Recession Marches On

April 30, 2008

http://www.reuters.com/article/ousiv/idUSN2932297520080430

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:

http://openwindowpublishingco.com/cgi/wp/?p=60

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. 

Pete 


Polishing the Furniture in a Burning House

April 29, 2008

http://sinkinglifeboat.blogspot.com/2008/04/polishing-furniture-in-burning-house.html

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.

Pete


Candidates’ Advisors Duck Question on Overpopulation

April 29, 2008

http://www.eenews.net/tv/transcript/775

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. 

Pete


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. 

Pete


In Meeting with Guatemalan Leader, Bush Betrays America Again

April 29, 2008

http://afp.google.com/article/ALeqM5i1husekv0SAY-7ALHc63hZXtqj7w

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.

Pete


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

April 29, 2008

http://www.usatoday.com/news/nation/census/2008-04-28-onebillion_N.htm

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.

Pete


Former World Bank Chief Blames Greenspan & Bush for Financial Crisis

April 28, 2008

 http://www.reuters.com/article/gc06/idUSL2719096320080427

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.

Pete


“Global economy a world of hurt for U.S. workers” by Cynthia Tucker

April 26, 2008

http://www.ajc.com/opinion/content/opinion/tucker/stories/2008/04/25/tucked_0427.html

This op-ed piece is by Cynthia Tucker, columnist for the Atlanta Journal-Constitution.  She has appeared on the PBS News Hour with Jim Lehrer many times over the years and is a highly respected journalist.

She absolutely hits the nail on the head with this piece in which she takes John McCain to task, but her criticism could apply equally to virtually any politician.  This editorial is a must read!  Following are a couple of key quotes:

“The campaign stop, part of McCain’s tour of “forgotten places,” highlighted the senator’s reputed penchant for straight talk, for refusing to pander no matter how unpopular his message. “Protectionism and isolationism have never worked in American history,” McCain said, according to The Associated Press.

He may be right, but McCain’s message would be more palatable if he were offering hard-pressed workers something other than the same dried-out message about education and job training. Retraining for what?”

Exactly!  I’ve wanted to scream the same question at the television every time I hear another politician suggest “job retraining” for displaced workers!  And I can’t let McCain’s lie that “Protectionism and isolationism have never worked…” pass.  The fact is that for the first 170 years of our nation’s history, we relied upon tariffs for all of our federal revenue and to afford domestic industry the protection it needed to grow.  As a result, we built ourselves into the most powerful, wealthy nation the world had ever seen – its preeminent industrial power and the envy of every nation.  By contrast, since turning toward “free” trade with the signing of the Global Agreement on Tariffs and Trade in 1947, our nation has been reduced to a skid row bum, literally begging the rest of the world for cash to keep us afloat.  McCain was right when he said he knew almost nothing about economics. 

“Here’s what the new economy has done for the average American: precious little. In 2000, median yearly household income, in 2006 dollars, was $49,447, according to The Wall Street Journal, which crunched data from the Census Bureau. By 2006, median household income had fallen to $48,223.”

In 1973 it was $40,000.  Take away the enormous increase enjoyed by the top one or two percent, and factor out the understatement of inflation by the Consumer Price Index, and you’d find that it has actually declined since then.  In other words, Americans are worse off today than they were 35 years ago. 

“… Princeton economist Alan Blinder, a longtime proponent of cross-border commerce, now says that it will create more severe social and economic upheaval than he once believed. He predicts that 30 million to 40 million American jobs are likely to be shipped overseas in the next 10 to 20 years, some of them in white-collar occupations such as financial analyst, microbiologist, graphic designer, radiologist and, oddly, economist.”

Alan Blinder is a former Fed governor and a long-time cheerleader for “free” trade and the supposed “benefits” it was going to bring to America.  Thanks for nothing, Alan!

“Those who still put great faith in free trade — Democrats and Republicans alike — need to look beyond their platitudes to see the displacement and anxiety it has created among middle-class workers. Their worries are not born of ideology but of a hard and bitter experience that has left them anxious about the future. When the factory where you’ve worked for years shuts down or your company stops offering health insurance, you’re not much interested in hearing about Adam Smith and theories of comparative advantage.”

It’s especially encouraging to hear someone call into question Ricardo’s (not Smith’s) principle of comparative advantage, the economic theory upon which the concept of “free” trade is based!

It’s great to see more and more prominent economists and journalists beginning to wake up to what’s being done to our country by “free” (blind!) trade. 

Pete


“WHAT’S WRONG WITH MARKET ECONOMICS AND GDP?” by HAZEL HENDERSON: 24/04/2008

April 26, 2008

http://www.maximsnews.com/news20080424whatswrongwithmarketeconomicsandgdp10804241209.htm

This may be the most important and relevant article I’ve linked to yet.  Please take the time to read it.  (By the way, don’t be fooled by the “maximsnews” name of the site.  It’s not the men’s magazine.  This is a site for news for the United Nations.)  This is an opinion piece published by Hazel Henderson.  She is author of Ethical Markets: Growing the Green Economy (2007) and other books.  She co-organized the Beyond GDP Conference in Brussels, representing the Club of Rome.

In the first chapter of Five Short Blasts, I pointed out the folly of using GDP as a measure of the health of our economy.  I also pointed out that per capita GDP is a much better measure, something that Ms. Hazelton also endorses in her article.  It seems I’m not alone and even some economists are beginning to question the value of GDP as a yardstick of economic progress.  This would be truly a game-changing development if more economists latch onto this new idea.

The following are some highlights from her article:

“  The credibility of the economics profession and its macroeconomic and risk models has been shattered by the Wall Street-led financial meltdown.  Many analysts see this worst crisis since World War II as the beginning of the end of market fundamentalism as the driver of globalization. 

…the long-simmering critiques of money-based GDP/GNP national accounts are coming to a head.  These popular critiques, including my own, were summarized by the late Senator Robert F. Kennedy in 1968 in a speech delivered to the University of Kansas.  Even GDP’s creator, Simon Kuznets, worried about using GDP as an overall indicator of national progress and well-being, saying that “the welfare of a nation can scarcely be informed from a measure of national income.”

…The cracks in GDP as a scorecard of national progress began appearing at the UN Earth Summit in Rio de Janeiro in 1992, followed by the European Parliament’s conference in 1995 on “Taking Nature Into Account.”  In November 2007, the European Parliament again took up the issue at the urging of the European Commission (www.beyond-gdp.eu). 

…By March 2008, the US Senate picked up these critical debates and the plethora of new, broader indicators of health, education and environment.  The Senate’s Committee on Commerce held its own hearing on “Rethinking GDP as a Measure of National Strength” – a low-key academic exploration on how all of these new measures of overall quality could be used to correct all the now-recognized errors in GDP that economic textbooks perpetuate.

…In its March 13, 2008 issue, even The Economist weighed in with “Grossly Distorted Picture,” criticizing the widespread focus on GDP-growth.  This “growth fetish” has long been the subject of countless critiques by environmentalists and even a few economists.  To see this journal of economic and free-trade orthodoxy now also criticizing GDP-growth signals a tipping point in this long debate.  Echoing so many earlier critiques, The Economist pointed out that a better measure than rates of GDP-growth would be to compare GDP per head – a much more tangible sign of progress that takes into account the growth of population. 

…The Economist is correct that the growth of average income per capita is the more realistic indicator.  But, they omit another problem with these GDP measures: averaging per capita of growth in incomes masks how that income is distributed.  Averaging incomes across the whole population could mean that a country might have a few billionaires while most of its citizens live in poverty.

…Let’s agree that GDP has outlived its usefulness (started as a World War II measure of war production). 

I can’t emphasize enough the importance of this development.  If economists begin to acknowledge that growth, as measured by such crude instruments as GDP, isn’t necessarily a good thing, then we’ll be taking a huge first step toward real sustainability. 

Pete


“Culture of Death?”

April 26, 2008

Last night I encountered a blogger who referred to concerns about overpopulation as a “culture of death.” I attempted to post a reply; I just can’t let something like that stand. But the reply wouldn’t go. It seems the site was experiencing some kind of problem. (Maybe the problem was some sort of automated, cyber-close-mindedness?)I thought this would be a good topic for a post of my own. This is a reaction that those of us concerned about overpopulation often get. We’re accused of promoting a “culture of death.” I’m not sure what twisted logic makes them think that’s an appropriate metaphor; perhaps they equate a concern with overpopulation with advocating abortion. Or perhaps they think that we’d just like to see everyone else cease to exist. Neither could be further from the truth. We want a lower birth rate – true – but that can easily be achieved without resorting to abortion. This is why I removed it from the population equation in Five Short Blasts. It’s a non-starter for many people. They won’t even consider your position if it’s included. So why torpedo the discussion with something that’s irrelevant?

If you encounter this “culture of death” accusation from someone who doesn’t believe that we face a problem of overpopulation, politely suggest to them that it is actually they who are promoting a culture of death. Since there are only two factors in determining the size of the world’s population – birth rate and death rate – and since the population must stabilize at some point, then a refusal to consider a lower birth rate is, by default, a choice for a higher death rate. And if they can’t recognize that the population will, in fact, stabilize eventually, then they need some education in some simple matters of physics, like the finiteness of the supply of elements available for the make-up of human flesh. (It’s a ridiculously extreme limitation, but one that no one can deny, not even the most fanatic economist who insists that any resource shortage can be overcome.)

By and large, the people who spout this “culture of death” stuff are self-righteous religious fanatics who let their pro-life zeal pervert a reasonable stance against abortion into an illogical advocacy for never-ending population growth. Don’t be intimidated by their passionate attacks. Take them on. The truth is on your side.

Pete