Per Capita GDP in Decline

July 3, 2014

The country is in an uproar over the immigration crisis that Obama’s refusal to enforce the laws has left us in and, at the same time, I find myself with limited time for writing posts.  You can read opinion pieces on the immigration mess anywhere and everywhere right now.  So I though a better use of my time would be to focus on the recent downward revision in GDP (gross domestic product) and use it as an example as to why America’s ridiculously high rate of legal immigration – not to mention Obama’s refusal to enforce the border and deport illegal immigrants – is so bad for the American economy.

The BEA (bureau of economic analysis) last week dramatically lowered its final reading of GDP for the 1st quarter to an annual rate of decline of 2.9%.  The harsh winter took much of the blame.  Adjusted for inflation, GDP still remains higher than it was in the 3rd quarter of 2013.  And it’s risen by nearly a trillion dollars since the 4th quarter of 2007, when the recession first began.

But you shouldn’t care about overall GDP.  What matters is each American’s slice of the pie, or per capita GDP.  When population growth is taken into account, per capita GDP fell to its lowest level since the 2nd quarter of 2013.  And it’s barely budged in the past seven years (going back to the 4th quarter of 2007 again).  Here’s the chart:  Real Per Capita GDP.

Since the end of 2007, per capita GDP has risen by only $317 per person, an annual rate of increase of only 0.09%.  That includes all Americans, and it’s been widely reported that all of the gains are concentrated in the top 1% of Americans.  Take away that top 1%, and per capita GDP has actually declined during the supposed “recovery” that has taken place since the end of the recession.  And that’s in spite of a trillion dollars in stimulus spending by the federal government and four trillion dollars of stimulus provided by the Federal Reserve.  Imagine how bad it’d be if we took away that $5 trillion that has been poured into the economy in the past seven years.

Declining per capita GDP is one of the outcomes predicted by the inverse relationship between population density and per capita consumption (which is inextricably linked to per capita employment).  As our population continues to grow beyond its optimal level (thanks entirely to both legal and illegal immigration), it’s inescapable that per capita GDP will decline, even as overall GDP continues to grow slowly.

In other words, immigration is the driving force behind a decline in Americans’ quality of life.  Yet, the deep pockets that fund our politicians continue to advocate for increased immigration and population growth.  They want more consumers to grow their bottom lines.


Obama Directly Responsible for Immigration Mess

June 11, 2014

As reported in this CNN article (and virtually everywhere else this week), the southern U.S. border has been overrun by a tidal wave of unaccompanied, underage illegal immigrants.

Of the 1,200 or so crossing the Rio Grande in eastern Texas every day, up to 400 are unaccompanied children…

Prior to Obama’s refusal to enforce immigration laws, about 8,000 unaccompanied children entered the country illegally each year.  Now the rate is 400 per day – almost 150,000 per year – and that’s just one small section of the border in Texas.  Word has gotten out in Mexico and Central America that if you’re a minor and you can make it here, then you’re here to stay and the American Dream is yours.

The Obama administration has often complained that we don’t have the resources to deport all of these illegal immigrants.  Yet it has found the resources to bus this new wave all across the southwest and to set up housing for them.  Couldn’t it much more easily simply bus them back to the border?  At that point, they’re Mexico’s problem and if Mexico doesn’t like it, it’s time to get tough with Mexico and demand that they begin enforcing their own borders.

This situation is an outrage and the vast majority of the American people are absolutely fed up.  The media is also widely reporting the defeat of Republican Eric Cantor this morning, and his support for immigration “reform” and amnesty is being cited as the major reason why.  All congressmen and senators should sit up and take note.

This isn’t a rant against immigration, it’s a rant against a breakdown in common sense that fuels population growth at a time when that’s the very last thing that this country needs.  Of the approximately 18 million people added to our ranks in the last seven years (almost all of it through immigration), not a single one has found employment.  (The employment level is the same as it was seven years ago.)  But all are exacerbating our dependence on foreign oil, our challenge to reduce carbon emissions and our growing dependence on safety net programs to feed and house a growing population living in poverty.

Good riddance, Eric Cantor.  Too bad we have to wait three years before a similar change in president.

 


Citibank Commercial

December 8, 2013

I saw this Citibank commercial today and it just about made me ill.  It begins with Jonathon Rose, a developer, noting that America’s population is projected to grow by 90 million people over the next 40 years, and he speaks of what a great challenge it will be to grow and develop cities to handle all these people, and he speaks glowingly of how wonderful it will be. 

Wonderful for developers like him and, of course, it won’t do their financiers – like Citibank – any harm either.  Both will make a killing.  But consider this:  America’s population grew by 90 million over the last 40 years.  Do you think we’re better off for it?  The fact is that the top one or two percent of Americans are better off.  But the middle class has fallen behind.  And poverty rates are at a record level.  Unemployment (the real kind, not the number that the Bureau of Labor Statistics publishes) hovers just above 10% and 17 million Americans are out of work. It wasn’t like this 40 years ago.  And 40 years from now, today’s economy will look like the good old days.

I bring up this commercial because it illustrates one of the key points that I tried to make in Five Short Blasts – that beyond some critical population density, the interests of business and the interests of individual citizens – once in alignment – begin to diverge.  It’s in the best interest of business that the population continue to grow forever.  As the population grows, so too does total consumption of all products.  As total consumption grows, so too do corporate profits.  If 310 million people in the U.S. consume 310 million widgets, and 400 million people will consume 350 million widgets, then you’ve sold an additional 40 million.  What do you care if the per capita consumption of widgets has declined and, along with it, the number of people with jobs?  As long as your company is making the widgets, you’re doing great.

But unless you’re someone high up in the Widget Co. hierarchy, you’re not doing so well.  Because per capita consumption has declined, unemployment is higher and it’s putting downward pressure on your wages.  You’re fearful of losing your job – with so many people eager to do your job for less.  And your world is a dirtier, more crowded place, one in which rising poverty is taking its toll on government’s ability to provide an adequate safety net. 

So whose interests do you think will hold sway, yours or Citibank’s?  Where do you think your congressman will turn for campaign donations – to you or to Citibank?  And then who do you think he/she will listen to?


Senate Immigration Bill Sides Against Americans

June 29, 2013

First of all, my apologies for posting so infrequently recently.  For the past month I’ve been working on a major project at home that has taken all of my attention and physical energy.   Now that it’s winding down a bit, it’s time to comment on the immigration bill that was passed by the Senate this week – S.744.

As I explained in Five Short Blasts, when a nation breaches a critical population density, the interests of big business and the interests of individuals, which up to that point had been alignment, with population growth serving both, begin to diverge.  It’s in the best interest of business to continue to grow the population, adding more customers and sales volume.  But it’s in the interest of individual citizens to halt that population growth to avoid the consequences of worsening unemployment and poverty as per capita consumption begins to decline. 

This week the Senate came down solidly on the side of the interests of business, passing a bill that will dramatically increase the rate at which the U.S. population is growing.  To the 68 senators who voted in favor of this bill, it’s no matter to them that this bill will flood the labor force with additional workers at a time when 17 million Americans are still out of work.  Even the unemployed still have to purchase food, clothing and shelter and all of the other products necessary to survive.  More sales volume.  More profits.  More campaign donations from corporations. 

In a nutshell, S.744 provides a path to citizenship for approximately 12 million illegal aliens – “amnesty” – while supposedly beefing up enforcement to discourage further illegal immigration.  We’ve been down this road and have heard all of the promises before about stopping illegal immigration.  We all know that what we’ll get is 12 million people rewarded for ignoring our laws, most of whom will either head straight to the unemployment line or will displace American workers who will then find themselves standing in that line, and a token effort to secure the borders that ends as soon as the media spotlight is turned away.   

But this bill goes beyond simply providing amnesty to those already here.  A report that I received this week from FAIR – Federation for American Immigration Reform – makes clear just how scary this bill is in terms of exploding our population.  So I’d like to share with you some data from that report.

In terms of the impact on immigration, FAIR estimates that this bill has the potential for admitting 50 million permanent immigrants over the next 10 years.  The breakdown is as follows:

  • amnesty recipients –                                 12,800,000
  • immigration through existing visas – 11,805,236
  • backlog reduction –                                     4,050,000
  • merit based –                                                   1,269,076
  • derivative visas to dependents –            1,179,177
  • employer sponsored –                                 1,132,010
  • uncapped immediate relatives –                855,000
  • “recapture” of past unused visas –              325,000
  • education based –                                             314,447
  • investor visas –                                                  125,779 

That’s a total of almost 34 million.  Add to this an additional 25 million temporary “guest” workers, most of whom will seamlessly transition to permanent status as “temporary” workers have always done.

What’s the cost of all of this new immigration?  Included in the FAIR report is an evaluation of the costs done by the Heritage Foundation, who estimates that this new tidal wave of immigration will add $6.3 trillion to our national debt.  This is broken down as follows:

  • The typical illegal alien is 34 years old and has a 10th grade education.  Even while in illegal status, such an individual uses $14,387 more in government benefits than they pay in taxes per year.  Once legalized and eligible for additional benefits, that figure will swell to $29,500 per illegal alien.
  • In terms of Social Security benefits, an amnestied alien will consume $3 in benefits for every dollar that they pay into the system.  (Those who champion immigration as a way to boost the number of workers paying into the system never address what happens when those workers age and begin to draw benefits themselves.)
  • In total, amnestied aliens would be expected to pay about $3.1 trillion in taxes while using $9.4 trillion in benefits.

This bill is an absolute disaster for Americans and will doom our quality life to a slow descent back into the poverty that characterizes most densely populated countries – those who haven’t been clever enough to dupe the U.S. into a massive trade deficit.

Thankfully, the House of Representatives now stands in the way of passage of such a bill – our last hope to stop this madness, since our bleeding heart president is unable to connect the dots between the problems we face and out-of-control population growth.  Hopefully, the Republicans in the House will show more backbone and stand up for the American people in greater numbers than their Senate counterparts.


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.


Another “New Normal” Jobs Report for May

June 13, 2013

http://www.bls.gov/news.release/empsit.nr0.htm

Do you find yourself unemployed?  Or you’re afraid of losing the job you have?  Or your wages are stagnant because of the glut in the labor force?  Get used to it.  You’re living in the “new normal,” the by-product of globalism, founded on a 19th century trade theory that isn’t worth the parchment it was written on. 

On Friday the Bureau of Labor Statistics released the employment report for the month of May.  As employment reports go, it was a relatively good “new normal” report.  Predictably, the economy added enough jobs to keep pace with the growth in the labor force – about 175,000, and unemployment (the government-massaged U3 figure) ticked upward to 7.6%.  This is what counts as a “recovery” in the “new normal.” 

Since the bottoming of the “Great Recession” in spring of 2011, when a real measure of U3 unemployment (one that holds the labor force as a constant percentage of the growing population) hit 11.9%, unemployment has improved to 10.3% – that in spite of deficit spending of $900 billion per year and money-printing by the Federal Reserve of the same amount.  And the economy is actually slowing.  It used to be that, two years into a recovery, unemployment would be back down to 4-5%.  Today we’re more than double that figure. 

In May, the “detachment from reality” index, which measures the gap between official U3 unemployment and a figure that more accurately holds the labor force as a constant percentage of the population, ticked downward only slightly from April’s record level, as 420,000 workers who had mysteriously vanished from the labor force suddenly reappeared, swamping the 320,000 people who found work according to the household survey (another equally unbelievable figure).  Here’s a chart of the index:  Detachment from Reality Index.

The number of unemployed fell for the 2nd month in a row to the lowest level since October, but still stands at over 16.5 million:  Unemployed Americans.

Per capita employment rose for the 2nd consecutive month to its highest level since October:  Per Capita Employment.  Here, it’s important to note that the employment level reported in the household survey is lower than it was in November of 2008, in spite of the population growing by 10.4 million during those 4-1/2 years.  Not a single person added to the population since 2008 has joined the labor force to provide themselves a source of income.  A little hard to believe, isn’t it?  Someone explain to me how population growth has helped the economy.  None are joining the labor force, so none are contributing to the economic output and vitality of the country.  If they’re not working, then they’re on the public dole. 

And now Congress wants to exacerbate the situation by throwing the doors open to millions more immigrants.  Everyone who would like to volunteer to give up their jobs so that we can put them to work, raise your hand.  Anyone?  I didn’t think so.


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.


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