Recession Marches On

April 30, 2008

The above link is a Reuters report on the advance reading (the first pass) of Gross Domestic Product (GDP) for the first quarter of 2008.  But GDP is a lousy gauge of how well the economy’s doing because it doesn’t take into account inflation or population growth.  A much better measure is per capita chained GDP – which is GDP adjusted for both inflation and population growth.  As I reported in January, fourh quarter 2007 data for per capita chained GDP already placed us into recession:

If you can believe the Commerce Department’s report (which I believe is highly suspect), GDP held at the same rate as the fourth quarter, as did the rate of inflation.  (That is difficult to believe, isn’t it?  Watch for downward revisions in the coming weeks.)  With inflation running at an annual rate of 2.6% (supposedly) and population growth running at 1% per year (thanks to immigration), this 0.6% increase in GDP means that each American’s share of the economy has declined by another 3.0%. 

Folks, this is not a normal business cycle recession.  It’s not a temporary blip caused by the economy accelerating ahead of itself, waiting for other factors to catch up.  This is the culmination of decades of economic policy that consisted of nothing more than creating new rugs under which the filth of our exploding trade deficit could be swept.  The government is running out of yarn for weaving new rugs.  The mortgage meltdown has exposed the mess to the world and relegated America’s credit rating to junk status.  Our foreign creditors have cut us off and left us to face the truth – we’re bankrupt.  We’ve sold off a significant fraction of our national net worth to finance the trade deficit and, with the shrinking dollar eroding what’s left even faster, we’re rapidly approaching the day when there will be nothing left – when foreigners own us lock, stock and barrel.  There’ll be nothing left to finance the trade deficit and, when that day comes, watch out!  The recession will explode into a full-blown depression.  Will it come to that?  Maybe not – at least not right away.  The government and the Fed has their spinning wheels running full tilt in a desperate effort to produce more yarn for another shabby rug. 


Polishing the Furniture in a Burning House

April 29, 2008

This is a link to a blog post that I think does a masterful job of illustrating how technological solutions to our environmental problems are absolutely useless if the problem of overpopulation is left unaddressed.  Kudos to blogger Tim Murray.


Candidates’ Advisors Duck Question on Overpopulation

April 29, 2008

The above is a link to a transcript of a forum conducted by the Society of Environmental Journalists.  Panel members included Jason Grumet, environmental adviser for Sen. Barack Obama (D-Ill.), Todd Stern, adviser to Sen. Hillary Rodham Clinton (D-N.Y.), and James Woolsey, environmental adviser to Sen. John McCain (R-Ariz.).

One of the journalists in attendance, Constance Holden of Science Magazine finally asked one of the most important questions of the political campaign thus far and, predictably, the candidates’ advisors ducked for cover!  Notice that each candidate’s advisor immediately turned the answer away from the original question and sought refuge in technological solutions.  If only the journalists had more time to probe deeper.

The critical exchange occurs about two thirds of the way through the transcript.  I’ve excerpted it below for your convenience:

Constance Holden: Constance Holden, Science magazine. As we all know, the driving force behind all these problems, environment, food, energy, is population growth. I know that’s not something anybody wants to directly address, but I thought it might help illuminate differences among the candidates if we could find out how your candidate thinks about this problem and whether they have any ideas about addressing it.

Jason Grumet: Sure and, as you point out rightly, I think that is fundamental when it comes to a question of global resources, the fundamental challenge. And it’s not just a question of population growth, but it’s also a question of the rest of the world beginning to aspire to the comforts that we have come to take for granted here.Sure and, as you point out rightly, I think that is fundamental when it comes to a question of global resources, the fundamental challenge. And it’s not just a question of population growth, but it’s also a question of the rest of the world beginning to aspire to the comforts that we have come to take for granted here.When people achieve an annual income of about $5,000 a year they start to buy cars and you are going to see somewhere between 3 and 500 million people in China find themselves in that position in the next decade. And so, I think, Senator Obama is very attentive to the fact that we’re not going to be able to fix this problem just around the edges, nor are we going to be able to go pat the rest of the world on the head and say, you know, we realize that refrigeration thing was really overrated. Why don’t you all just sweat it out?


So, fundamentally, it is going to be about profound changes in technology. The U.S. has not taken the kind of global leadership that I think we can in doing that.

One of the reasons why Senator Obama is committed to investing here in technologies which are controversial, like clean coal and like advanced nuclear, is based on the view that not only must we have those technologies here, but that it’s hard to imagine China deciding not to use their coal. And if we don’t play a role in developing what is truly zero carbon coal by making sequestration real, there’s not much we’re going to be able to do here. This isn’t American warming. It’s global warming.

And so I think I’m speaking somewhat maybe elliptically to your question, but fundamentally there is a recognition that we have to invent solutions that enable the rest of the world to prosper while not causing the whole place to cook.

Susan Feeney: Todd?Todd?Todd Stern: I don’t have an absolute direct answer on the population question, but let me make a point that’s perhaps relevant, which is that the controlling of CO2 and greenhouse gases in developing countries is going to be increasingly critical.I don’t have an absolute direct answer on the population question, but let me make a point that’s perhaps relevant, which is that the controlling of CO2 and greenhouse gases in developing countries is going to be increasingly critical.I think 75 percent of emissions growth in the next 25 years is expected to come from developing countries and China is, far and away, the lead among them. And 40 percent is coming from China and India and China together is 55 percent.



Now, what is going to be critical I think both from a political point of view and from a substantive point of view, and perhaps even in ways that relate to population, is that ways are going to need to be found in which developing countries can control the release of carbon in ways that do not require them to sacrifice their underlying development goals.

So, for example, if you think of China as an example, China is facing an environmental debacle right now. It’s not climate change, just ordinary pollution. The same kinds of policies that would help to control that would also greatly limit their greenhouse gases.

Now, again, the point is, as countries develop more, generally, I think it’s the case that population growth levels off to some degree. And so the nexus is we’ve got to find ways in which developing countries continue to develop, but develop in a way that leapfrogs in essence the high carbon base of the economy that developed countries rely upon.

Jim Woolsey: I’d like to pick up on that.I’d like to pick up on that.Susan Feeney: OK, one minute to follow please.OK, one minute to follow please.Jim Woolsey: I’m somewhat jaundiced on this because I drive two-thirds of the way to my office every day on sunlight. I have photovoltaics on the roof, batteries in the basement, and A-123 just converted my Prius to be a plug-in.I’m somewhat jaundiced on this because I drive two-thirds of the way to my office every day on sunlight. I have photovoltaics on the roof, batteries in the basement, and A-123 just converted my Prius to be a plug-in.It gets about 20 miles, essentially all electric. It’s not pie in the sky. These technologies are coming. The photovoltaics are radically improving in efficiency and dropping in cost. The batteries are getting better and better. And we shouldn’t assume that just because the Chinese young couple who have finally kind of made it into the middle class want to buy an automobile, that for the foreseeable future it’s always going to be an automobile propelled by carbon emitting sources of one kind or another.




The technology is changing. It’s changing partly because of things the U.S. government is doing, partially for market pressures, partly for a lot of reasons. But I think we should keep our eye on the possibility that with some of these technologies, particularly with respect to solar and particularly with respect to photovoltaics and batteries, we may be moving into an era in which we are going to be able to do to oil and to some extent to coal, what refrigeration did at the end of 19th-century to salt.

Salt was the only way to preserve meat at the end at the late 19th century. Countries fought wars over salt mines. It was a big deal. Within a relatively few years refrigeration destroyed salt’s monopoly. If you had some on the table today, where you use salt independent, where did it come from? You don’t care. I don’t care. It’s just a commodity. We need to do that to oil.”

Is it any wonder that we’re making no progress toward a national population policy?  None of the candidates’ advisors has the courage to address the issue or enough knowledge of the issue to discuss it intelligently.  Kudos to Constance Holden of Science Magazine for asking the most important question of our time. 


Bush: “It’s a sign that we’re losing confidence.”

April 29, 2008

Perhaps the most noteworthy comment from Bush’s typically-painful news conference today was one that the pundits completely missed in their post-conference wrap-ups.  The President was commenting on the rising tide of protectionist sentiment in the country.  “It’s a sign that we’re losing confidence,” he said. 

It was probably a Freudian slip, but one that came very close to Jimmy Carter’s “malaise” speech, in which Carter made a similar observation, although never using the word “malaise” himself.  That word was used by pundits in describing Carter’s tone, but it came to define the overall failure of his policies.  In this case, it’s an admission by Bush that the country has lost confidence in his policies. 

You bet we’re losing confidence!  We’re losing confidence in the same way that people lose confidence in any approach (in this case, “free” (blind) trade policies) that, after decades of experience, have proven to be a complete and utter failure.  How else can you describe a trade policy that has produced a cumulative deficit of $9 trillion since 1976, one that has destroyed the value of the dollar and transformed America’s credit rating in the global community to “junk” status?  Perhaps we’re not so much losing confidence as we are wising up. 

One final comment on the news conference:  it was another opportunity lost for the journalists.  In spite of all the discussion of soaring oil and food prices and whether or not supplies are adequate or even in decline, the thought never occurred to any of the journalists to ask Bush why we then continue to pour fuel on the fire by maintaining an extremely high rate of immigration.  How I’d love to hear him try to answer that one.  He might set a new Bush record for hemming, hawing and “uhhhhhs!”

The end of this dismal chapter in America’s history can’t some soon enough. 


In Meeting with Guatemalan Leader, Bush Betrays America Again

April 29, 2008

While meeting with Guatemalan President Colom, Bush came down on the wrong side of our two most critical issues again – trade and immigration.  Bush supported free trade with Guatemala and offered hope to Colom of granting “temporary protected status” to Guatemalan immigrants, both legal and illegal. 

With a population density near that of China, Guatemala has nothing to offer Americans in trade for access to our healthy market except another automatic, irreversible trade deficit and loss of manufacturing jobs for American workers. 

And rampant population growth threatens our economy and quality of life. Immigration, both legal and illegal, are fueling this growth.  I’m not talking just about the obvious problems that we see in the news – growing dependence on foreign oil, carbon emissions, soaring commodity prices, environmental degradation, etc. I’m talking about the effect upon rising unemployment and poverty in America.

Our policies of encouraging high rates of immigration are rooted in the belief of economists that population growth is a good thing, fueling economic growth. Through most of human history, the interests of the common good and business (corporations) were both well-served by continuing population growth. For the common good, we needed more workers to man our factories, producing the goods needed for a high standard of living. This population growth translated into sales volume growth for corporations. Both were happy.

But, once an optimum population density is breached, their interests diverge. It is in the best interest of the common good to stabilize the population, avoiding an erosion of our quality of life through high unemployment and poverty. However, it is still in the interest of corporations to fuel population growth because, even though per capita consumption goes into decline, total consumption still increases. We now find ourselves in the position of having corporations and economists influencing public policy in a direction that is not in the best interest of the common good.

The U.N. ranks the U.S. with eight other countries – India, Pakistan, Nigeria, Democratic Republic of Congo, Bangladesh, Uganda, Ethiopia and China – as accounting for fully half of the world’s population growth by 2050. The U.S. is the only developed country still experiencing third world-like population growth, most of which is due to immigration. It’s absolutely imperative that our population be stabilized, and that’s impossible without dramatically reining in immigration, both legal and illegal.


U.S. Population to Hit 1 Billion by 2100?

April 29, 2008

Pray to God that our nation’s leaders come to their senses before this ever happens.  It’s imperative that they understand that economists and corporations, interested only in macroeconomic numbers like GDP, total sales volume and profits are taking this country in a direction that is destroying our quality of life and driving up unemployment and poverty. 

“‘What do we do now to start preparing for that?’ asks Arthur Nelson, co-director of the Metropolitan Institute at Virginia Tech, whose analysis projects that the USA will hit the 1 billion mark sometime between 2100 and 2120. ‘It’s a realistic long-term challenge.’”

Instead of wasting effort on preparing for one billion people, here’s an idea, Arthur:  start raising awareness of overpopulation and start talking about how to stabilize our population!

“‘We have a surprising amount of space in existing urban areas,’ he says. ‘We can easily triple the population in our urbanized areas with much of that growth occurring on, of all things, parking lots.’”

And thus we will then be experiencing the very effects of overpopulation that I have warned of in Five Short Blasts.  Come on, Mr. Nelson, use your head.  What will all those people do for a living when our per capita consumption falls to a fraction of today’s level.  There is no other United States we can turn to as an export market to sustain our bloated work force in the same way that other overpopulated nations use us. 

“Nelson, who will become the founding director of the Center for the New Metropolis at the University of Utah this fall, says many events from disease to famine could throw his projections off course.

‘We could certainly have a comet hit the planet and pulverize the atmosphere,’ he says. ‘But what if none of these things happen? … Do we plan on a calamity, do we assume that half the population’s planet might be wiped out? I don’t think that’s very responsible.’”

Nor do I, Mr. Nelson.  Neither is it very realistic.  That’s what led me to think beyond such scenarios to find the real limitation of human population, the collision between falling per capita consumption and rising productivity, resulting in unemployment and poverty.  It’s poverty, history’s number one killer, that will eventually get us if we’re not smart enough to take action now. 

Somewhere, God is looking down on us and just shaking his head.


Former World Bank Chief Blames Greenspan & Bush for Financial Crisis

April 28, 2008

I don’t disagree with Joseph Stiglitz’s analysis as far as it goes, but he altogether misses the main cause of the U.S. financial crisis: our “free” trade policy which has produced a $700+ billion per year trade deficit and a cumulative $9 trillion trade deficit since 1976. But what else would you expect from an economist? To lay the blame where it really lies would be to disavow their beloved “principle of comparative advantage,” the flawed, 200-year old theory upon which globalization is based.