Euro Zone Unemployment Hits New Record

June 1, 2013

 

http://www.reuters.com/article/2013/05/31/us-eurozone-economy-idUSBRE94U0DJ20130531

As reported in the above-linked Reuters article, unemployment in the Euro zone hit a new record in April – 12.2%.  And that rate only begins to tell the story:

Almost two-thirds of young Greeks are unable to find work … in Italy, the unemployment rate hit its highest level in at least 36 years, with 40 percent of young people out of work

This should come as no surprise to anyone who understands the relationship between a high population density (the euro zone is nearly as densely populated as China) and low per capita consumption.  And per capita consumption and unemployment are inextricably linked. 

The reasons for Europe’s unemployment crisis are clear:

  • As anyone who has ever visited Europe knows, out of necessity, the vast majority of its people live in small apartments and consume very little, yet they are as productive as workers in the U.S.  High productivity and low consumption spell trouble for employment, and makes Europe utterly dependent on manufacturing for export to gainfully employ its vast labor force.
  • Following its ascension to the World Trade Organization over a decade ago, China has steadily “muscled in” on Europe’s export business.
  • For decades, Europe has relied heavily on deficit spending on social programs to prop up consumption and maintain an illusion of prosperity.  Their debt level has reached an unsustainable level,  and austerity programs have kicked government employees to the unemployment lines and falling incomes have bitten into Europe’s already-meager rate of personal consumption.

There is no escape from this trap that has been set by economists’ reliance on population growth to stoke macroeconomic growth.  Beyond the euro zone, unemployment around the globe will worsen as the world’s population continues to grow.  More and more nations turn to exports to bolster their economy while fewer and fewer net consumers remain.  How long will it be before this crisis begins to rip at the fabric of civilization?  It sounds like Europe may be approaching that point.


Unhappy? Move to a less densely populated state.

February 20, 2013

“CBS This Morning” reported on a survey done by the University of Vermont in which researchers searched “geo-tagged” twitter messages for words that were either “happy” or “unhappy” words, and then compiled the data by state.  Here’s a link to the results:  http://www.uvm.edu/storylab/share/papers/mitchell2013a/AppendixB.html.

The colored map caught my population density-sensitive eye.  Knowing that the eastern U.S. is more densely populated than the western U.S., I was immediately suspicious that there may be a correlation.  It’s something I’ve suspected for a long time – that people living in crowded conditions are more unhappy – but I’ve never come across any hard data, until now.  (Although one could question just how “hard” the data is that’s gathered from a twitter survey.) 

So I plotted the data state-by-state vs. each state’s population density on a scatter chart to see if any correlation emerges.  Here’s the chart:  U of Vermont Happiness Index.  There’s a lot of scatter in the data but, once a trend line is calculated and plotted by the computer (in this case, a logarithmic trend line gave the best correlation) a relationship does emerge.  For this trend line, the correlation coefficient (R2) is 0.13.  A correlation coefficient of 1.0 indicates a perfect, straight line relationship while a correlation coefficient of 0.0 indicates that no relationship exists, as you’d find in a shotgun-like scatter of the data.  So the relationship is weak, but there’s definitely one there.  Densely populated states tend to be more unhappy while more sparsely populated states tend to be happier. 

No doubt, there are many other factors involved.  Southern states seem to be less happy.  Even though Texas is below the average population density, it ranks near the bottom of the happiness index.  Perhaps oppressive heat and humidity are factors.  Having lived for five years in the Houston area, I can tell you that it was definitely a factor for me.  (I felt like I was living in hell for much of the year.)  Houston is also among the worst in terms of air pollution and traffic congestion. 

California’s happiness index holds up quite well, in spite of its population density being well above average.  Perhaps its climate and beautiful geography tend to offset its overcrowding.  Lending support to that theory, it should be no surprise that Hawaii is the happiest state in the union. 

Alaska, the least densely populated state, falls somewhere around the middle of the happiness scale.  Perhaps the happiness that would otherwise be attributed to its sparse population is offset by its bitterly cold and dark climate for much of the year.  Or, perhaps the diminished opportunities for social interaction in an extremely sparse population actually becomes a negative factor.  That is, perhaps there’s a “sweet spot” in terms of the relationship between population density and happiness.

It also struck me how similar this map was to the electoral college map in the most recent presidential election.  Republican states also tended to be western states (with some exceptions, like California), while the Democratic states tended to be eastern states.  Does this mean that Republicans are happier than Democrats?  Maybe.  If you think about it, people who are better off financially tend to be more conservative and tend to vote Republican.  The Democratic states tend to be less happy.  Does this mean that President Obama was better than George Romney at tapping into unhappy voters?  Or do his policies play better to people in densely populated (and less happy) situations, who see more of a role for government in maintaining an orderly society?  But, then again, this may also tend to relate back to population density, since unemployment is higher in densely-populated areas. 

This is all a bit beyond the scope of my economic theory based on the very real and powerful inverse relationship between population density and per capita consumption, and I don’t want to make too much of what appears to be a weak relationship, but the evidence suggests that we all might be a bit happier if the U.S. was less crowded.


Immigration Reform and The “Stupid Party”

January 28, 2013

At a meeting of Republican leaders this past week, Louisiana governor Bobby Jindal told his fellow Republicans that the GOP needs to “stop being the stupid party.”  Jindal was referencing comments made by a few GOP candidates about rape and the party’s growing reputation as an anti-science party, thanks to pandering to far right elements that deny evolution and climate science.

But the Republican party holds no monopoly on stupidity.  I could cite a litany of stupid moves and policy positions on the part of Democrats, including trade policy, budget policy and foreign policy.  Among the stupidest of the Democratic positions is its advocacy for immigration reform.  How stupid is it to reward illegal aliens with amnesty and citizenship?  How stupid is it to swell our population yet again with another tidal wave of immigrants when all of the problems caused by overpopulation, driven almost entirely by immigration, grow worse by the day:  unemployment, overdependency on foreign oil and the deterioration in our climate, just to name a few? 

But there’s two kinds of stupid.  There’s real stupidity of the sorts mentioned above.  And then there’s political stupidity – the kind that involves not using the first kind to your advantage with the electorate.  It’s this latter kind of stupidity that Jindal and Republicans are contemplating.  In the case of immigration reform, Republicans seem to have concluded that, although the Democrats’ position on immigration is stupid, their position plays well with those elements of Latino voters who favor illegal immigrants over the best interests of their newly-adopted homeland.  So now, instead of trying to parlay their opposition to illegal immigration and amnesty for illegals into an advantage with the rest of the populace by making a better, more coherent argument for opposing illegal immigration, Republicans have decided it best to simply negate Democrats’ advantage with Latino voters by joining them in their stupidity. 

Yeah, yeah, I know – recent polls have shown that something less than 50% of voters now oppose a pathway to citizenship for illegals.  But not opposing it isn’t the same thing as enthusiastically favoring it.  If given a choice and if armed with intelligent arguments why our worsening overpopulation is a real problem, the vast majority of voters – perhaps even Latino voters – would prefer that we simply enforce the borders and force illegals back home. 

What’s really stupid is that we’ve made this mistake before and we’re about to do it again.  In 1986, Congress passed the “Immigration Reform and Control Act” which granted amnesty to millions of illegal immigrants.  The following were the key provisions of that Act:

  • required employers to attest to their employees’ immigration status.
  • made it illegal to knowingly hire or recruit unauthorized immigrants.
  • legalized certain seasonal agricultural illegal immigrants.
  • legalized illegal immigrants who entered the United States before January 1, 1982 and had resided there continuously with the penalty of a fine, back taxes due, and admission of guilt.

It was supposed to be a one-time deal and a permanent fix for the problem of illegal immigration.  Now according to an article just published this morning, here’s the framework of the “immigration reform” deal that Democrats and Republicans have struck in the Senate:

  • Creating a path to citizenship for illegal immigrants already here, contingent upon securing the border and better tracking of people here on visas.
  • Reforming the legal immigration system, including awarding green cards to immigrants who obtain advanced degrees in science, math, technology or engineering from an American university.
  • Creating an effective employment verification system to ensure that employers do not hire illegal immigrants.
  • Allowing more low-skill workers into the country and allowing employers to hire immigrants if they can demonstrate they couldn’t recruit a U.S. citizen; and establishing an agricultural worker program.

Point for point, it’s almost exactly the same as the “immigration reform” that was passed 27 years earlier, except that the provision for automatically awarding green cards to foreign students who earn degrees will make it that much harder for American students to find work, and that much harder for American students to afford seats at the universities that are increasingly taken by foreign students. 

Regarding the first point of the plan, there’s already a pathway to citizenship.  It involves going home and applying for a visa.  And we don’t need “immigration reform” to enforce the border and track people with visas.  Those are already provisions of existing law that merely lack the resources and funding. 

Regarding the 2nd point, a study just released this morning found that half of all Americans with college degrees are working in jobs for which they’re overqualified.  And approximately half of all recent college graduates can’t find work at all.  Why do we need to import more students?  How much more affordable would college be if our universities actually had to compete for students instead of filling the classrooms with immigrants?  How much could we cut federal spending on tuition aid?

Regarding the third point, we already have the E-verify system.  What we don’t have are states that require its use.

And regarding the last point, we already have this and employers routinely claim that they can’t find workers without even making any valid effort.

Immigration reform is stupid, plain and simple.  We already have all of the laws we need.  All we lack is the will to enforce them and the backing of economists who understand what worsening overpopulation does to our economy.  Swelling the ranks of the unemployed with more unemployed immigrants is stupid.  Making our over-dependence on foreign oil worse is stupid.  Negating all of our gains in energy efficiency and emissions by growing the population is stupid.  Filling our universities with foreign students we don’t need is stupid.  Destroying the credibility of our immigration laws with round-after-round of amnesty is stupid. 

What’s really stupid is ruining our economy and our country in an effort to court a minority of ill-informed voters, something that has never bothered the Democrats much.   And now  Republicans have concluded that if you can’t lick ‘em, join ‘em.  It’s easier than standing on principle.


Over-valuing Immigrants

January 24, 2013

http://blogs.reuters.com/reihan-salam/2013/01/22/fixing-immigration-but-not-the-rubio-way/

This above-linked editorial appeared on Reuters a couple of days ago.  The topic of immigration “reform” (liberalization) has picked up a lot of steam since President Obama’s re-election, as Republicans have concluded that they need to out-do Democratic pandering to the Latino demographic (which both parties have stereotyped as valuing the importation of more Latinos over the interests of their newly adopted home) as their pathway back to the white house.  (By the way, I wonder how many Latinos are actually fooled into thinking that this push for immigration reform will actually benefit Latinos instead of opening the flood gates to a tidal wave of Chinese and Indian immigrants?)

The point of the editorial is to argue the merits of giving illegals a sort of “premanent noncitizen resident” status instead of a more difficult “path to citizenship.” 

But that’s not the point of this post.  What caught my eye is found near the beginning of this piece, a relatively new justification for growing our population:

“But first, it is important to understand why the immigration issue is gaining momentum. Back in 2011, J.P. Morgan released a report that found that U.S. households own $70 trillion in physical and financial assets. This same report found that America’s stock of human capital, i.e., the collective education and experience of all U.S. workers, amounted to $700 trillion. Rather than pouring hundreds of billions of dollars into new roads, bridges and housing units, the surest and cheapest strategy for increasing our collective wealth is to import talented workers.”

So J.P. Morgan (one of our nation’s “too big to fail” banks) is saying that each American is actually worth ten times the amount of tangible financial and physical assets they’ve managed to accumulate.  Sure, a tiny fraction of this can actually be measured in terms of the money that’s been spent on their education.  But the vast majority of this intangible “wealth” is obviously arrived at by assigning some dubious value to Americans’ “experiences.” 

If this were true – that each of us is far more valuable to society than our net worth indicates – then why is no one willing to pay for it?  U.S. households’ net worth of $70 trillion works out to about $500,000 per household, a figure that’s about four times as much as the median net worth, giving you some idea of just how much wealth is concentrated in the hands of the top one percent.  But never mind that; let’s say that your net worth is about $500,000.  J.P. Morgan’s report says that your real value to society is about $5 million. 

So why isn’t Canada offering each American $5 million to move there?  Or even $1 million?  I’d happily move there for that much.  Or, for that matter, why isn’t any country making such an offer? 

Why aren’t there corporate “breeding farms” where women can choose to be treated like animal breeding stock in return for being paid millions for each baby they produce?  A repugnant idea, to be sure but, no doubt, there’d be no shortage of women willing to sign up. 

Even if the J.P. Morgan report is correct – that people’s education and experience is worth ten times as much as their net worth – shouldn’t the real conclusion be that money spent on education and experience is largely squandered – that people shouldn’t bother with attaining an education because wages are too low to justify it?  If the 20 million unemployed Americans are worth so much, why is no one willing to hire them?  And why spend good money on an education, only to join their ranks?

The conclusion of this report is blatantly false, yet immigration advocates – those who stand to profit from growing our population – use it to their advantage.  As is true with any such study, one must consider the motivation of those who have funded or produced it.  What is J.P. Morgan’s real motivation for so blatantly over-valuing our collective education and experience?  It’s not the supposed $700 trillion in intangible  value to the economy that they’re interested in.  Rather, like any other bank, it’s the $70 trillion in real assets that they’re after, and they’d like to see that figure grow with the population. 

In 1976, the U.S. population was 218 million and the median family net worth was $113, 000 (in 2010 dollars).  In 2010, the population had grown by nearly 50% to 309 million, yet the median family net worth had fallen to $77,300.  But over the same time frame the average net worth rose from $184,000 to $499,000.  So, during that time frame, while the median American was worse off, the collective net worth (the amount that banks are involved in managing) rose dramatically from about $20 trillion to $70 trillion.  In other words, while the population grew, most Americans grew poorer while the banks grew much richer, especially as the top few percent of people grew much, much richer – profiting from the growth in the economy. 

But the poverty-inducing effect of worsening overpopulation is reaching higher into the ranks of top few percent.  From 2004 to 2010, even the average net worth declined.  That’s because of the Great Recession in 2008 and the plunge in home and stock market values, one might claim.  True, but was that contraction an anomaly or the bursting of a bubble built on debt to maintain an illusion of prosperity?  I’d contend it was the latter. 

To put it in simpler terms, banks – like all other corporations – profit from a growing macroeconomy that accompanies population growth.  But, because of the worsening unemployment and poverty that that growth brings, the fortune of average citizens gets worse.  But, if the banks can convince you and your elected representatives that growing the population faster – and liberalizing immigration is a good way to do it – is in your best interest (as it most certainly is theirs), then so much the better for them.


Poverty Fueled by Population Growth in the U.S.

December 21, 2012

http://www.reuters.com/subjects/income-inequality/indiana

The above-linked story was the feature article on Reuters yesterday.  It caught my eye because, though I now live in Michigan, Indiana was my home state.  The article uses the state of Indiana as a case study in the growth of poverty in the U.S.  It seems that Indiana has the second fastest-growing poverty rate in the country, second only to Nevada.  I suppose that the writers chose Indiana over Nevada for their case study since it better represents middle-class America, as opposed to a state whose economy is built around gambling and entertainment. 

It’s a very long, thorough treatise of the problem of poverty in America, but it’s this one sentence in particular that reall caught my eye:

The number of Americans below the federal poverty level – $22,350 a year for a family of four – hit 48 million in 2011, 17 million more than in 1989.

With this data, we can do a little math.  In 1989, the U.S. population was 247 million people.  At that time, the number of people living in poverty was 31 million (48 million minus 17 million).  That’s a poverty rate of 12.5%.  In 2011, the U.S. population was 310 million, and 48 million lived in poverty.  That’s a rate of 15.5%.

But consider this:  between 2011 and 1989, the U.S. population grew by by 63 million people, and 17 million have been added to the ranks of the poor.  That means that 27% of the people added to our population since 1989 are below the poverty level! 

The theory I presented in Five Short Blasts predicts that a growing population (once some critical level has been breached) will result in rising unemployment and poverty.  This piece of data corroborates that theory, and even I was surprised at just how rapidly it’s fueling the poverty rate. 

And, as the article points out, all of this is in spite of the fact that the federal government spent a record amount in 2011 to combat poverty.  Given the impetus to cut federal spending, what is the likelihood that this effort to hold back the tide of poverty can be sustained?  Only slightly better than the likelihood that it will address the real root cause of the problem.


U.S. Birth Rate Falls to Record Low

December 8, 2012

http://www.usatoday.com/story/news/nation/2012/11/29/birth-rate-declines-record-low-immigrants/1735797/

This story (link provided above) came out while I was traveling last week, so I’m just now getting around to it.  It’s far too important to let pass without comment.  As reported by the Pew Research Center, the birth rate among women of child-bearing years (ages 15-44) fell to 63.2 births per 1,000 women, half the rate of 1957 and the lowest since record-keeping began in 1920.  This is great news for the economy (as I explained in Five Short Blasts and as further explained on this web site), and it’s great news for anyone concerned about the other challenges that overpopulation presents – global warming, resource depletion and environmental degradation.  Of course, this good news can (and likely will) be undone by misguided legislators, following the advice of their economists, by compensating with increased immigration and legislation that encourages a higher birth rate. 

I won’t rehash in this post how a lower birth rate is good news for the economy.  But the story and some reaction to the story do merit comment.  First of all, the final sentence in the above-linked story summarizes well economists’ reaction to such news: 

The Post (The Washington Post) writes that “… A continuing decline would challenge long-held assumptions that births to immigrants will help maintain the U.S. population and provide the taxpaying workforce needed to support the aging Baby Boomer generation.”

Economists believe that each succeeding generation needs to be bigger than the one that preceded it in order to support the older generation in retirement without placing too much burden on the younger generation.  Never mind the fact that economists don’t understand what an overcrowded population does to harm the economy.  The folly of such an approach is obvious to any thinking person who understands that it’s impossible for the population to grow indefinitely and, when it does stop, we’ll be left with the same problem, but on a much larger scale. 

Secondly, the report notes that the decline in the birth rate is led by a sudden plunge among immigrant women – especially among Mexican women – with the onset of the recession a few years ago.  This proves that economics is a major factor for families in deciding how many children to have.  And it proves that the approach I advocated in Five Short Blasts for reducing the birth rate to a level consistent with a stable population – using tax policy to encourage a slightly lower birth rate – would likely work very well.  There’s no need to resort to the clumsy, authoritarian tactics employed in places like China and India.  Just make it a little more expensive to have large families and leave people free to decide for themselves how many children is the right number for them. 

Then there’s this reaction from Reuters columnist Chrystia Freeland.  It begins with the observation of some of the more ridiculous misconceptions about birth rates:

“… for a long time, the United States has watched declining birthrates in places like Western Europe, Russia and even China with an air of superiority. The United States, lusty and fertile, was bucking the demographic trends.”

How exactly is a high birth rate any indication of “superiority?”  Do unborn fetuses decide to migrate to the wombs of mothers in the U.S. because it will be a better place to live?  Not likely.  Equating a high birth rate with any sort of “superiority” flies in the face of the facts.  A high birth rate characterizes the worst hell-holes in the world.  The nations with the top five birth rates are Niger, Mali, Uganda, Burkina Faso and Zambia – among the poorest nations on earth. 

Nevertheless, this is a common attitude.  Every city points with pride to its population growth as some sort of evidence of its superiority to other cities – as evidence that it’s a better place to live.  No one ever notes that nearly every city is growing in population at the same rate and that, if they keep it up, none of them will be a good place to live.

Later in the article, Ms. Freeland notes another prominent attitude toward birth rates:

Kotkin (Joel Kotkin, author of a study of birth rates for the Civil Service College of Singapore), for example, sees the falling birthrate as the central feature of what he calls “post-familialism,” a new form of social organization that prizes liberation, personal happiness and perhaps even a “hip” urban aesthetic over the more traditional values of community and self-sacrifice.

So, somehow, a lower birth rate is associated with selfishness and a turn away from traditional values?  How did overpopulation ever become a “family value?”  Is it not possible for small, one and two-child families to embrace “traditional values” in the same way that they are embraced by larger families? 

Ms. Freeland concludes her piece by arguing in favor of women using their wombs and a lower birth rate as leverage women can use in their quest to become “full members of society.”  (I’m now banging my head on the desk.)


The Population Density Factor in the National Election

September 12, 2012

http://www.cnn.com/ELECTION/2012/ecalculator#?battleground

OK, here’s a fascinating analysis of the electoral map of the United States that you won’t find anywhere else.  When one looks at an electoral college map like the one you’ll find with the above link, you can’t help but be struck by how the vast majority of the U.S., at least in terms of surface area, is solidly in Romney’s camp.  Yet, Obama leads in electoral votes.  How can this be? 

Population density seems to be playing a critical role.  Of the 16 blue states on this map (those Obama is expected to win), the average population density is 928 people per square mile.  Of the 20 red states – those Romney is expected to win, the average population density is only 60.  The average population density of the six states leaning one way or another is 130.  The average population density of the 9 states considered “toss-ups” is 149. 

In other words, those states favoring Obama are 15 times as densely populated (on average) than those states favoring Romney.  The states that are toss-ups or leaning one way or the other fall in between in terms of population density. 

Perhaps this shouldn’t be surprising.  As populations become more crowded, it’s an inescapable fact that government must play an ever-greater role in maintaining an orderly society.  What’s less obvious to most (but not to those who understand the relationship between population density and unemployment) is that the government must play a greater role in providing a social safety net as populations grow more crowded.  I doubt that many people in the blue states really understand this.  But it seems that they sense it.  At the same time, the theme of smaller government plays well in sparsely populated states where people don’t sense the need for more government because they’ve never experienced living in crowded conditions. 

Sadly, this is a bad omen for the Republican Party.  I say “sadly” because all people would be far better off living in less crowded conditions where there is less need for government involvement in our lives.  The Republican philosophy will slowly resonate with fewer and fewer people.  It may explain why President Obama continues to enjoy as much support as he does in spite of the terrible economy and high unemployment.  Only a few decades ago, when the country was less crowded and more prosperous, he’d have been swept out of office in a landslide.  Today, however, a growing number of people sense that the laissez faire capitalism and globalization advocated by Republicans in this ever-more-crowded, dog-eat-dog world actually offers little hope of a better life.  While Democrats advocate the same things, at least they also favor maintaining a strong safety net (but at a cost that can’t be sustained). 

If Republicans want to prevent their electoral map from slowly shrinking as more states grow more crowded, they’d be wise to wake up to the role of population density in driving unemployment and poverty, and to the fact that the population growth they promote as a source of economic growth is actually choking the life out of their party.


Follow

Get every new post delivered to your Inbox.

Join 48 other followers