I just finished watching the Nightly Business Report on PBS, which included an interview by Susie Gharib of Caterpillar’s CEO, Jim Owens. She questioned him at length about Caterpillar’s role in the global economy. She asked Mr. Owens what is the biggest thing he worries about. His response was basically that he’s worried about any moves toward protectionism in the U.S. He explained that, with only 5% of the world’s population, it’s critical to companies like Caterpillar that they have free access to the rest of the world’s market in order to grow their business and maintain their status as a global leader in their field.
It got me thinking about how critically important it is to understand my theory of “Population Density-Induced Decline in Per Capita Consumption,” (see Figure 6-1 on page 106 of “Five Short Blasts”) and its ramifications for the relationship between individual Americans and corporations. As you can see in Figure 6-1, their interests were the same throughout human history until an optimum population density was reached, which I believe has happened in the last few decades.
Once that optimum population density is breached, the interests of individuals decouple from the interests of corporations. It is in the best interest of corporations to continually grow their sales volume through population growth and through marketing to very densely populated countries. Although per capita consumption may be in decline, total consumption will always grow as the population grows. They couldn’t care less about declining per capita consumption.
However, once the optimum population density is exceeded, it is in the best interest of individuals to refrain from trading with countries more densely populated than our own because of the effects of rising unemployment and declining quality of life.
Corporations don’t care about risiing unemployment. They actually like it because it drives down their labor costs. They don’t care about a declining quality of life (except for their top executives). All they care about is sales volume and profit.
It is critically important to understand this because our country is locked in a tug of war of competing interests. Corporations insist upon free trade because they don’t want to jeopardize their positions in foreign countries with huge populations (customer bases). Given a choice, they’d be perfectly happy to surrender the American marketplace if it meant they could sell in China, for example.
Increasingly, individuals sense that free trade is at the root of their economic demise and they are growing impatient with our nation’s trade policies. They understand that our enormous trade deficit is sucking the life blood from our economy.
So don’t be confused. The old adage that “what’s good for Bull Moose Motors is good for America” no longer holds true. It broke down when that optimum population density, which was effectively magnified by free trade with grossly-overpopulated nations, was breached. Stand up for your interests. Write your senators and congressmen today to demand an overhaul of our trade policies to restore a balance of trade!
I have absolutely no problem with corporations making plenty of money. But a couple of boundaries need to be established: (1) trade (especially in manufactured goods) must be balanced and (2) they can’t use population growth to increase volume. The U.S. population must be stabilized.