect change) need to think long and hard about new processes and ideas which might boost growth. And, on a side note, distance us from the deep Greens who think economic growth per se is a danger and that we need to slow down and become more sustainable. That path will, ironically, almost certainly make us miss climate change targets and guarantee the planet warms up even faster (probably because of the emissions produced by ravaging armies fighting over what’s left of the resources). The transition to net zero carbon emissions needs to be powered by innovation, growth and capitalism, not state planning and dirigisme.

Anyway, these sorts of discussions are happening in some circles and I would thoroughly recommend the emerging discipline of Progress Studies if you’re after an analytical take on productivity, innovation and growth. This weird hybrid discipline has a libertarian tinge to it – though there are some token optimistic lefties including some who believe in automated luxury communism – but it’s a powerful body of thought that looks both at past economic growth in the Western world plus future trends and tries to work out how to build a wealthier, more satisfied society. One of the people engaged in that discussion is Caleb Watney who recently started a blog called Agglomerations which is shaping up nicely.

Today he has what is in effect a book review of Matthew Yglesias’ One Billion Americans. My copy is on its way, but I heartily recommend Watneys review of the book here – https://www.agglomerations.tech/taking-one-billion-americans-seriously/

The block buster idea is that America would be a much richer, happier, better place if there were 1 billion Americans – there are currently 328 million. There is a huge range of arguments kicking around in this ‘liberal-left’ book but one key insight is that more people is better! And that many more older people versus younger people is also better. As Watney summarises towards the end of his review  – “An America with fewer kids becomes an older, risk-averse population that starts fewer companies, produces less innovation, and finds itself play-acting the same political and cultural fights that dominated when its population was younger.” And I would substitute the USA for UK in that description.

Without having the benefit of reading the book quite yet, one insight is that the US has very low population densities – around 35.7 per square km. If the US could get to the German level of 240 per sq km, then it wouldn’t be a stretch to fit those extra 600 million people into new cities throughout the south and mid west! Organic population growth helped along by better family friendly policies may help a bit but if we are honest the main pathway to that bigger number, a desirable number in the view of the book, is immigration. Lots of it.

Back in the UK we have 66.65 million citizens today. A story in the Daily Mail imagined   hitting 70 million by 2030  and I can imagine that throughout the Southern suburbs horror was being expressed.  “Can you imagine the roads, and the dental surgery waiting lists!”.

That horror will in part be based on the realisation that UK population density is already high at 275 people per sq km, and 281 in England. And I guess around 450 to 500 in Southern England.

At which point let me introduce a heretical thought. If we want the UK to prosper even more maybe we should be much more ambitious about the UK population? Taiwan has a population density of 670 people per square km. Japan is at 347, coastal China probably much higher – my guess is that Guangdong province is above 600.

So, here’s my heretical suggestion. Let’s target a UK population of 100 million citizens by 2050, with much of the growth by immigration and family friendly policies. Let’s accept that population density will grow inexorably in the UK, and especially England and take seriously the Levelling Up agenda – make it cross party. Let’s get Manchester to 3 or even 4 million people, Leeds to 3 million, Birmingham to 5 million (here speaks a Midlands boy) and the greater London area to 15 million. Let’s understand from a policy perspective what is needed and let’s also think beyond the Covid agenda – at some point this horrible virus will fade from view and although the excited talk about central London dying a slow death from outward emigration will vanish from view.

We need to build up and out whilst also protecting as much of the Green belt as we can. Let’s embrace the idea of the UK becoming the largest nation by population by 2050 – Russia on current form will be well under 100 million by that date.

From an investment perspective this line of thinking would suggest a relentless portfolio focus long term on

• Big house builders who will get ever bigger
• The residential renting sector via PRS funds
• UK e commerce. All those urbanised, suburban and ex urban folk will devour more consumer products but will choose to use the internet to deliver those services

On this reading, population is destiny and marry that with capitalist enterprise and state assisted innovation, and you have the potential ingredients for above average sustained economic growth and the emergence of automated luxury liberalism here in the UK.

At which point I can imagine a whole host of completely legitimate critiques, violent disagreements and sheer hostility to these heretical thoughts. Lots more immigration. More crowded infrastructure. Less societal cohesion. More young people. The horror!

But the cynic could imagine a future where climate change is making life inexorably more awkward for many people in equatorial regions. By contrast places the UK will probably be one of the least bad places to live in this steadily warming world by 2050. If we believe the Extinction Rebellion scare mongering, we will have tens of millions of people on the move, and if that is the case I can guarantee where many of them will want to head to. The UK. So, whether we want this future or not, we may end up with it. From an investment point of view, I think its time to think the consequences through in a thorough way. I’m willing to bet we’ll have 100 million Brits by 2050 whether we like it or not. Are you ready?