Study Reveals Link Between Global Trade Imbalances and Population Density

 

As judged by the balance of trade expressed in per capita terms, thus adjusting for the sheer size of each nation, the effectiveness of the United States’ trade policies ranks near the very bottom of the nations of the world.  (See U.S. Trade Policy Ranks Among World’s Worst.)  Since the near-total collapse of the global economy last year, most economists who once shrugged off the effects of global trade imbalances now admit that these imbalances were the root cause of the collapse and can’t be sustained. 

The biggest trade imbalance has been between the U.S. and the rest of the world.  In spite of the best efforts of American manufacturers to get leaner and become more competitive, the trade deficit has been worsening for decades.  It begs the question whether there are factors at work that make these trade imbalances inevitable in a free trade environment. 

In Five Short Blasts,  I used U.S. trade data to argue that disparities in population density are a major (if not dominant) factor behind the U.S. trade deficit in manufactured goods.  But if population density is a factor, then the same impact on trade should be evident in the trade data for all nations of the world.  Densely populated nations should tend to have trade surpluses in manufactured goods while more sparsely populated nations should tend to have trade deficits.   To test my theory on such a global scale, I’ve completed a study of trade data for all nations of the world, using trade data provided by the CIA in its World Fact Book.   I began by breaking down the trade balance into exports and imports.  The following spreadsheets rank the exports and imports of all nations* in per capita terms:

Exports Per Capita, All Nations    Imports Per Capita, All Nations

You can see that the U.S. ranks 46th out of 154 nations in terms of exports per capita, and 118th in terms of imports.  But I soon realized that the top of the exports chart and the bottom of the imports chart were dominated by wealthy, developed nations.  That’s why I included the per capita Purchasing Power Parity (PPP, roughly equivalent to per capita GDP) for each nation in the charts.  To determine whether wealth was a factor, as logic would seem to suggest, I plotted x-y scatter charts for each:

Exports vs PPP Chart    Imports vs PPP Chart

As you can see, the wealth of a nation has a powerful influence on the volume of its exports and imports.  It makes sense.  A wealthy oil-producing nation, for example, may export oil in exchange for imports of manufactured goods.  A poor nation, on the other hand, has little to sell and, thus, has little money to buy.  That’s why this effect wasn’t evident when we looked only at the overall trade balance.  A poor nation is just as likely to have a balance of trade because it has nothing to sell or buy as a wealthy nation that exports and imports a great deal while maintaining an overall balance.

Therefore, it becomes necessary to confine our analysis of trade to developed, wealthy nations in order to avoid having other influencing factors muted by the wealth effect.  So I chose to confine my analysis to those nations with purchasing power parity (PPP) per capita (roughly a measure of GDP per capita) of $25,000 or greater.  (For reference, the U.S. had PPP in 2008 of $47,500.)

The following spreadsheet ranks the balance of trade of the 31 nations with a per capita PPP greater than $25,000. 

Trade Balance Per Capita, PPP GT 25K

I included a column with each nation’s balance of trade in oil and natural gas because I noticed what seemed to be a strong correlation.  High-lighting the net oil-exporting nations in yellow, it becomes easy to see the effect.  Like the effect of wealth, the effect of oil isn’t surprising either.  Naturally, those nations that export huge volumes of oil and gas are going to have favorable trade balances.  (As an aside, I found it interesting that, among developed nations with a deficit in oil and gas, America’s deficit, when expressed in per capita terms, is rather mundane – about the same as other nations.)

Since natural resources tend to be distributed unevenly around the world, trade in resources is vital and beneficial to all.  What’s really important is how nations use trade in manufactured products to offset deficiencies in natural resources and to maintain an overall balance of trade.  Unfortunately, no data for manufactured goods is available.  (If it is, I haven’t found it.)  However, I know from my experience in analyzing U.S. trade data that oil and gas tend to dominate trade in natural resources.  Subtracting them from the overall trade balance usually yields a pretty good approximation of trade in manufactured products.  So, using the CIA’s data and subtracting oil and gas from the overall trade balance, the following is a ranking of developed nations’ balance of trade in manufactured goods:

Manf’d Good Trade Balance, PPP GT 25K

Because my goal in analyzing this global trade data for manufactured goods was to determine whether or not there is any evidence of population density having an effect, it was here that I included the population density data.  And a relationship seems to jump out at you when you compare the population density of the nations at the top of the list (those with the most favorable balance of trade in manufactured products) to those at the bottom of the list.  (Here I should note that the overall population density for this group of 31 nations combined is 30.4 people per square kilometer.  The United States is almost right on this figure, at 31.3.  But the only proper way to determine whether a relationship exists is to plot the data on an x-y scatter chart and then have the computer generate a trend line.  A flat line indicates no relationship while a sloping line indicates the presence of a relationship.  Here’s the chart:

Manf’d Goods vs Pop Density

There is a fairly strong relationship evident.  But the slope of the line is somewhat muted by the presence of what is known in statistics as an “outlier” – a data point that is so far out of the range of the other data points that it’s statistically insignificant.  In this case it’s Qatar, the world’s champ in oil exports, at least in per capita terms.  Qatar exports so much oil that it has no need whatsoever of producing anything else.  They simply kick back and enjoy the good life with a PPP that far exceeds that of any other nation, net oil exporters included.  So, if we delete that data point, the chart changes as follows:

Manf’d Goods vs Pop Density2

Now the trend line conforms more to the data.  And if we were to eliminate Ireland, the data point at the other extreme end of the scale, but not quite an outlier, it’s easy to see that the trend line would conform to the data even more closely. 

It’s also important to note that by confining this analysis to developed nations – those with per capita PPP exceeding $25,000 – I excluded the most dominant player in world trade today:  China.  If China’s data point were included, it would fall right on the trend line, with a population density of 140 people/sq km and a balance of trade in manufactured goods of $351. 

It’s impossible to overstate the significance of this relationship.  Because economists adamantly refuse to give any consideration to the role of population growth in economics, they have completely overlooked the relationship between population density and per capita consumption, and its ramifications for trade.  (To learn more about the relationship between population density and per capita consumption, see “the theory explained” category on this blog.)

Finally, it’s worth noting here that population density also plays a role in driving trade imbalances in oil.  Very densely populated nations tend to be net oil importers, forcing them to export even more manufactured goods in order to maintain a balance of trade, combining with the effect of population density on their low per capita consumption.  High oil consumption and low domestic consumption of manufactured products team up to make such nations heavily dependent on exports of manufactured products. 

Summary and conclusions:

1. The balance of trade of the U.S., a nation with a low population density relative to most other nations, ranks near the bottom of all nations.
2. Global trade is dominated by oil and gas.  Oil exporting nations use their profits to purchase other natural resources and manufactured goods.  Oil importing nations export manufactured goods to fund their purchases of oil and gas.
3. How successful a nation will be in using manufactured goods to maintain a balance of trade is heavily influenced by its population density.  The effect is real and significant. 
4. The practice of free trade between two nations grossly disparate in population density is very likely to result in a trade deficit in manufactured goods for the less densely populated nation. 
5. Failure to account for the population density effect in global trade policies will likely result in sustained trade imbalances. 

—————————————–

* Small island nations, whose economies are dominated by tourism, are excluded.  Tiny city-states are included in their surrounding or neighboring countries.  (Example:  Hong Kong is included in the data for China.)

Population Growth Injected into Carbon Cut Debate

 

http://www.reuters.com/article/GCA-GreenBusiness/idUSTRE59B2OX20091012?sp=true

As reported in the above-linked Reuters article, at least one low-level government official recognizes that projected U.S. population growth will make America’s goals for reducing carbon emissions much more difficult.  Brian O’Neill, a scientist at the U.S. National Center for Atmospheric Research, who also works at the International Institute for Applied Systems Analysis in Austria, has correctly observed that projected population growth makes carbon emissions reductions more difficult for the U.S. compared to some other developed countries where their populations are stable or declining. 

The leaders of the G8 nations have agreed to cut carbon emissions by 2050 by 80% from their 1990 levels.  Some of these developed nations are expected to decline in population by 2050, but not the U.S., whose population is projected to be 60% higher in 2050 (at 400 million people), vs. its 1990 population of 250 million.  So an 80% reduction in those emissions by 2050 would translate into a per capita reduction of 87.5% for the U.S.  For nations whose populations are projected to decline, their per capita reductions would be less than 80%.  This will translate into a lower standard of living for Americans than for other developed countries. 

Why is O’Neill talking to Reuters correspondents about this?  Is he a rogue low-level official speaking for himself?  Or is he parroting thinking that he’s heard at higher levels in his organization?  Or is it possible that this is an intentional move by the Obama administration to inject the subject of population growth into the carbon emissions debate? 

If the latter is the case, then to what end is the administration broaching this subject?  Two possibilities come to mind.  Since virtually all of our population growth is due to immigration, could it be that the administration is setting the stage for a dramatic change to immigration policy?  The second possibility seems more likely to me – that the administration is trying to shift the focus of carbon emissions reductions to a per capita basis instead of total emissions.  If so, they may think that the U.S. can get some relief on its own emissions goals vis-a-vis other G8 nations, but there’s a danger that such an approach could back-fire.  If total carbon emissions reductions are translated into a per capita basis, then it would be logical to apply the per capita figure evenly to all people of the world.  In such a scenario, U.S. emissions would have to be cut much further, since vast numbers of people already exist at far lower levels of per capita emissions, and population growth projections for many third world countries is even worse than the projections for the U.S.  In other words, if everyone gets to emit their fair share, then U.S. emissions will have to be cut much more drastically than 80%, a level that many already believe is simply unattainable. 

My interest in all of this is, of course, not so much reductions in carbon emissions, but the pressure that this subject brings to bear on the need to reduce our population.  Since economists don’t understand that reductions in our population would actually have huge economic benefits, we’ll all be better off in the end whether the impetus for population reductions is economic or some environmental concern.  The good news here is that, as much as environmentalists would like to keep the population factor below the radar, it’s beginning to be openly discussed.

Finally, the article ends with a quote so egregious that I can’t let it pass without comment:

David Satterthwaite, of the International Institute for Environment and Development (IIED), said … “It’s consumption that drives dangerous climate change, not population.” … “There is at most a weak link between population growth and rising emissions of greenhouse gases.”

Anyone who would make such a statement is being disingenuous, to put it mildly.  The rise in greenhouse gas emissions is directly related to the growth in population over the past couple of centuries.  Even a fifth-grader can understand that total emissions is a function of population times the average per capita emissions.  Only a fool would focus solely on per capita emissions while discounting the role of population growth.  Stabilizing and reducing our population is critical to achieving our goals for greenhouse gas emissions reductions.  If reduced enough, it could also have the side effect of providing a huge boost to the standard of living for everyone.

Pets in Japan

Thanks to my wife for taping Sunday’s episode of “CBS Sunday Morning,” which was devoted to the subject of animals.  I watched it last night.  One of the segments covered what seems to be a new phenomenon in Japan – pets.  As it turns out, it’s a perfect example of my theory at work – an example I hadn’t thought of but could have predicted if I did – so I thought I’d share it with you. 

It’s hard to believe that something as simple having pets – so ubiquitous in American society – has only more recently caught on in Japan.  Now everyone there wants one.  But there’s just one problem.  A large percentage of the population lives in tiny apartments where pets aren’t allowed.  So the CBS story highlighted a sort of “rent-a-pet” boutique where, for $25 per hour, people could rent a dog to walk around on a leash.  There was a long line outside the shop – people waiting patiently for the opportunity to experience this simple pleasure.

So here’s yet another example of how a high population density erodes per capita consumption.  Think about what this does to the per capita consumption of all products associated with pet ownership – veterinary services, pet food and all the paraphernalia that goes along with owning Fido or Kitty:  leashes, chew toys, beds, scratching posts, etc.  The cost of owning a medium-sized dog in America is over $1,000 per year.  So, for every 25-50 dogs in America, another job is created.  Since the median family income is about $48,000, if the average family had one medium-sized dog, it would contribute 2% to our GDP and likely account for three million jobs .  Cut that figure in half, as would easily happen in a population density like Japan, and that’s a 1% cut in GDP.  That’s not huge but, hey, all we’re talking about here is pets.  Extend that to every other product and you start to understand how a rising population density begins to erode employment. 

Some will say that this has nothing to do with a high population density – that the Japanese people are either predisposed to living in tiny accommodations or they are more enlightened than Americans, choosing a more efficient existence.  Nonsense.  The average Japanese family would upgrade their digs to a 1,500 square foot home (modest, but about the median for Americans) in a heartbeat if they could.  But it’ll never happen for them, not in their wildest dreams.  Japan is just way too crowded.  They’ll never be able to enjoy a modest home, a garden, a lawn, a lawnmower, a car in the garage or even a garage.  Nor would Americans or any other people who allowed their population density to grow to that level. 

Imagine living in these conditions.  Imagine waiting in line to rent a dog for an hour.  Imagine living in a home where leaving space for two people to pass each other is a critical factor in determining how to position your sparse furniture.  Imagine commuting to work every day in a train so packed with people that you can barely move because owning a car is too impractical.  Imagine that simple pleasures like playing golf or tennis or going to the beach must be planned far in advance because of the crushing demand for those facilities.  Finally, imagine what all of this does to per capita employment when more and more people are forced to share the same amount of space, fewer facilities and fewer products. 

If you can imagine these things, especially that last one, then you’re on your way to an understanding of global economics that eludes the most respected of economists.

Prius Commercial Illustrates Economic Theory

In countless discussions with economists and non-economists alike, I’ve been amazed at how difficult it seems to be for people to grasp the new economic theory I presented in Five Short Blasts – that beyond a certain point, over-crowding begins to erode per capita consumption, inevitably driving up unemployment. 

I sometimes suggest that people consider the extreme limit – a world that is so densely populated that it is literally carpeted with human flesh.  In such an extreme case, per capita consumption would fall to virtually zero since there is no room for anything other than people, packed together so densely that a ping pong ball tossed into the crowd couldn’t find its way to the ground.  In such an example, it’s intuitively obvious that employment would also fall to zero.  (If no products are consumed, then no employment in producing and distributing products is available.)  Unemployment would rise to 100%.  It’s just simple math.  If per capita consumption is a function of population density (a parabolic function that rises to some point and then begins to decline) and the limit is zero when population density rises to infinity, then per capita consumption can only decline as the limit is approached, no matter how far away that limit may seem. 

That world is portrayed perfectly in the Toyota Prius commercials that have been airing on television lately.  A Prius wends its way down a one-lane road through a world where, except for the road, people occupy every square foot.  What appears to be grass is, upon closer examination, a field of people dressed in green, packed tightly together and waving, as though blowing in the breeze.  What appears to be blue streams are actually people dressed in blue, bounding along like bubbling, flowing water.  Even the sun itself is a ball of people, dressed in bright yellow and red.  The only object visible, other than people, is the Prius. 

Pictured in the commercial is a world where economists’ illogical premise that population growth can forever be used as an engine for economic growth has arrived at its logical conclusion – a world where people own and consume nothing.  There is no room for anything, other than to stand in one spot, wave in the breeze, and watch one car go by down a narrow road.  (Unexplained in that commercial is where the steel, glass, rubber, plastic and lithium batteries used to assemble that car, and the gasoline used to fuel it, came from.) 

But now imagine that you’re a Prius salesman, tasked by your boss with selling a Prius to every potential consumer in that picture.  After making your pitch, touting the eco-friendliness of the vehicle, your first potential customer replies “that seems like a very nice car, very eco-friendly, but no thank you.” 

“Why not?”, you ask.  “Well, for starters, just where the hell would I park it?”, comes the reply.  “There’s no place to build a garage.  And, besides, where would I drive it?  It’s so crowded here that there are no stores, no places of employment, nothing.  It’s so crowded that we don’t even have farms!”  (The dark side of the commercial, unseen by the viewer, is that the people in the Prius world survive only by cannibalism!)

Unfortunately for you, the Prius salesman, being a blade of grass and waving in the wind doesn’t pay well.  With no consumption in Prius-Land – there are no houses, no other vehicles, no golf clubs, no boats and, for obvious reasons, no lawn mowers (yikes!) – there is also no employment.  There isn’t even a textile mill to make new costumes to replace the ones worn by the blades of grass, sure to wear out as they constantly rub against one another as they wave in the breeze.  No one earns a dime. 

So, good luck selling those Priuses (or anything) in Prius-Land.  Fortunately for Toyota, the Prius commercial ends as the Prius drives into the sunset, sparing you what happens soon thereafter.  Had the cameras kept rolling, you’d have seen that the Prius was on its way to the last open landfill to be buried, making way for a little more space to be occupied by a few more blades of grass.  Then, growing weary from waving in the breeze, one blade of grass turns to another and says, “I’m hungry!”  Uh oh.  The rest of the commercial became R-rated for extreme violence, and had to cut.

Of Relativity and Lady Liberty

In 1905, Albert Einstein introduced to the world his theory of relativity, postulating that the laws of physics must hold true regardless of the observer’s frame of reference.  While this may have seemed simplistic or even self-evident to people like you and me, firmly rooted in our slow-moving, earth-bound existence, it was truly profound for physicists who think in terms of space and stars and the speed of light.  Its logical consequences led to mind-blowing discoveries of relationships between time and speed, space and matter and rewrote the laws of physics, beginning with the most fundamental.  Thanks to Einstein, it’s now understood that the apple Isaac Newton observed falling from the tree was driven not by a force of gravity, but by the curvature of space.  Once decoupled from the tree’s branch, and lacking any other influencing forces (like a strong wind), it fell toward the earth because that’s the only direction in which the curvature of space would allow it to go. 

This past 4th of July weekend, the news programs all carried stories of the reopening to the public of the stairway to the crown of the Statue of Liberty.  But for seemingly obvious, practical reasons, the tiny spiral staircase forced officials to limit access to only thirty people per hour.  At first I was struck by the irony of it – that this monument to our heritage of immigration and the belief that we can grow our population without end – should itself impose a limit on the number of its visitors.  Thirty people per hour.  That’s it.  No more are welcome. 

Then it hit me:  if the laws of physics must hold true regardless of an observer’s frame of reference, then shouldn’t that also be true for the field of economics?  Shouldn’t its laws apply to an observer inside Lady Liberty just as much as they would to an observer of something larger, like the United States as a whole?  Of course they should.  The laws of economics do not transcend the laws of physics.

For example, consider the law of supply and demand, one of the most fundamental precepts of economics.  It still holds true inside Lady Liberty.  If I were a vendor of bottles of water in the crown of the statue at the top of that staircase, I could command a higher price if all I had left was a single bottle of cold water than if I had a large supply of 100 bottles. 

So what about economists’ claim that overpopulation can never be a problem because man is ingenious enough to overcome any obstacle to further growth?  Let’s apply that to Lady Liberty.  Why should we place any limit at all on the number of people inside the statue?  It’s because in that relatively tiny frame of reference, it’s patently obvious that it’s impossible to accommodate more than a relatively small number of people.  Just as the sheet metal of a Volkswagen limited the number of college students that could be stuffed inside when such games were in vogue back in the ’60s, the copper skin of Lady Liberty limits the number of visitors that can be stuffed inside. 

Thus, if relativity is applied to the field of economics, then the claim that population growth can never become a problem fails at the most basic level.  Why?  Because it’s not really a “law” of economics.  It’s a dodge that economists adopted in response to the seeming failure of Malthus’ theory that shortages of food would limit population growth.  Either unable or unwilling to further evolve Malthus’ theory about overpopulation, economists simply cupped their hands over their ears, like the “hear no evil” monkey, and vowed never to consider overpopulation again.  They adopted the ”growth is good; growth is no problem” mantra and repeated it over and over until they actually began to believe it.

Then how can economists get away with making this claim?  It’s because when people consider the subject of population, the frame of reference that automatically comes to mind is so large as to be nearly infinite for all practical purposes:  the entire country of the United States, for example – an area of over three million square miles.  It’s difficult to comprehend the boundaries of such a vast expanse ever being a practical limit to the number of people that can be contained within.  And because it’s difficult to comprehend it ever being a problem, no one is willing to consider any of the consequences of a growing population.  Beyond resources and strain on the environment, is there anything else that may tend to limit the size of the population before we become a sea-to-shining-sea, quarter mile deep mass of human flesh?  What happens as we crowd together into smaller spaces?  Will our per capita consumption begin to decline?  What does this mean for per capita employment?  Could it be that poverty will prove to be the ultimate barrier to excessive growth? 

As in physics, presumed “laws” of economics that don’t stand up to scrutiny in one frame of reference are failures for every frame of reference.  And the longer we cling to such “laws,” the more unlikely progress toward valid economic models becomes.

Unemployment: A Lagging Indicator or the Crux of the Problem?

http://www.usatoday.com/money/economy/2009-07-02-unemployment-june_N.htm

There’s been a lot of talk in the media in the last few months about “green shoots” and the beginning of an economic recovery.  Banks have stabilized (at least from outward appearances, thanks to a thin veneer of money applied by the Federal Reserve), housing sales and home price declines are slowing, as are declines in retail spending and auto sales.  Happy days are here again!  The slow rate of decline in the economy is being accepted as the new norm.  Corporations’ profits have stabilized, thanks to cost-cutting and job eliminations.  In fact, Wall Street was ready to celebrate job losses of “only” 350,000 in June as evidence that the economy was on a roll, and investors looked forward to a nice rally.  After all, unemployment is just a lagging indicator, they say.  It’s nothing to worry about.  It’ll get better once consumers start binging again. 

Then, along comes the Labor Department on Thursday, tossing a turd into their punch bowl with the June unemployment report.  Another 467,000 jobs lost in June and another step closer to double-digit unemployment (as measured by U-3*), much worse than expected and much worse than the May figure.  Suddenly, and just for a day, everyone is reminded that the consumers we count on to drive the economy derive their spending power from their dual role as laborers and that, without income, all the talk of an economic recovery is just so much wishful thinking. 

It all comes down to basic economics – not the pretend economics in vogue with economists today – where we can pretend that population growth can be used as an engine for economic growth forever without cancerous consequences, where we can pretend that workers who lose their jobs to trade deficits can be retrained for magical new jobs in imaginary, yet-to-emerge fields – but real economics based upon the acknowledgement that consumers and laborers are one and the same, and that their purchasing power emanates from a healthy demand for labor that is at least in balance with the supply. 

Pretend economics is the product of economists who turn a blind eye to population growth, cross their fingers and, with unjustified optimism, proclaim that man is ingenious enough to overcome any obstacle to never-ending growth.  Real economics, on the other hand, is the product of people who stop to consider the full range of potential consequences of population growth – not just the finiteness of resources and potential environmental impact, but more subtle things like the effects of crowding more people into a finite space – what happens to per capita consumption and employment, and what happens when we try to trade freely with nations that are badly overpopulated.

Get this through your heads, pretend economists:  a slowing rate of decline isn’t the same thing as recovery.  It doesn’t even mean the bottom is in sight.  All it means is that we’re still in decline.  Foreclosures are still rising; home prices are still falling and will continue to fall until the median home is affordable by people earning the median income.  The problem is that the median income continues to decline as we continue to freely trade away our jobs to badly overpopulated nations and as we continue to exacerbate the situation at home with our own worsening overpopulation.  Unemployment is still rising and will continue to rise until it reaches a level consistent with the effective population density we’ve assumed by trading freely with nations five, ten and twenty times more densely populated than our own. 

With our national debt now reaching a level that even the most sanguine of economists sees as dangerous, the time is rapidly approaching when we can no longer paper over the consequences of our trade deficit with federal deficit spending.  It’s time to act.  It’s time for our president t0 take meaningful action  – meaning tariffs on manufactured products from overpopulated nations – to restore a balance of trade.  Of course they’ll react angrily, but it’s not as though they haven’t had warnings for decades that this trade imbalance can’t be sustained forever.  They’ve had ample opportunity to make good on promises to boost their economies and their imports of American products.  We can wait no longer. 

———————————————–

* The official unemployment rate, U-3, rose by only 0.1% to 9.5% and the more comprehensive figure, U-6, now getting much more attention in the media, rose only 0.1% to 16.5%.  But the unemployment rate is a flaky figure, based on surveys instead of hard employment data, that may rise less than the job loss figures indicate in one month, only to be followed by a bigger-than-indicated rise the next month.  Since the labor force is approximately 150 million people, and since it grows by about 150,000 per month (due to population growth), then a flat employment report should actually yield a rise in unemployment of 0.1%, meaning that a loss of about 450,000 jobs should yield a rise in unemployment of 0.4%.  What I’m saying is that the U-3 unemployment rate is probably closer to 9.8% and, if job losses continue at the current rate, expect a big jump next month to take it over 10%.  It’s also worth noting that even the U-6 figure doesn’t measure the full extent of unemployment, since those on disability are excluded, even if they are looking for work, and the homeless are obviously not included since they can’t even be surveyed.  Include these categories and we’re approaching 20% unemployment.

Higher Mileage Standards to Cut Oil Consumption – or Not?

http://www.usatoday.com/money/autos/2009-05-18-auto-emissions_N.htm

Today President Obama announced plans to increase auto fuel efficiency to an average of over 35 miles per gallon, an improvement of approximately 30% over today’s level. 

The Obama administration announced Tuesday what amounts to a sweeping revision to auto-emission and fuel-economy standards, putting them in the same package for the first time.

The plan would require cars and trucks to average 35.5 miles per gallon by 2016, President Obama said at a ceremony with legislators, regulators, executives of 10 car companies and the United Auto Workers union. The plan would increase the standard and accelerate the requirement from 35 mpg in 2020 set by the 2007 Energy Act.

The president hailed the plan’s potential for cutting our dependence on foreign oil and for cutting greenhouse gas emissions, cutting both by about 30% once all vehicles on the road have been replaced by these more efficient models. 

Thirty percent less oil consumption.  Thirty percent lower CO2 emissions.  Sounds great, doesn’t it?  There’s just one problem.  It’s not true.  Because the government also plans to rapidly grow the U.S. population, through ever-higher rates of immigration and through high birth rates, by 2035 we will be consuming as much oil to fuel our vehicles and we will be emitting as much CO2 as we do today.  After that, further population growth will actually drive oil consumption and CO2 emissions even higher than today’s level!  Don’t believe me?  Check out the government’s own population projections at http://www.census.gov/population/www/projections/summarytables.html. 

It’s not as though the government has no control over this.  They have total control of immigration and use tax policy to encourage a high birth rate.  Why?  Because they can’t envision a healthy economy that doesn’t rely on population growth as the major source of “economic” growth. 

I applaud the president for taking this action, but to sell this as a plan for cutting oil consumption and reducing greenhouse gas emissions is just a bit disingenuous when they also quietly plan to explode the population, more than offsetting any gains from this program.  If the president wants to get serious about cutting oil consumption and CO2 emissions, then we not only need a plan to cut the per capita consumption of oil but a plan to simultaneously stabilize and even reduce our population, the number of “capita,” to a sustainable level. 

Green Leader Calls for Halving U.K. Population

http://www.timesonline.co.uk/tol/news/politics/article5950442.ece

Thanks to one of my readers for bringing this linked article to my attention.  It seems that one of English Prime Minister Gordon Brown’s key “green advisors” has called for the U.K. to reduce its population by half to build a sustainable society. 

JONATHON PORRITT, one of Gordon Brown’s leading green advisers, is to warn that Britain must drastically reduce its population if it is to build a sustainable society.

Porritt’s call will come at this week’s annual conference of the Optimum Population Trust (OPT), of which he is patron.

It’s significant that influential leaders are beginning to muster the courage to raise this issue.  Is anyone on this side of the Atlantic listening?  Of course, if they understood that their economy would actually be enhanced instead of harmed by such an approach, their job would be that much easier.  But regardless of whether overpopulation is addressed out of concern for the environment or out of concern for its effect upon unemployment and poverty, the end result is the same and I’ll be just as happy. 

You would think that environmentalists would be the first to jump on this bandwagon but, amazingly, they’re among the most resistant.  They fear that linking the environmental movement with a drive to reduce our population will stigmatize them as being too radical.  Here’s an example in this same article:

Population growth is one of the most politically sensitive environmental problems. The issues it raises, including religion, culture and immigration policy, have proved too toxic for most green groups.

Such views on population have split the green movement. George Monbiot, a prominent writer on green issues, has criticised population campaigners, arguing that “relentless” economic growth is a greater threat.

Environmentalists who fear tackling the population issue focus instead on reducing per capita consumption.  For example, they point to the low per capita consumption of energy in densely populated societies like Japan as evidence that nations like the U.S., with much higher per capita consumption, are being wasteful and can dramatically reduce consumption without significant harm to the economy.  However, they don’t understand that per capita consumption of energy in places like Japan is low not because they are more efficient, but because over-crowding has driven down their standard of living.  Low per capita employment in providing goods and services for domestic consumption is an inescapable consequence, making them dependent on exports to prop up their economy.  Without a high per capita consumption market like the U.S. to absorb their productive capacity, their economy would quickly collapse, just as ours would if we tried to emulate their rate of consumption. 

The only solution that relieves the strain on the environment and resources, while retaining the ability to enjoy a high standard of living, is to implement a population management policy that, through non-coercive measures, encourages a reduced birth rate, ultimately resulting in a slow decline in the population.  I hope that America is represented at this OPT conference and I hope that we pay close attention.

Energy Consumption Per Capita: Are Americans Wasteful?

https://www.nationalpriorities.org/energy_consumption_per_capita

Here’s an example of how public policy can go awry when the relationships between population density, per capita consumption and employment are not clearly understood.  Click the above link to see a chart of energy consumption per capita for seven different countries.  Recently, I’ve seen something similar posted on various blogs that deal with issues like energy policy and global warming, and in each case the conclusion of the author has been the same – that since Americans use far more energy per capita than other wealthy nations like Germany, Japan and the U.K., then Americans are wasteful and great oil savings (and reductions in carbon emissions) could be realized by becoming as efficient as those nations at the right hand side of the scale. 

At first blush, it seems like a reasonable conclusion, doesn’t it?  After all, the image that immediately comes to mind regarding the relatively higher energy consumption in America is gas-guzzling SUVs, right?  And the image that comes to mind regarding Japan is fuel-efficient cars like the Toyota Prius.  There is some smattering of truth there, although no one thinks about the fact that there are far more Priuses on the road in the U.S. than there are in Japan. 

More importantly, the conclusion that America is wasteful and great energy savings could be realized is erroneous because population density and its relationship to per capita consumption, together with the economic consequences of that relationship,  haven’t been taken into consideration.  In the cases of Japan, Germany and the U.K., their per capita energy consumption is low not because they are more efficient than the U.S. but because their extreme population densities have driven down per capita consumption of nearly everything.  (Japan is ten times as densely populated as the U.S. while Germany and the U.K. are about seven times more densely populated.  Also, notice that, with the exception of the tiny city-state of Luxembourg, the left side of the scale includes the sparsely populated nations of Canada and Australia.) 

For example, consider the effect upon the per capita consumption of dwelling space in Japan.  It’s only 30% of that in the U.S., not because the Japanese like living in tiny homes, but because there is no room for anything larger.  So the energy used to light, heat and air condition their homes, in per capita terms, is only 30% of that in the U.S. as well.  Now, that may sound like a good thing from an environmental perspective until you consider the economic ramifications.

Not only is their per capita energy consumption in their homes reduced to 30% of the U.S., but so too is the per capita employment in all industries associated with building, furnishing and maintaining their homes.  Making matters worse, their per capita consumption of nearly everything, along with their per capita employment in those industries, with the exception of food and clothing, is similarly affected to a greater or lesser extent by their extreme over-crowding.  This leaves them with an enormous glut of labor that can only be gainfully employed by manufacturing products for export.  In essence, this over-crowding and low per capita consumption transform them into a parasitic economy, feeding on the markets and manufacturing jobs of nations like the U.S.

So the only way to reduce per capita energy consumption in the U.S. to a Japan-like level is to cut our overall per capita consumption of everything to their level.  The problem is that this would also cut per capita employment, just like in Japan, but without any other U.S. to turn to for employment of the resulting labor glut.  This would drive unemployment through the roof and start a world-wide decline of living standards. 

So let’s back up and consider the real problem, which is not the per capita consumption of energy but the total, world-wide consumption of energy.  If we want to reduce it, the correct approach is not to drive it down in the U.S., a move that would send global unemployment soaring, along with poverty around the world, but to dramatically reduce the population in overpopulated nations like Japan, Germany, the U.K., China, Korea and so many other places.  Yes, this would actually allow their per capita consumption of everything to rise, but the net effect would be a significant reduction in total consumption while allowing living standards to rise around the world.   

It’s imperative that we understand the economic consequences of overpopulation if we want to avoid a move toward well-intentioned policies that make a complete mess of the global economy.

The Global Economy Faces Its Fatal Flaw

http://www.usatoday.com/money/economy/2009-02-13-geithner-g7-meeting_N.htm

This linked article reports on the same upcoming G7 meeting in Rome that I posted on yesterday.  (See “Protectionism Had Nothing to Do with The Great Depression.”)  But it boils down the whole global economic collapse with one key observation: 

Germany is warning against protectionism as a knee-jerk reaction to the crisis. Such measures would be devastating to the German economy, which is powered by exports —

This is precisely the problem with the global economy as it’s structured.  Not only is Germany utterly dependent on exports, but so too is every overpopulated nation on earth, including Japan, Korea, China, Taiwan, Israel, Malaysia, Switzerland, Denmark, Mexico, Ireland and a whole host of others.  All of these are overwhelmingly dependent on the U.S. to absorb these exports, resulting in a huge transfer of wealth from the U.S. to the rest of the world.  The U.S. has literally been bankrupted in the process.  Any attempt to restore the global economy without fixing this trade imbalance is doomed to failure.

Why are these nations so dependent on exports?  It’s because their over-crowding has badly eroded their ability to consume products.  Low per capita consumption coupled with high per capita output (or productivity) inevitably means that they have an enormous over-capacity of labor. 

For the United States, there is only one solution to our economic collapse and that is the restoration of a balance of trade, regardless of what it takes:  import quotas, tariffs or whatever.  For these other overpopulated nations, the short-term picture is grim, and their only hope for the long term is to adopt policies designed to dramatically reduce their populations. 

All will deny this truth and fight in vain to revive the corpse of their dearly departed economic model of growth and free trade.  All will be for naught.  The only question is how bad things will have to get before they face reality, if they face it at all.