Anti-border tax coalition

April 20, 2017

http://www.reuters.com/article/us-usa-tax-lobbying-idUSKBN17C2HQ

I’ve been predisposed for a week or so and it’s now time to get caught up on some things.  There’s been a lot in the news lately regarding Trump administration policies on immigration and trade.  I’m extremely pleased with what’s happening on immigration, less so with what I hear about Trump waffling on the idea of a “border tax” (another name for tariffs).

But I’ll start with the above-linked story that came out last week because this is a perfect example of the divergence of interests that takes place when a nation becomes “economically over-populated” or takes on the characteristics of such an economy through free trade with a badly overpopulated nation.  For the benefit of those unfamiliar with this concept, this divergence of interests is one of the consequences of the inverse relationship between population density and per capita consumption.  As a society becomes more densely populated, the need to crowd together and economize space begins to erode per capita consumption.  As per capita consumption declines, so too does per capita employment.  The result is rising unemployment and poverty.   It’s in individuals’ best interest – in the best interest of the common good – that this situation be avoided.  (To better understand this concept, I encourage you to read Five ShortBlasts.)

However, while per capita consumption may begin to decline as a population density reaches a certain level, total consumption continues to rise with a growing population.  Who benefits from that?  Anyone in the business of selling products.  Not only do they benefit from the increase in sales volume, but they benefit further as the labor force grows faster than demand, putting downward pressure on wages.  Thus, it’s in corporations’ best interest to see population growth continue forever, and to pursue more markets through free trade.

So it’s in the best interest of the common good that we avoid meshing our economy through free trade with nations whose markets are emaciated by overcrowding and who come to the trading table with nothing but bloated labor forces hungry for work.  But it’s in corporations’ best interests to grow the overall customer base through free trade with those same nations.  So it comes as no surprise that a big-business coalition is eager to steer lawmakers away from any tax plan that would include a “border tax” (a tariff) that might shut them out of their foreign markets.

They call themselves “Americans for Affordable Products,” making it sound as though it is individual Americans who make up this coalition and not global corporations.  They want us to believe that products will become less affordable.  While prices for imports may rise, they want you to forget that those increases would be more than offset by rising incomes and falling tax rates.  They don’t care if the border tax benefits you.  All they care about is that it may not necessarily benefit them.

So which of these competing interests will lawmakers heed – their wealthy corporate benefactors or the angry Americans who swept the Trump administration into power on his promise to enact a border tax and bring our manufacturing jobs back home?  Money talks and I fear that groups like this coalition are having an effect.  Trump and Republicans would be wise to ignore them.  Democrats paid the price for ignoring the plight of middle-class Americans when Obama betrayed his promise of “hope and change.”  Those same middle-class Americans will pull the trigger on Trump too if he doesn’t come through.

 

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Make America Great Again

October 25, 2016

I wonder how many post-baby boom Americans – Gen Xers and millenials – can even relate to Donald Trump’s campaign slogan.  “Make America Great Again?”  What’s not great about it now?  We’re the leader of the free world – the most powerful nation on earth.  We have a high standard of living and every modern convenience you can imagine.  We have cell phones, Facebook, Twitter and YouTube.  We make ten bucks an hour schlepping lattes at Starbucks and have nice little apartments where we can go to watch The Voice and Dancing with the Stars in the evenings.  How much better could it get?

Undoubtedly, the once-great America that Trump remembers – an America that anyone under 50 is too young to have ever known – was the post-World War II America.  It was a land of almost unimaginable industrial might.  By the end of the war, the shipyards on the West Coast were building complete destroyers from the keel up in only two days.  The Willow Run bomber plant in Detroit was cranking out a new B-24 bomber every hour, day and night, seven days a week.  Other plants cranked out trucks and tanks by the thousands.  And massive steel mills all around the country that stretched for miles kept all of these plants supplied.  Neither Germany nor Japan nor any other nation on earth could even come close to matching that kind of industrial output.

When the war ended, industry transitioned back to a peacetime economy.  The factories in Detroit resumed making cars and all of the other thousands of factories around the country resumed making appliances and every other product imaginable.  American products were the envy of the world.  European cars were laughable compared to American cars.  I can remember taking Europeans for a ride in my car and their astonishment at the latest feature – cruise control.  Hell, indoor plumbing and sanitation weren’t even commonplace in Europe back then.  And Asia was downright primitive.

Anyone who was a high school graduate could get a good job at the local mill or assembly plant making enough money to buy a home and a car – as much money as a college graduate, though the college graduate would eventually earn more with experience and advancement.  Not only was the pay good, but health care was often provided for free as a benefit.  Co-pays and deductibles?  Those concepts didn’t exist.  And a good pension was a given.  Companies competed for college graduates.  Each could choose from a half dozen different offers.

The U.S. space program quickly left the Russians in the dust, putting men on the moon while the Russians had barely moved beyond sending monkeys up for a couple of orbits.  America was the world’s bread basket.  Even the Russians were dependent on American grains.  And everything about American culture – our clothing, music, movies and magazines were the envy of the world.

That’s when America was great, in a way that those who didn’t live it can’t even imagine.  But even while all this was going on, the seeds of America’s decline had already been sown.  Weary of two world wars in as many decades, the time had come to address the high rates of unemployment in overpopulated nations like Germany and Japan that had fostered the rise of its fascist leaders.  Eager to put their new, untested theory of free trade to the test, economists convinced world leaders that free trade was the route to global peace and prosperity.  So in 1947 the U.S. signed the Global Agreement on Tariffs and Trade, or “GATT,” beginning the process of dismantling the tariff structure that had helped build America into the world’s preeminent industrial powerhouse.

What could it hurt?  Sharing a little of the wealth seemed a small price to pay to prevent the next war, one that might doom humanity, in light of how the last one just ended with the dawn of atomic weapons.  Besides, the economists convinced us, growth in the world economy would only add to the demand for American products.

It started innocuously enough.  A few Volkswagens from Germany.  Toys and souvenirs and trinkets from Japan.  The words “made in Japan” became synonymous with “cheap junk.”  Then came small Honda motorcycles, soon to be followed by cars of the same brand – cheap, two-cycle, chain-driven death traps that were painted paisley and sold as novelty items.

But that trickle quickly evolved into a tidal wave.  By 1975 our trade surplus had vanished and our national debt, which had been shrinking dramatically since the end of World War II, began to rise again.  In the 1990s, the Clinton administration passed NAFTA, exploding our trade deficit with Mexico and then, as its closing act, granted China “most favored nation” trade status.  We all know how that went.  2016 marks our 40th consecutive year with a trade deficit.  And the $13 trillion growth in our national debt during that period can be blamed entirely on the trade deficit’s cumulative drain on the economy.

Returning to post-war America, we were a nation of 150 million people with a seemingly boundless supply of resources and wide open spaces.  During the morning rush hour, you had to wait through two traffic light changes to clear the intersection instead of one.  President Eisenhower had just commissioned the construction of the interstate highway system.  Freeways were virtually devoid of traffic.

The term “illegal alien” didn’t exist in those days.  There were migrant workers who came to harvest crops that had to be hand-picked and, when the harvest was over, they were gone.  Then, something changed.  They didn’t leave.  We began to notice large groups of Mexicans gathered in parking lots – “day laborers” waiting for pickup trucks to take them to some job site – probably a house under construction – where the contractor was happy to have the “off the books,” tax-free labor.  Now, people who had lost their jobs in the auto industry and needed construction work found themselves displaced yet again.  And our population that once grew by a million people per year began growing at two or three times that pace – even ten times that pace when you include the results of the amnesty programs for illegal aliens.  Now we’re a nation of 325 million.  In spite of that population growth, which economists call a driver of economic growth, good-paying full-time jobs are scarce and household incomes and net worth, for all but the top few percent, are declining.

Born two years after the signing of GATT, at the age of 67, I can honestly say that I have never once seen my country stand up for its citizens and workers.  Oh, there’s been plenty of times when our military has asserted itself, often ill-advisedly, in some foreign conflict.  But I’m talking primarily about trade negotiations, but also other diplomatic negotiations, like deals to keep North Korea in check or, more recently, Iran.  Not one damn time do I remember the U.S. coming away with a deal that was good for American workers.  Can you?  If so, please feel free to refresh my memory.

There’s a very solid reason why free trade and globalization have failed Americans.  It’s the inverse relationship between population density and per capita consumption at work.  Instead of being an engine of economic growth, our population growth has been cancerous and toxic, eating away at per capita consumption.  And by co-mingling our economy with those of grossly overpopulated nations, the effect has been accelerated.  The result is that young Americans face the prospect of being the first generation to fare more poorly than their parents.

By far, the two factors most critical to restoring America to its nearly-forgotten greatness are first a dramatic shift in trade policy away from “free” trade to a focus on balance.  All trade deals must be based on the premise that the U.S. will buy from its trade partners no more than they are willing to buy from us.  Contrast that with today’s trade policy that says, “If you can make it and get it here, we’ll buy it.”

Second, run-away population growth that is fueled almost entirely by equal parts of both legal and illegal immigration must be reined in.  Illegal immigration is the place to start.  But even legal immigration needs to be dramatically curtailed.

Donald Trump is the first candidate in my long memory who has promised to do exactly these two things – to tear up existing trade deals and start over, putting America first, and putting an end to illegal immigration.

I personally don’t much like Donald Trump.  Never have.  It’s a shame that this message has been overshadowed by some of his antics and the things he’s said that have been caught by open mics.  But as someone who attended an all-male high school, followed by an all-male university, followed by three years in the navy, you can believe me when I say I’ve heard worse things spoken more commonly than some would like to believe.  But that’s not an excuse for his behavior.

It’s like this:  imagine that we’re at war, and it’s going badly.  We need to replace the general in charge.  He’s a nice guy, one we’re all proud to serve under and be associated with, but ineffective.  We have two candidates in mind to replace him.  One is similar – a great person but just as ineffective and likely to yield the same results.  The other is a foul SOB, but one who knows how to kick ass and get things done.  Like I said, it’s a war.  Do we want to win or don’t we?  There are times when the latter choice is the right one, and this is one of those times.

In two weeks we have a chance to reverse America’s decline.  We have a chance to put an end to our role as the host in globalization’s host-parasite relationship.  It’s a chance that I began to doubt would ever come.  It may not come again. Let’s stand up for America for a change.

 

 

 


Per Capita U.S. Auto Sales Declining

January 9, 2016

New vehicle sales were released a couple of days ago.  The headline of the story is that sales set a new record in 2015 – 17.47 million, beating the previous record set in 2000.  It got me wondering.  2000 was fifteen years ago.  Since then, the U.S. population has grown by about 13%.  So the new record should have easily topped the 15-year-old record, right?  Wrong.  It barely beat the 2000 record by only about 100,000 vehicles, or by about 0.6%.

So I couldn’t help but wonder:  is it possible that we’re already beginning to see a decline in the per capita consumption of vehicles in the U.S., which is what the inverse relationship between population density and per capita consumption that I presented in Five Short Blasts would predict?  In Chapter 10 of the book I theorized that the U.S., though much less densely populated than many other nations, had already crossed the threshold where a growing population density begins to erode per capita consumption and, with it, the economy, and that this happened sometime perhaps in the ’50s or ’60s when our population was half of what it is today.

New vehicle sales is one piece of consumer data that’s readily available and not a closely-guarded secret of some market research company.  So it was time to find out how new vehicle sales have changed over time as our population has grown.  I plotted such sales going back to 1968 versus the U.S. population and here’s the result:  auto sales 1968-2015.  The following are some observations about this chart:

  1. New vehicle sales tend to swing up and down pretty wildly, dropping precipitously during recessions and shooting back up during recoveries.
  2. I don’t know what  happened prior to 1968, but it’s clear that between 1968 and 1978, the per capita consumption of new vehicles was rising quickly, jumping 44% to .067 vehicles per person, which is about one vehicle for ever 15 people.
  3. That figure of .067 vehicles per person in 1978, when our population was about a third lower than today, still stands as the record level.  The next peak of per capita consumption of new vehicles in 1986 didn’t quite rise to the same level, reaching 0.66.  The next peak in 2000 – the record that was just broken this year – reached only 0.62 new vehicles per person, well short of the 1978 peak.
  4. This total vehicle sales record set in 2015, when expressed in per capita terms, even misses the 2000 mark by quite a large margin.

Clearly, per capita consumption of new vehicles is in decline, and has been declining since as far back as 1978.  One could argue that 2015 may not be a peak, that vehicle sales have been climbing steadily since 2009 when they reached their lowest level of the entire 1968-2015 period.   The auto industry projects that sales could go higher in 2016.  I think that’s unlikely.  First of all, though 2015 was a record year, the sales rate in December fell to its lowest level since June, and December is typically one of the strongest sales months of the year.  Secondly, 2015 was the sixth consecutive year of sales volume increases, the longest of the 1968-2015 period.  Previously, the longest period of annual sales volume increases was four years, from 1983-1986.  Finally, look at what’s happening in the economy in general beginning in December.  Many economic indicators are now turning negative.  Most would agree that the auto industry’s expectations of a stronger 2016 are a pipe dream.

So just how fast is per capita consumption of new vehicles declining?  To find out, I re-plotted the data beginning with 1978 and had the computer generate a trend line with an equation to describe it.  Here’s the new chart:  auto sales 1978-2015.  Now you can see the clear downward trend.  Of the four different mathematical formulas that could be used to describe the trend – linear, logarithmic, exponential and power – the best fit was a linear equation.  The formula is included in the chart:  f(x) = -.0003x + .06.  (I’ve rounded off the two constants for clarity.)  This means that as our population continues to grow at the same rate – about 1% per year – per capita new vehicle sales will decline by .0003, which is about a 0.5% decline.

Why is this happening?  It’s pretty simple, really.  Most of our population growth is in urban areas where there’s been strong demand for apartment-style housing.  We examined in a recent post how renters are increasingly paying a greater percentage of their incomes on rent.  And people who live in apartments in metropolitan areas face big obstacles when it comes to car ownership – especially the lack and high cost of parking, both at home and at work, not to mention the traffic issues in the cities.  It’s just cost prohibitive to own a car, so many opt for public transportation.  The root cause of this situation, though, is ever-worsening crowding driven by the increase in population density.

Sure, there are many factors that may be at play here but, for each one you can name, I can name another offsetting factor.  Cars are built better and last longer?  Everything about our society pushes people to buy new cars more often – not less.  Cars are less affordable?  Dealers now practically give cars away, with loan durations of six or seven years, when three years was the norm back in ’78.

This decline in the per capita consumption of vehicles is yet another example of the conflict of interest that’s created once a population breaches that critical level and begins to drive down per capita consumption.  If you’re a consumer, it’s in your best interest that the population stabilize or even shrink a bit, increasing your quality of life and enabling you to live in uncrowded conditions where you can enjoy all that life has to offer, including the freedom to own a car and travel at will.  But if you’re General Motors, it’s in your best interest that the population continue to grow because if the population grows by 1% and per capita consumption declines by 0.5%, your total sales volume still increases.  And we saw this happen in 2015.  Sales set a new record in spite of a significant decline in per capita sales.  And so it’s also in the best interests of General Motors to fund candidates who support high rates of immigration.

Immigration-fueled population growth is steadily ruining our quality of life.  Though few really understand why, more and more Americans seem to sense this and it at least partly explains the popularity of the few candidates who at least oppose illegal immigration.

 


Renters financially stressed

December 29, 2015

http://www.cnbc.com/2015/12/09/housings-new-crisis-half-your-income-for-rent.html

I’m finally getting caught up on some things.  One of them is this above-linked article that appeared on CNBC three weeks ago.  It illustrates the fact that, in America, home ownership is declining and housing is becoming less affordable, even for renters.

In Five Short Blasts we saw how a rising population density, as it does with the per capita consumption of virtually everything, dramatically reduces the per capita consumption of dwelling space.  The average citizen of Japan, a nation ten times as densely populated as the U.S., lives in a dwelling less than one third the size of the average American’s.  So it’s only reasonable to expect that, as America grows more densely populated, the same thing will happen:  our homes will get smaller.

Indeed, as the per capita consumption of everything declines, it’s inescapable that employment will decline as well, and poverty will increase.  People who are poor can afford even less, exacerbating the decline in consumption.  Thus, worsening population density and rising poverty work synergistically to spawn a downward spiral.

This article is evidence of the downward spiral in the economic condition of Americans:

“The crisis in the number of renters paying excessive amounts of their income for housing continues, because the market has been unable to meet the need for housing that is within the financial reach of many families and individuals with lower incomes. These affordability challenges also are increasingly afflicting moderate-income households,” said Chris Herbert, managing director of the center.  (Harvard Joint Center for Housing Studies)

… Homeownership is now at the lowest level in half a century, and some expect it could go significantly lower. Household formation is expected to continue its slow rise, but almost entirely on renter households, not owner households.

It’s important to note the relationship here between incomes and housing.  Yes, it’s only natural that poorer people will tend to be renters instead of home buyers and will occupy smaller dwellings.  But the trend toward smaller dwellings also reduces employment in the housing industry, just as lower per capita consumption reduces employment in every industry.  We consume less because we grow more crowded.  We grow poorer when we consume less.  And we then consume even less because we’re poorer.  It’s a process that feeds on itself.

There’s only one way to break this cycle – to stop the rise in population density and level off our population at a sustainable level.


Small Scale is “New Trend”(?)

June 18, 2013

http://www.reuters.com/article/2013/06/02/us-usa-apartments-micro-idUSBRE95105M20130602

The above-linked Reuters article is something I came across a couple of weeks ago.  It reports on a new trend in housing – “micro-apartments.”

Tiny apartments … are cropping up in major cities around the country to meet the demand of people who are short on cash but determined to live in areas with otherwise pricey rents.

They are “short on cash” because incomes are declining relative to housing prices.  They are determined to live in “areas with otherwise pricey rents” because that’s where the jobs are – in the cities.

Micros … usually offer less than 200 square feet including private bathrooms, and they typically come furnished, sometimes with built-in beds and other amenities to save space.  … Most feature a group kitchen that may be shared among eight units … Few come with parking

This isn’t a “new trend” at all.  It’s the process of population densification that’s inescapable when you continue to cram more and more people into the same space, as the U.S. (and indeed the entire world) is doing as our population grows ever larger. 

Think about what this is doing to per capita consumption of products.  Let’s use as a baseline the single-bedroom apartment I occupied when I took my first job after being discharged from the navy.  It was about 400 square feet.  It had a small kitchen, bathroom and living room, and closet space.  I had a designated parking space in a carport. 

The units reported on in this article are half that size.  So the per capita consumption of the materials used to construct the floor is cut in half.  Per capita consumption of materials used in the construction of the walls (lumber, drywall, insulation, paint, wiring and electrical fixtures) is reduced by 30% (assuming a square floor space).  If “group kitchens” are shared among eight units, the per capita consumption of ovens, kitchen sinks, refrigerators and small appliances is reduced by 87%.  Since “few come with parking spaces,” then, no doubt, the occupants rely on mass transit, or perhaps bicycles, and the per capita consumption of cars falls to near zero.

Take a walk through a Lowe’s or Home Depot and, as you do so, imagine the per capita consumption of each product that you see for people who live in these micro apartments.  Lawn mowers and other lawn and garden tools and products?  Zero.  Major appliances?  Zero.  Doors and windows?  Plumbing and electrical?  As close to zero as you can get.

This trend to smaller living quarters isn’t just isolated to a small slice of the population.  Aside from the wealthy few percent who have trended toward “Mc-mansions,” Americans’ dwelling spaces are getting smaller as land available for development dwindles.  Homes are smaller and are situated on smaller lots.  And those homes now house more people, as young people choose to stay with Mom and Dad later into their lives as their purchasing power shrinks relative to the cost of housing.

And that’s just homes and apartments.  Consumption of vehicles is declining as people are forced into more crowded city conditions where parking spaces are at a premium and streets are choked with gridlock.

But each one of these micro apartment dwellers goes to work each day and is even more productive than workers of the past.  And herein lies the problem.  It’s economically, physically and literally impossible for people to be more productive while consuming less and be able to maintain full employment.  Warehouses will eventually fill to maximum capacity as production exceeds sales, eventually leading to layoffs and growing unemployment. 

And what happens to per capita consumption then?  People who have lost their jobs consume even less, beginning a vicious cycle of falling consumption and worsening unemployment. 

The inverse relationship between per capita consumption and population density isn’t just a theory.  It’s real.  It’s happening, even in the U.S., once the land of wide-open spaces, but now where out-of-control immigration has turned us into an urban jungle and is fueling one of the fastest population growth rates in the world.  That this results in worsening unemployment isn’t just a theory; it’s more akin to a law of physics.  It’s inescapable.

Less consumption and living a simpler, more efficient life may seem to be a recipe for saving the planet, but it’s not.  The sheer volume of new consumers overwhelms any such savings.  Instead, it’s a ploy to make you feel better about the population growth that stokes sales volumes for corporations.  It’s a path away from a high standard of living and back to the poverty that mankind has worked so desperately to escape.

These aren’t difficult concepts, yet they continue to elude the field of economics.  The truth can’t be found if it lies in a place where you refuse to look, and the subject of population growth is one that economists fear above all others.


China’s Economy: Heavy on Stimulus, Light on Consumption

January 22, 2013

http://www.reuters.com/article/2013/01/20/us-china-economy-idUSBRE90J0I820130120

The above link will take you to an interesting piece that appeared on Reuters this weekend.  Much of the celebrated growth in China’s economy has been driven by debt-fueled infrastructure spending and other private investment-funded development in anticipation of western-style consumption by its 1.2 billion consumers – consumption that has yet to materialize.  The article also notes that the explosion in property values there, while a boon to the developers, is taking a big bite out of the Chinese consumers’ ability to afford anything other than their cramped, overpriced living quarters.  This should come as a surprise to no one, since the price of dwelling space reaches exhorbitant levels in every other densely populated area of the world, whether it’s New York City or the entire country of Japan.  People who spend all of their income on rent and food have little left for the purchase of other products. 

The economy picked up in the fourth quarter as a spurt of infrastructure spending orchestrated by Beijing broke seven straight quarters of a slowdown. Consumption’s contribution to growth fell in the fourth quarter for the third straight quarter even though retail sales were rising in each of the last three months.

Retail sales, or total consumption, continues to grow but consumption’s share of the Chinese economy is declining.  It’s exactly what happens in a society whose population density is beyond that critical point where over-crowding impairs per capita consumption.  It’s happening not only in China, but throughout the world as the global population continues to grow.  While the sum total of the world’s economic output continues to grow, consumption’s share of the economy is declining as unemployment rises, making the world ever more dependent on deficit spending to maintain an illusion of prosperity.  Deficit spending has grown to the point where there aren’t even enough investors willing to fund it, forcing all of the world’s central banks to accelerate their money printing to buy up their nations’ own debts. 

And it’s all to no avail.  Deficit spending is increasingly less effective in stimulating the economy because people living in cramped conditions can’t consume more products no matter how much money you give them to do it.  China’s no different and the world is in for a rude awakening when the big plans for China’s economic growth go bust.


Apartments Shrinking in Major U.S. Cities

December 13, 2012

 As I browsed through the latest issue of AARP Bulletin last night, the following article caught my eye.

Tiny Apartments

 It’s very rare that I come across something like this – hard data on per capita consumption that can be linked to population density.  As reported in the article,  apartments are shrinking in major U.S. cities. 

Compare the size of these apartments to the average-sized home in the U.S.  The average per capita dwelling space in the U.S. is 710 square feet.  That means that the average single person occupies a dwelling (likely an apartment) of 710 square feet.  The average family of four occupies a dwelling (likely a single family home) of 2,840 square feet.  As reported in this article, apartments in large, densely populated major cities of the U.S. are shrinking down to 220-330 square feet. 

The fact that people in large cities tend to live in apartments isn’t news.  Nor is the fact that single young people, just starting out in their careers, choose to live in small apartments.  I did when I was discharged from the Navy and began my career in the Cleveland area.  (My apartment dwarfed those being reported in the above article.)  Even though I was living in the ‘burbs among many nice homes, I chose to live in an apartment because that’s all I could afford at the time and because I had no interest in a bigger home. 

But as I pointed out in Five Short Blasts, population density is a major factor in forcing people into smaller dwelling spaces than they’d otherwise choose.  (See Figure 5-2 on page 88.)  The average japanese citizen occupies a dwelling space less than one third that of the average American’s home, not because they like living in crowded, cramped quarters but, because Japan is ten times as densely populated as the U.S., there isn’t room for anything larger. 

This article is further corroboration of the effect, reporting that small apartments are now getting even smaller as these cities grow more densely populated and as the demand for housing becomes more intense.  Let’s focus on the data reported for San Francisco, where that city is considering reducing the legal minimum apartment size from 290 square feet to 220 square feet.  Consider the impact on per capita consumption.  The per capita consumption of flooring materials is reduced by 24%.  So too is the per capita consumption of materials used in the ceiling.  The per capita consumption of materials used to build the walls – lumber, drywall, nails, tape and joint compount, and paint – is reduced by 13%.  The per capita consumption of wall-hangings is reduced by that amount as well.  And thanks to the 24% reduction in foor space, the consumption of furnishings is reduced even more, since occupants still need the same amount of aisle space between the furnishings. 

The problem is that the denizens of these tiny digs are just as productive as any other workers and just as hungry to earn the income needed to pay for these over-priced dwellings.  Just as productive, but consuming far less.  It’s a trend we find in nearly every aspect of the economy as our world grows more densely populated.  You do the math.  It’s impossible to consume less in per capita terms without having an equal impact on per capita employment.  Worsening unemployment is absolutely inescapable. 

Of course, economists don’t think in these terms.  They see urban population densification as synonymous with a densification of economic activity – more money spent per square mile.  They dismiss  the decline in per capita consumption of dwelling space and other goods with the claim that people will simply spend their money on other things – like services and entertainment, and create jobs in those sectors.  Never mind the fact that the high cost of these apartments leaves people without any additional income or the fact that people in less densely populated conditions enjoy those same services and entertainment in greater measure because they actually do have the money.

That this obvious inverse relationship between population density and per capita consumption continues to elude the field of economics is astounding and tragic.