Raise the Hammer
Discussing the end of population growth is as politically incorrect as saying the simplest solution to peak oil and climate change is to use less fossil energy, starting with the most oil and fossil energy intense economies and societies.
By Andrew McKillop
Published September 01, 2009
In the 20th Century, world population nearly quadrupled from around 1.55 billion to about six billion. Nobody in their right mind, today, claims it could quadruple this century, to about 24 billion. Population boomers are, however, still at work, most recently the newly victorious Democratic Party of Japan, insisting that restoring or strengthening population growth is vital for the nation and good for everybody. Above all, population growth is claimed as good for 'classic' economic growth.
Unlike the twin challenges of climate change and high priced oil, which are now accepted by mainstream political and public opinion, any argument that even the 'demographic pump' for economic growth is a fallacy has to fight a wall of rhetoric, denial, conspiracy plot theory and politically correct thinking. Proposing ZPG or zero population growth as a vital goal for adjustment to reality and the way to avoid almost certain economic and geopolitical, as well as environmental catastrophe is still dismissed out of hand.
Favorite accusations are that not being in favor of 'robust' population growth is misanthropic, malthusian, racist, anti-family, antisocial, anti-progress and so on. The danger of continued population growth, even at ever lower, ever decreasing annual rates since the 1960s is still rejected by powerful supporters of population boom.
Probably the most basic argument used by ardent defenders of so-called vital, vigorous and exuberant demographic growth is that it almost guarantees economic growth. For governments strapped with rising, sometimes extreme high national debts, population growth seems to suggest future tax paying workers and rising government receipts - if employment grows.
The clear problem for ZPG is therefore set: it appears to set a cap or ceiling on economic growth, or at least state tax receipts, now that an old favorite among arguments for population growth - that it increases the number of footsoldiers for the nation's army - has been relegated to the trash can of military history. Peak Oil and Climate Change are now both admitted as plausible or probable, and above all are big business, but ZPG is still officially anti-economy and not wanted on board.
Peak Oil and Climate Change have been converted to assets for political and business deciders, and their benefits as rallying calls, profit centres and the base for a thousand hedge funds now exceed the time, effort and costs needed for stonewall denying them.
Out and about in the global economy, the late consumer society is now adopting the Green Revolution. Today it is not only socially acceptable, but also profitable for consumers to want ecoaware toys, green homes and apartments with solar roofs, and family saloon cars only emitting 120 grams of CO2 a kilometre, with an electric car coming soon.
All these consumer goods and services, and the employment, profits and taxes they generate flow directly or indirectly from Climate Change and Peak Oil. ZPG however only seems to imply lower tax receipts and declining sales of the latest eco-friendly baby carriage with disk brakes. The consumer public totally approves the spinoffs from climate change and peak oil activism, but are conversely easy to rouse against demographic doomsters.
Climate change and peak oil activists were treated like this until they became assets in generating a hoped-for new consumer boom - and also because climate change and oil resource depletion are simple facts.
The basic rationale for population growth - that it automatically generates economic growth - can be checked in today's rich world-poor world. One simple fact stands out. In 2007-2008 using FAO and IFPRI data, the number of people facing acute food shortage increased by about nine percent to attain more than 950 million. The same year, the last year of what is called 'vigorous' global economic growth before the present crisis, the world economy grew by about four percent using IMF data.
To be sure, this reality can be swept aside as a problem of income distribution, necessitating yet more economic growth to resolve, and more economic growth, politically correct logic affirms is facilitated or generated by population growth. The same type of logic reversals and acts of faith, we can note, have always been a basis for religious philiosophy, for example the agonizing question of the ranks and types of angels and their direct linkage to God, or not.
What the facts show is simple: Economic growth does not at all guarantee that people eat, let alone eat more. The vast majority of starving persons in the world are poor and exist outside the mainly white OECD countries, where food surpluses able to generate serious problems of mass obesity are one food-linked problem.
How the OECD countries are presently and still able to attain or create food surpluses is very simple to explain: they burn a lot more oil than poor countries. Whatever the calls for Green Energy, in the OECD countries of the real world present, OECD national food production in the real world present is totally oil dependent.
In some countries of the OECD, specially Japan, this has attained extreme highs, Japan using an average of more than ten barrels direct oil consumption per hectare of rice production per year. The ransacking of world fish stocks, mostly by OECD countries, Russia and China, is not possible without very intensive use of oil energy.
Producing more food, worldwide, with current technology and current practices would need a very large step up in nonOECD oil consumption - which no OECD leaderships, however pro-baby and anti-misanthropic they may be in public call for at present, or will call for in the peak oil and climate change constrained future.
To be sure global ZPG is an epic challenge. Imagining a future zero emission and ZPG society and economy with oil, gas and coal burning relegated to the antique past is not only fantastic, but would demand a complete change to how economic growth is considered. Diehard defenders of the growth economy, which includes all G20 leaderships for very simple reasons, make a point of seeing no need to limit population growth and mass migration. This is totally unlike their adoption of the ecoaware revolution and their febrile hunting of the Evil Molecule CO2.
In other words ZPG, to them, remains a menace.
Simply because of reality, that climate is changing and world oil production and export supply is either close to peak, or beyond peak, both these subjects no longer get rejected out of hand as doomster talk. In fact, peak oil doomsters and climate change doomsters are now actively recycled as economically valuable lobbyists, able to speed the consumer public's acceptance of economic change away from fossil fuel burning towards a more sustainable, or less unsustainable economy.
However, environmental doomsters who continue singling out population growth as a dangerous scourge with only negative long-term results are still treated as "anti progressive" elements. Upping the rhetoric, most defenders of economic growth treat population activists as edging us towards a modern equivalent of The Fall of Rome.
History shows that it took quite a while, around 40 years through about 410-450 AD, for Rome to fall. Taking 2009 and looking forward 40 years to 2049 places us right in the middle of massive climate change, according to government and official Web sites in almost any country round the world. It also places us near to near total drying-up and disappearance of world oil supply, according to increasingly official Web site and oil company data.
Looking back 40 years takes us to 1969. At the time, not only the Internet did not exist, but more important world population was about three billion less than present-day population. If the last doubling of the world's population from three billion to six billion, had been exclusively of OECD populations, adding three billion more average oil consumers of the OECD group to world population, the question of Peak Oil would no longer have any remaining 'controversy' attached to it. It would have become a permanent headline crisis.
Climate change also would very surely and certainly be far worse, today, than it is. Similar to world merchandise food exports, wood production, metals and minerals supplies, and even cement and stone aggregates, the OECD countries with a current 2009 population of just over one billion consumes a little more than 50 percent of world oil output, over 60 percent of world metals and minerals, and about 70 percent of world wood products and merchandise food supplies.
Adding three billion OECD oil consumers who used on average about 13.5 barrels per head in 2008 to the world's population would raise world oil consumption to about 75 billion barrels a year today. If this had happened in 1960-2000, world oil demand today would be far above twice the actual consumption of around 31 billion barrels a year - and very simply totally impossible to produce.
The same of course also applies to minerals, metals, wood and food supplies. This underlines that OECD style personal and national consumption, plus population growth, only have one read out. Far from being sustainable, combining OECD style consumption and ongoing population growth - the basic driver of the Global Economy - can only generate economic collapse, uncontrolled mass migration or war for resources.
Underlying but unstated in the kneejerk rejection of global ZPG as an urgent priority, by diehard defenders of the growth economy, we have simple fear. How do we feed that many people, let alone build them green cities, or green cars with lithium ion batteries recharged by spinning windmills needing neodymium generator magnets, aligned in massive ranks on a faraway horizon? Will there be enough "Green Energy Revolution" resources, such as lithium and neodymium, to replace oil, gas and coal? Could we replace and substitute the current 98 percent oil fuelled car fleet of about 900 million units with friendly electric cars?
What happens if the new, moderate and reasonable 'consensus' population growth forecasts for 2050, of about 9.1 to 9.5 billion, come true?
This would add about 2.6 billion to the current world population, about two-and-a-half times the current total population of the OECD group. Most of this population growth will be urban. What does history tell us about large urban populations who run out of basic resources?
The world population overhang at the time of Rome's fall in the 5th Century AD was at most small, but was highly urban oriented and specially concerned unsure or inadequate food supplies. Rome's fall, relative to 20th Century barbarity was an "orange revolution" if not a green one.
History shows there was a surprisingly low body count at each visit from Hun invaders, increasingly joined by wandering population groups from all around the western half of the shrinking Roman Empire. Inside the empire's apparatus, the Roman elite had lost contact with the masses, were decadent in the extreme, and would have surely leapt at the chance to supply pesticide laden convenience foods to the masses, to keep them quiet.
Any role of fossil fuel exhaustion or technology change in the Fall of Rome was either 100 percent absent or extremely marginal. Conversely, climate change and environmental mismanagement likely had a large role in the downfall. This increasingly exposed Rome's large population to food supply shortages, which intensified as its population grew and crop yields declined in overworked fields across the Roman region, and beyond.
Today we have a "consensus view" that world population can only go on increasing. This alone shackles innovation because human numbers, and therefore needs, are so high. It is not possible to change anything, or not much, because daily demand pressure on resources, of all kinds, is so extreme high.
Due to this, the logic continues, we need the Green Revolution or "New Industrial Revoloution" but in a rigorously growth-economy context. There can only be minor change of urban and industrial systems, structures and infrastructures, in fact they must be dramatically increased due to population growth - needing strong and stable economic growth to pay the party.
If not, we get disaster. Nobody pretends this will be easy, of course, so the next industrial revolution is described as indeed painful but above all necessary.
The Ancient Roman downsizing alternative surely does not figure on "consensus view" Web sites. These vaunt the merits of the next and green industrial revolution, driving economic growth for decades ahead. This was the verbally gymnastic, but unrealistic and impossible by-line to the G20 London Summit of April 2009, catchily titled : Towards A Global Green Recovery.
Political leaderships of the G20 are to be congratulated as not so far behind their captains of industry, and finance, in polishing up their climate change based, greenwash and green growth rhetoric. Staying ambivalent on peak oil, because any weakness on that front will of course be exploited by OPEC and Wall Street oil traders, they pile on CO2 fear and loathing as reasons why consumers must love windmills, buy solar collectors and change their oil-fuelled car for an electric car the moment these come on the market. Lithium supply problems are for the 'investor community' to play with, that is handy ammunition for cranking up boom-bust market swings for the financial gambling fraternity.
Never on public view is the population bomb that eliminates most options and makes economic growth not a luxury, but a basic need. Most political leaders therefore feel heavily constrained to play correct, and always warmly approve population growth - because they fondly believe it drives economic growth.
However, the bad news for this demographic no alternative is that world population growth rates are falling, and population ageing is an increasing reality in many countries - including the world's most populous country, China.
World population doubled, that is added 3.35 billion or increased by 100 percent through 1965-2005, but not even population boomers who believe that growing population "can only mean" economic growth, are able to suggest more than another 50 percent or 60 percent added in the next 40 years to 2050. Put another way, try finding any talk on the Web, today, about world population attaining 13.4 billion in a "forecastable future", let alone the 25 billion that full-blown 20th Century-style population growth would need.
Without admitting it too openly, population boomers have to concede that population growth as an annual percent rate is slowing, and has been slowing for a long time. Since the late 1960s, as an annual percent rate, world population growth has fallen about two-thirds or 67 percent, but due to the size effect of world population is able to generate a net increase of about 65 - 70 million per year. At late 1960s peak percentage growth rates, more than 3.3 percent a year, the world's population would be growing, today, at around 200 million a year.
The annual percentage growth rate has fallen by 67 percent in 45 years. There is no theoretical reason the other 33 percent or one-third will not also disappear, bringing world population to real ZPG or zero population growth. Put another way, nothing guarantees the 40 percent or 50 percent growth of world population to 2050 that "consensus views" suggest today.
Checking consensus views in the 1990s and 1980s shows how much population boomers have had to tame their rhetoric! Previous "consensus forecasts" of world population in 2050, dating from the 1970s and 1980s, went as high as 14 billion. Few go beyond 9 to 9.5 billion today - meaning that the politically correct future world population of 2050 "lost 4 or 5 billion" in 25 years.
We can compare that with the world's total present population, of about 6.7 billion. This figure can only be given to the nearest 200 million or so, despite pretence to the contrary by agencies such as the US Census Bureau, which claims the August 2009 population is 6.7819 billion, due to census and counting errors and problems, specially in poorer countries, which are not amenable to revision by satellite sensing.
To be sure, Ancient Roman style 80 percent downsizing in 80 years figures nowhere, but world population downsizing needs to be stated as an option. Very few Roman exiles and refugees died on the spot - they voted with their feet, went elsewhere and lived differently, but tended to reproduce slower, with smaller families, afterwards.
This can be a world paradigm for the 21st Century. World population does not have to increase to 2050. It could or might fall 25 percent to 33 percent in the same 40-year period, by 2050. In other words, world population would peak very soon, by about 2015, then start falling. Responsible and pro-active treatment of the population bomb would set out to defuse it the same way China's leaders have done for over 20 years, and seek this end: 25 percent to 33 percent less world population by 2050.
Like the balance between forces and factors raising world temperatures, or lowering them, world population dynamics are anything but set in stone, and as with climate change, tipping points exist. The impact of major downward change in world population growth rates through the next 40 years would be dramatic in the extreme. Outlooks for both oil depletion and climate change could or would radically change, both of them for the better, because there would be more time and more resource capacity per person for the epic-scale adjustment that is coming.
The demographic pump that limits or destroys options would calm down or stop - but the clear and basic collateral dead victim would be economic growth.
One reason the end of population growth is a no-no subject is simple. It is as politically incorrect as saying the simplest solution to peak oil and anthropogenic CO2 emissions is to use less fossil energy, every year, starting with the most oil and fossil energy intense, most energy wasteful economies and societies. That is, the OECD group and a few small population oil and gas exporter countries.
Using less fossil energy is basic to human survival this century, and in the case of oil is a self-fulfilling prophecy simply due to geological depletion. Shutting down the demographic pump of 'classic' economic growth will make this inevitable and obligatory process all the easier.
The problem is economic and decisional inertia, due to religious style belief that population growth almost guarantees economic growth. What we find in all past history, and will find in the near-term future is that when there is population growth but no economic growth, we are in big trouble.
Population boomers like to present themselves as friends of humanity, or at least of the Pope and nearly all religious leaderships. Population boomers go hand-in-hand with New Economy growth fanatics. Their 'elegant' reasoning can be set out very simply. More population, in theory, can only drive down wage costs as more poor people seek work.
This is not the usual way this 'humanist' logic is communicated. In the stirring rhetoric of growth fanatics, dating as far back as David Ricardo, everybody could or might become more wealthier, even the poor, at some glorious far-off time in the future, placed at close to Last Judgement Day for Ricardo's pal Thomas Malthus.
In classical economic theory, when the poor dont find work, those who dont starve will emigrate to where they hope work might be available. Worldwide, simple facts show that emigrants move from poor countries to rich countries. Trying to prove the contrary is a waste of time. Not being able to drive down wage costs in their home country, because poverty, underinvestment and underdevelopment means there arent enough jobs and wages are extreme low, they tend to drive down wages in richer countries.
Added frills to the population boomers' rhetoric includes the innovation that mass poverty and low wages supposedly add to the glorious growth society and economy. Growing population pressure on resources, they say, leads to innovation and economic efficiency.
Cold and simple facts show what really happens when populations get poorer. Innovation stops, environmental resources are depradated, the economy goes to a survival setting, social conflict rises and civil wars start.
This real world impact of population growth and mass migration, which does not surface in the official rhetoric, is grist to the satanic mills and sweat shops of classic capitalism. At times of economic recession and rising poverty, overpopulation is also a good, historic, proven cause of political extremism and world wars. A simple question: would Hitler have been voted to power without the Great Depression?
Overpopulation is also a driver for historic and genocidal mass migration adventures, called "peopling the empty continents", these events being far more destructive than Hun invader visits to Ancient Rome.
What has to be understood is another no-no subject. The near quadrupling of world population in the 20th Century, from about 1.5 billion to 6 billion, was a one-off event. It won't happen again and can't happen again.
Simple math shows this: quadrupling the world's present 6.7 billion population, to 27 billion, would destroy this planet's ecosystems, destroy this planet's forests and soil resources, world fossil energy reserves would disappear in an eyeblink, climate change would slip, or race out of all control, and human populations would collapse.
Knowing that another quadrupling of world population is totally impossible, why not think about cutting present day world population ?
The reason is simple: if world population starts shrinking, or even if it continues slowing, economic growth will likely become an endangered species. The 2008-2009 financial and economic crisis could or might have already 'undermined' growth for some while into the future - but further falls in world population growth would add more certainty to the ZEG (zero economic growth) prospect.
In any case, massive population growth is now receding, simply due to population ageing, soil erosion and desertification, loss of arable land, water shortages, fossil energy depletion and transgenic disease - among others.
We can easily argue the 20th Century population boom was at least equal in unrepeatability, and close linked to the fossil energy boom of the 20th Century. Since the scramble to produce and burn the planet's fossil energy reserves in record time is now coming to be recognized as not only unrepeatable and by definition unsustainable, but also undesirable, this same reasoning and status can be shifted to population growth.
Like peak oil and climate change, calls for changing the population pump that pushes the world to make-or-break decisions on the future of civilization will likely stay underground, then break out to the high ground. This may be sooner rather than later. For decades, climate change and peak oil were politically uncorrect, the subject of controversy, of claims and counter claims, of deliberate disinformation but both finally broke out to the mainstream - and both now make money!
Likewise, calls for action to get global ZPG by about 2015 are more than just a possibility. When we get a fall in oil and energy demand, and economic growth, when these all turn negative, population growth also falls.
This has happened before: in the 1930s. We also know what happened to world politics in the 1930s, the growth of European fascism and nazism being a democratic ballot box favorite, not needed by Stalinist totalitarianism, Japanese imperialism, or US and British colonialism.
These somber forces fought it out in the past, but a remake is unlikely today. The global economy has leveled the playfield, nations have shriveled to antique textbook status, ideologies have shriveled also, and consuming more is the only and universal ethic - meaning classic wars of 20th Century style are unlikely.
Winding down the growth economy while maintaining the sustainale parts of the global economy is not going to be easy. This fact alone makes for continued and determined refusal to publicly consider population options, including controlled large scale migration, but in no way removes the coming obligation to act.
Linked with the cleantech and energy transitions, ZPG can become a key part of transition to sustainability - without ZPG the doomsters still retain a master card.
By matthewsweet (registered) | Posted September 01, 2009 at 12:24:21
Interesting argument undermined by the desperate need of an editor.
By Borrelli (registered) | Posted September 01, 2009 at 15:45:46
If the world were proportionally over-populated, I think it would be much easier to have discussions about population control or ZPG, but in much of the Western world, and especially North America, there is plenty of land and resources yet to be exploited. This is a blessing in many ways because while I understand the need for ZPG, we're still talking about a massive social engineering project that will have vast unforseen consequences.
Though China didn't shy away from implementing population control policies, they had a very poor understanding the long-term cultural consequences of the one-child policy and are now dealing with a fairly large gender imbalance, which itself is a problem since large populations of young males with no job or marriage prospects tend to lead to restive populations. In Japan, population control was similarly needed, and over the past half century the Japanese have brought down birth rates by something close to 20 per 1000, yet this has resulted in a very small youth cohort that will somehow have to support a burgeoning ageing population.
Which is basically to say that dramatically reducing population growth will have its fair share of problems associated with it, and it will be a much larger issue in proportionally over-populated areas of the world where resources are already scarce. Look to learn lessons from Nigeria and nations in the Middle East over the next 20 years to see how they fare.
By Faretheewell (anonymous) | Posted September 01, 2009 at 23:10:43
The interesting thing about China is that now that the policy is into its second generation, with one child policy children having their own children, it has had the side effect of greatly enhancing the value placed upon girl children. This is aside, of course from the dramatic change in emphasis from having many children to support you in your old age, to making sure that the child you do have is as economically advantaged as possible.
The result of restraints in population growth transforming the society in less than two generations from a generally poor, rural and economically backward nation, to a heavily urban, industrial nation and what is arguably the most powerful nation in the world, with the highest production of virtually every type of manufacture, the highest GDP in the world on a purchasing power parity basis, and swiftly buying vast quantities of mines and other natural resource production in other countries.
One can see that policies that reduce population growth in other high population countries may be feared and opposed in certain circles.
By kiwichick (anonymous) | Posted September 02, 2009 at 00:24:27
congratulations on a great article
but is it too late?
crude oil has already peaked ( otherwise why use tarsands and shalerock oil)
therefore the recession we are seeing now is just the entree;
the main course is on it's way
expect global population to collapse to less than 1 billion this century
By kiwichick (anonymous) | Posted September 02, 2009 at 00:29:03
why is the australian gov. paying australian's to have sex?
how can we cut GHG emissions if we keep paying baby bonus's and family benefits (sex subsidy's)
By alrathbone (registered) | Posted September 02, 2009 at 00:51:32
It is known (and taught) that the way to cut population growth is via development, that is to say: Increase education of women, increase economic self sufficiency of families, and reduce child mortality and you lead to free decisions to have less children. If all of the world had the same birth rates as the developed nations, we'd be a lot closer to ZPG. That said, how do we develop the undeveloped world in a manner that does not exhaust the world's resources.
By Capitalist (anonymous) | Posted September 02, 2009 at 09:23:35
@kiwichick
"crude oil has already peaked"
Have you seen this atricle about BP's giant oil discovery today?
www.theglobeandmail.com/report-on-business/industry-news/energy-and-resources/bp-makes-giant-oil-find-in-gulf-of-mexico/article1273012/
Peak oil is utter nonsense.
By Gilar (anonymous) | Posted September 02, 2009 at 12:45:45
Good article. Population trends do not have to be directed as was China's. I expect the world population will peak at 9B in 2015 without coercive government action. And economic growth can be achieved without population growth. Technology not more people gave us the internet. My grandchildren can live in a better world just as I live in a better world than my grandparents.
By The Elephant (anonymous) | Posted September 02, 2009 at 13:50:03
"My grandchildren can live in a better world just as I live in a better world than my grandparents." But can they do it using LESS ENERGY than you use? You use alot more energy than your grandparents.
By A Smith (anonymous) | Posted September 02, 2009 at 18:20:46
Ryan >> Peak oil is a reality, as even your own references clearly demonstrate.
Oil production has been relatively flat since 2004, yet World GDP keeps growing...
www.marketfolly.com/2008/08/world-gdp-vs-oil-production.html
While you may be right about oil production, the evidence does not support the notion that this will affect human capacity for using resources more productively. Do you disagree?
By LL (registered) - website | Posted September 02, 2009 at 19:15:24
I view population growth the same way I view abortion. They're both bad things. But rather than address them with authoritarian-state solutions (whether laws or tax incentives), we need to address the root causes of population growth. So many in the rich countries view children as a consumerist identity projects. So many in the poor countries use children as retirement funds. Where is the pressure coming from?
There is an elephant in the room here. How can you write an article about the intersection of population and the "growth economy" and not mention the word "capitalism" even once?
Capitalism is by definition a growth economy. Perpetual growth is a fundamental feature of capitalism. When growth slows, the system experiences crisis. For capitalism, population growth is the growth of labour power and increased resource consumption is the growth in fixed capital. The capitalist system needs both to continue.
So any talk of a Zero Growth Economy - a steady state economy - leads us inevitably to reopen discourse around socialism.
I know people automatically equate this with a state-run command economy. But "true" socialism - libertarian-socialism - is quite the opposite. It's a community-run, democratic form of economics. It empowers workers and consumers with direct democracy.
This, I would argue, is precisely what we need to handle the ecological crisis. Only libertarian socialism can deal with resource restraints equitably and democratically, and run a steady-state economy, while still offering women and others the chance to educate themselves and improve their lives with the best that industry has to offer.
A Smith's question - can economic growth continue with dwindling resources - is a fundamental one for green-liberals like Ryan. Certainly, some growth can be absorbed by using labour, energy and materials more effectively. (The organization of cities has a lot to do with that.) Consumers can be persuaded to value more immaterial products, like software and entertainment. But eventually, I would argue, the perpetual growth of GDP is going to require perpetual growth of labour (population) and energy supplies.
By JonC (registered) | Posted September 02, 2009 at 21:10:53
GDP is a fictional assessment at this point in time as any increase in the given time frame is the result of debt increase. The below is just debt owed to other countries.
By A Smith (anonymous) | Posted September 02, 2009 at 23:21:04
JonC >> GDP is a fictional assessment at this point in time as any increase in the given time frame is the result of debt increase.
Issuing debt does not automatically increase/decrease the output of goods and services. For example, if you loaned me $1 million to start a tech company, I am pretty sure I would take that money and produce nothing of value. However, if you gave that same $1 million to Johnny Genius, who has discovered a way to make computers for $20 a piece, that debt would be responsible for increasing GDP.
Debt is nothing more than a promise to pay back money that one person lends to another. By itself, debt can't produce one single unit of useful goods and services, all it tells us is that there are people with good ideas and there are other people willing to finance them.
By A Smith (anonymous) | Posted September 03, 2009 at 05:55:23
Ryan >> It's almost as if the former was acting as a (temporary) substitute for the latter
Debt is nothing more than one person giving money to another. External debt is nothing more than one nation giving money to another nation. Because people in this world can't borrow from Martians, the NET DEBT of the world is zero. For every debt owed, there is someone who is a creditor.
Therefore, if our world isn't simply financing growth through external debt (borrowed from other planets), how can you argue that the growth that's being reported is not based on fundamental improvements in productivity.
>> the growth of the period after 2004 was really the inflation of a bubble
Using the exact same source that JonC used...
www.indexmundi.com/g/g.aspx?v=66&c=xx&l=en
Year GDP - real growth rate (%)
2000 3
2001 4.8
2002 2.2
2003 2.7
2004 3.8
2005 4.9
2006 4.7
2007 5.3
2008 5.2
Definition of GDP - real growth rate: This entry gives GDP growth on an annual basis ADJUSTED for inflation and expressed as a percent.
This is how the IMF reported REAL GDP growth from 2004-08...
tinyurl.com/l9toeq
Take a look at Japan's GDP(PPP) ( tinyurl.com/m4bsce ) and compare it with it's oil consumption ( tinyurl.com/kqaduo ). Assuming that you believe that GDP (PPP) figures represent real increases in living standards, it's clear that oil consumption is NOT a limiting factor. Many other countries also follow this GDP/oil consumption pattern, including the U.S.A.
By grassroots are the way forward (registered) | Posted September 03, 2009 at 08:04:03
A Smith: You need to watch this series of lectures.
By JonC (registered) | Posted September 03, 2009 at 08:07:10
To begin, Smith, I would like to point out that you have just argued in favour of governments borrowing money to increase GDP, as in his world, at a bare minimum there is no negative effect, as the net sum is zero. Congratulations.
"Debt is nothing more than one person giving money to another." False, what you've described is a gift. A debt also assumes the repayment of said money and typically accumulated interest throughout the amortization of the debt.
The definition of GDP is GDP = C + I + G + (X − M), or GDP = private consumption + gross investment + government spending + (exports − imports)
I did enjoy how you used "REAL GDP" as if adding the word real in front solidifies your argument. Taking inflation into account does nothing to alter the fact that debts do not factor into GDP.
Despite your personal negotiating in bad faith (lying about your intent for borrowing money), the tens of trillions of dollars lent to countries is spent, and quantifies as the G in the above equation. And yes, the net debt is zero, but the amount owing isn't and again, the amount owing doesn't count against GDP, which is why it's such a horrible indicator in today's world. It would be like you borrowing a billion dollars and calling yourself a billionaire. The issue that has arisen from being a debt owing society is that GDP is a measure of consumption, and we can all consume a little more because of all the money being lent out. Forcing the collection of all outstanding external debts would destroy global GDP (particularly America's). More importantly, for the rest of the world (say Japan), if America in particular) isn't buying all of the crap they make, their GDPs drop off.
As for the martian question, GDP has slowly increased over civilization's history as we've extracted goods not from other planets, but our own, crafted them and exchanged them with one another. The first good would be food, eventually precious stones, then metals. The rapid increases over the past couple hundred years were due to our ability to extract not just objects, but energy from the planet's non-renewable resources. Starting with coal, then oil and uranium.... This increase of energy has allowed machines to do what would have taken the labour of thousands, increasing the margin of profit on a sale. These goods have a nominal cost in some cases no cost) compared to the sale price, and this difference, no matter the resource, has been the driver in economic growth. More recently borrowing with what looks more and more like never repaying, has been the driver.
By JonC (registered) | Posted September 03, 2009 at 13:26:16
From grassroots' link, you may want to specifically skip to this slide http://www.youtube.com/watch?v=3ffRvpPa9...
I knew inflation was altered, but I didn't realize it was that off.
By z jones (registered) | Posted September 04, 2009 at 09:58:42
Awww, A Smith has a sock puppet. How cute.
By A Smith (anonymous) | Posted September 04, 2009 at 15:27:40
JonC >> you have just argued in favour of governments borrowing money to increase GDP, as in his world, at a bare minimum there is no negative effect, as the net sum is zero.
Let's take this slow...
1) Within the world, the amount of net debt is zero. This is because, for every dollar loaned out, there is a person who is being paid back.
2) Loans do NOT create GDP out of thin air. For example, if I loan you a million dollars and you start a software company that goes bankrupt, you will have been responsible for destroying wealth.
In contrast, if I had loaned that same million to someone who runs a profitable software company, I will get paid back with interest.
In the first scenario, the issued debt delivers a bad result, because it's deployment results in products that cost more to make than people are willing to buy them for. In the second case, the issued debt has been a success, because the company can produce a product for less than the value consumers place on it.
3) Governments do not have to make a profit. This means they can invest in projects that cost more than they deliver in benefits and they never have to declare bankruptcy.
>> The issue that has arisen from being a debt owing society is that GDP is a measure of consumption, and we can all consume a little more because of all the money being lent out.
There is nothing inherently wrong with debt, as long as the money being lent out goes to people who can add value to the resources they employ. Otherwise, people would keep everything they earn and good ideas would never get the resources they need to expand.
The key to ensuring that debt is helpful to society, is PROFITS. As long as loans go to people who can pay them back, the amount of debt is irrelevant.
On the other hand, having government bail out banks that fail to deploy resources profitably, is nothing more than rewarding failure.
If society wants more wealth creating investments, what sense does it make to give investment dollars to people who can't add value to the products they produce?
By JonC (registered) | Posted September 04, 2009 at 16:01:33
I love how you take things slow for me and the first point you make I already agreed with. You are a genius. Let me take this slow. Loaning money doesn't count towards the GDP, but spending it does. It doesn't matter if it is spent well. It doesn't matter if I go bankrupt or go bananas. If I spend money, the GDP goes up. So when the government borrows trillions of dollars and then spends it. There are two economic events that occur
1) Money is borrowed 2) Money is spent
1) has absolutely no effect on GDP, 2) counts 100% towards GDP. So borrowing money artificially inflates the value that you use to make your whole basis of argument in the first place. And to remind you of your argument, since you most assuredly are spinning your wheels talking about other random tangents....
"Oil production has been relatively flat since 2004, yet World GDP keeps growing... While you may be right about oil production, the evidence does not support the notion that this will affect human capacity for using resources more productively."
The fact is that an insane amount of money is being borrowed and spent and this is the reason that GDP has marched onwards and upwards. Your rants about government is bad, blah blah blah do nothing to bolster your argument that economic success is unrelated to resource scarcity.
By A Smith (anonymous) | Posted September 05, 2009 at 00:09:17
JonC >> Loaning money doesn't count towards the GDP, but spending it does. It doesn't matter if it is spent well. It doesn't matter if I go bankrupt or go bananas. If I spend money, the GDP goes up.
Imagine there are two island nations that each borrow $1 billion dollars. The first nation takes that $1 billion dollars and builds a great resort and buys a fleet of fishing boats. The second nation spends the loan on imported food and beer. At the end of that year, what nation will have PRODUCED the most goods and services?
Because GDP = C + I + G + (X - M), this means that the first nation will have positive C, I, G (if they want government) and because they also attracted lots of high paying tourists and sold lots of tasty fish, they will have net exports of $200 million. The net result will be a GDP greater than zero.
In the second island's case, (C)onsumption is $ 1 billion, (I)nvestment is zero, G is zero and net exports are negative $1 billion (eXports ($0)- iMports ($1 billion)).
As a result, the second island's GDP is zero.
They end up producing NOTHING, because they didn't work, but only consumed the resources they imported from others who did create wealth.
Therefore, unless debt is used for the production of goods and services, it adds nothing to GDP, because by it's very definition, GDP tells us how much a particular jurisdiction PRODUCES.
By grassroots are the way forward (registered) | Posted September 05, 2009 at 08:59:52
A Smith:
Your second scenerio:
Would not, they, the island have to build infrastruture to hold the beer and food, like warehouses, transportation routes? How about building markets, to sell the food and beer? Would not the food and beer be sold at a mark up?
So some of the money would have to be invested, which would bring a different set of results to the table.
Your first scenerio:
What if there was no more resources such as oil, so planes/boats would not be landing to visit the resort? Or what if their was not enough fish in the seas?
So their projections about a healthy return can go up in smoke, thus not beng able to pay back the money.
By Michelle Martin (registered) - website | Posted September 05, 2009 at 10:02:26
The question "Are there too many people?" is the wrong question to ask, and leads us to look at individuals purely in terms of a cost/benefit analysis, and excuses us from changing our own behaviour where the environment or care for our fellow human beings are concerned. It is as wrong a question to ask as "How can I make more money than I could possibly need?" Both were questions worthy of the likes of Ebenezer Scrooge.
As someone who works with members of a vulnerable population, the potential for this to be the focus for us or for governments worries me. The questions of "How can I best help someone else who needs it?" or "How can government best care for its citizens?" become obscured when the existence itself of individuals is seen to be the problem.
To call Chinese population policies "directed" is surely euphemistic:
http://commdocs.house.gov/committees/intlrel/hfa75761.000/hfa75761_0.htm http://maps.unomaha.edu/peterson/funda/S...
By JonC (registered) | Posted September 05, 2009 at 13:44:04
Even in Smith's stupid case. If the GDP is the same whether the money is borrowed or from savings. Which is the whole point I was making. Borrowing increases GDP.
By A Smith (anonymous) | Posted September 05, 2009 at 15:50:46
Grassroots >> Would not, they, the island have to build infrastruture to hold the beer and food, like warehouses, transportation routes? How about building markets, to sell the food and beer?
That may have been a good idea, but that's not what they did, all they did was import food and beer. As for markets, this island is full of lefties, therefore things are free.
>> What if there was no more resources such as oil, so planes/boats would not be landing to visit the resort? Or what if their was not enough fish in the seas?
What if new technology doubled oil reserves? What if fisherman discovered ways to increase fish yields?
JonC >> If the GDP is the same whether the money is borrowed or from savings. Which is the whole point I was making. Borrowing increases GDP.
This definition of GDP is taken from the Whitehouse.gov website...
www.whitehouse.gov/omb/rewrite/budget/fy2003/bud35.html
Gross Domestic Product (GDP)
GDP is the standard measure of the size of the economy. It is the total production of goods and services within the United States.
Notice how the word PRODUCTION is the unit being measured. It's not how much a society consumes, but how much a society produces. That's why imports (goods produced OUTSIDE the United States) don't add to GDP, but subtract from GDP. If a society sits on it's ass all day and lets other people do the work, how can you say they produced anything?
In the case of the second island population, what exactly did they produce?
Finally, do actually you believe that issuing debt can magically increase the amount of food, beer, roads, buildings, software, without having anybody go to work and come up with new ideas? If everybody in the world stayed at home for a month, how could you buy anything?
By JonC (registered) | Posted September 05, 2009 at 19:09:08
You are arguing with your self. Read every single question you just asked me and then find where I'm providing something contradictory to that.
Now back to the actual issue, you've already agreed to the actual economic definition of GDP (that fancy looking equation thingy above). Government spending counts towards the GDP. The source of the funds is not a factor in the equation. I don't care about your stupid islands. I don't care about ideology or unrelated analogies. If the source of funds are borrowed or from savings, the GDP remains the same. AGREE OR DISAGREE. Just admit it.
By A Smith (anonymous) | Posted September 05, 2009 at 22:03:23
JonC >> If the source of funds are borrowed or from savings, the GDP remains the same.
The only thing that is needed to drive GDP growth is human greed. As long as there are people who want to make profits, there will be smart people who come up with new ways of creating customer value, using less resources.
For example, if the City of Hamilton started trying to make profits using the HSR, this would help drive GDP and it would make Hamilton a wealthier city. This is because, when people strive to make profits, the only way to do it is to keep costs down and customer benefits high. If the city was successful, the profits could be shared with the workers, management, politicians and the taxpayers.
>> I don't care about your stupid islands.
First of all, only the second island is stupid, the first island is awesome. When I buy this island, you will not be invited, unless you apologize and bring a nice gift.
By JonC (registered) | Posted September 05, 2009 at 22:16:14
Glad to see that you agree.
By steady-state (anonymous) | Posted September 08, 2009 at 12:22:53
This article tries to make a point but is way off the mark. When are we going to stop pussyfooting around with the situation and face the reality? To have a population of 6 billion people living a North American lifestyle, we would need ten more planets the size of Earth.
So we have now 1 billion people living in relative comfort while 5 billion live in relative misery. Or would we rather have 6 billion living in less misery? The purveyors of the current growth oriented economy would rather choose the former. Of course, they would also decide who are the ones living in comfort.
We have already overshot the Earth's carrying capacity by a long shot!
Peak oil and climate change are not probabilities.
Peak oil is inevitable. Climate change will occur unless we have dramatic change and that change is inevitable. The change will occur because ZPG and the economy (ZEG) are intertwined. Population will collapse and with it will go the economy. Humans can manipulate the economy but they cannot alter the physical limits of the planet.
Wake up folks!
By davidvanbeveren (registered) | Posted September 08, 2009 at 16:52:19
On the subject of oil resources, the CEO of Total himself anticipates that high costs for non-conventional extraction will constrain supply in the not-so-distant future and has revised production estimates downwards:
By Undustrial (registered) - website | Posted September 09, 2009 at 11:35:35
I simply love the complaint that any drop in population growth will result in a mostly aged-population without enough young people to support them economically, much like what's happening in Japan at the moment.
The argument totally neglects the fact that a proportional bulge in aged population is the natural result of a bulge in young population. At some point, we are either going to have to stop growing as a population, or begin thinking about ways of life which are far more energy intensive - like colonizing the moon, the undersea floor, or perhaps Mars (and honestly even giant floating zepplin-helicopter cities would be cheaper and less difficult than putting even a hundred people on Mars long-term). When we stop going, we are going to need to deal with an aging population bulge...and the longer we put that off, the heavier that burden will be to bear, and the less resources.
The beautiful thing about population control policies is that they just need to be not implemented. I would never, and could never, support the kind of totalitarian controls imposed in China. Time and time again in Japan and all over Europe, as well as Canada...if people are given access to the information and means to prevent children, they will use it. A decent standard of living, medical care, education, and human rights don't hurt, either (and naturally demand lower numbers).
Frank, honest sex education and access to contraceptives can no longer be stifled by political kow-towing to religious fundamentalists. Have a chat with the nurses at one of Hamilton's youth-oriented sexual health clinics about subjects like the influence of Christian fundamentalists at the school board, and you'll see how influential these people really are.
By z jones (registered) | Posted September 09, 2009 at 13:43:19
Well this is interesting, http://www.telegraph.co.uk/earth/environ...
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