Europe’s Migrant Crisis

October 28, 2015

http://www.citylab.com/housing/2015/10/mapping-the-frenzy-of-the-europes-migrant-crisis/412396/

Much has been made of the migration of asylum-seekers and economic refugees to Europe from conflicts and poverty in the Middle East and Africa.  The above link takes you to a site that maps the flow of people.  It’s pretty interesting and certainly looks alarming, especially to Europeans.  The media has virtually run out of superlatives to describe the scale of this crisis.  “Historic.”  “Unprecedented.”  “Staggering.”  This linked article says that “… it’s hard to grasp the magnitude …”  It’s a serious situation, to be sure, but I thought some perspective might be interesting.

Europe is a continent of approximately 585 million people, not counting Russia.  (After all, none of these people are seeking to migrate to Russia.)  It has a surface area of about 2.3 million square miles – about 2/3 the size of the U.S.  This gives it a population density of about 255 people per square mile, about three times as densely populated as the U.S.

As the article points out, approximately 680,000 people have arrived in Europe so far this year.  That’s an annualized rate of about 750,000.  So that rate would grow Europe’s population by about 0.13%.  Now, let’s compare that to the United States, which admits approximately one million legal immigrants per year and is also invaded by a roughly equal number of illegal immigrants, many of whom are deported, but roughly half remain and are eventually granted amnesty.  That’s an annual influx of approximately 1.5 million migrants each year, growing the U.S. population by 0.5% (more than three times the rate being experienced by Europe).

Put in that perspective, Europe’s migrant crisis pales in comparison to what the U.S. has been experiencing year-in and year-out for many decades.  The scenes of border crossings in Europe are no different than the situation at our own southern border.  Yet somehow it’s a crisis of historical proportions in Europe, worthy of constant global media attention, while America’s migrant crisis is completely shrugged off.  It’s become routine.  It’s become our duty to suck it up and take them all in.

Still, this is a serious situation, cause for major concern for Europeans and even for Americans.  Consider:

  • Europe is already very densely populated.  Take away Russia and the Scandinavian countries, and the rest of Europe is as densely populated as China.  Many European nations, especially Germany, are already heavily dependent on manufacturing for export to sustain their economies and avoid high unemployment.  The very last thing Europe needs is more population growth.
  • Americans should also be concerned by a surge in population growth in Europe.  It will exacerbate our large trade deficit with Europe as its market is further eroded by over-crowding and as its exporters become more desperate to increase foreign market share.
  • The days when the western world could serve as a relief valve for overpopulation are long since past.  Our ability to absorb immigrants without doing economic harm to our own people has been exhausted.  The inability of western economies to sustain economic growth or even maintain their present levels of consumption is becoming more evident every day.

The sad fact is that as long as the world’s population continues to grow exponentially, driven primarily by explosive growth among third world nations, we are rapidly reaching the point where all we can do is stand by helplessly and watch as more and more crises unfold.

 


Americans Growing Poorer

September 19, 2015

http://www.census.gov/content/dam/Census/library/publications/2015/demo/p60-252.pdf

The above-linked report – “Income and Poverty in the United States:  2014” – was published by the Census Bureau a couple of days ago.  The news isn’t good.  In spite of the supposed decline in unemployment and all the talk of economic recovery, the median household income fell once again and the poverty rate remained at or near the highest level in fifty years.

There’s tons of data to sift through in the report, so I’ll simply quote a few of the key findings of the report:

“Median household income was $53,657 in 2014, not statistically different in real terms from the 2013 median of $54,462 (Figure 1 and Table 1). This is the third consecutive year that the annual change was not statistically significant, following two consecutive years of annual declines in median household income.”

“Median household income … in 2014 … 6.5 percent lower than the 2007 (the year before the most recent recession) median ($57,357), and 7.2 percent lower than the median household income peak ($57,843) that occurred in 1999.”

“In 2014, the official poverty rate was 14.8 percent. There were 46.7 million people in poverty.”

“The 2014 poverty rate was 2.3 percentage points higher than in 2007, the year before the most recent recession (Figure 4).”

Median household income has declined every year since 2007, and even the median income in 2007 was less than the median income in 1999.  This is the longest period of decline since the Census Bureau began tracking the data in 1967.  From 1967 to 1999, the median household income (for all races) rose from approximately $42,000 to $57,843 – a increase of 38%.  Since 1999, however, it has declined by 7.2%.

This is exactly what the inverse relationship between population density and per capita consumption would predict – that as our population density (including our “effective” population density) rises beyond a critical level, worsening unemployment and poverty is inescapable.

So what was it that happened after 1999 that threw median incomes into what increasingly appears to be a permanent state of decline?  Our population density has been rising by about 1% a year for decades but our “effective” population density – the population density that we take upon ourselves when we combine with another nation through “free” trade – skyrocketed in 2000.  That was the year that the Clinton administration granted China “permanent normal trade relations” satus, opening the door to “free” trade with China.

Look back at Chapter 7 of Five Short Blasts (especially Figure 7-5 on page 130), where we examined what happened to our effective population density as we combined our economy with other nations through “free” trade.  The effect of trading with Ireland – the nation with whom we have the largest per capita trade deficit in the world – is negligible.  They’re so small that it makes no change to our effective (combined) population density.  Add Mexico to the list, and our density rises from 85 people per square mile to 118.  Add Germany and it rises to 132.  But, when China, with one fifth of the world’s population, is added to the mix, our effective population density rockets to 242!  The downward pressure on our labor market and incomes suddenly becomes overwhelming.

As long as we continue to blindly apply “free” trade policy to all nations with no consideration of the effect of population density, the resulting downward spiral in our economy is inescapable.  With each passing year, the data on incomes and poverty in America bears this out.

 

 

 

 

 


Mr. President, how can we take you seriously on climate change?

September 2, 2015

http://www.nbcnews.com/news/us-news/obama-climate-change-act-now-or-condemn-world-nightmare-n419071

President Obama yesterday opened the “GLACIER” climate change conference in Anchorage, Alaska, chastising world leaders to do more.  He said that the U.S. “recognizes our role in creating this problem and embraces our role in solving it.”

Really?  How can we take you seriously, Mr. President, when you encourage rampant illegal immigration, adding millions of carbon emitters to our population?  Do you seriously believe that there is any solution to the climate change problem that doesn’t begin with stabilizing our population?

How can an environmentalist not be dismayed by what’s going on?  In spite of all of our efforts – recycling, improving the efficiency of our homes, cars and every product we use – the environment has never been more threatened.  There is only one logical conclusion:  all of our environmental efforts are not intended to protect the environment.  Rather, they are meant to simply make more room for more people, fattening corporate bottom lines with more consumers.

Environmental leaders share as much blame as our political leaders.  They know very well that worsening overpopulation is ruining the environment, but have chosen to remain silent to avoid alienating donors.  They should all be ashamed.

Mr. President, do you want us to take you seriously on climate change?  Then prove it by taking action to stem illegal immigration and move toward stabilizing our population.


Global Unemployment Drops Slightly in 2014, Still Higher than 2012

July 29, 2015

The main implication of the inverse relationship between population density and per capita consumption is that, as the world’s population continues to rise, so too will unemployment.  I’ve now begun tracking a rough measure of global unemployment, using the data posted on the CIA’s World Factbook web site for each nation, beginning with 2012.  Knowing the unemployment rate and the population, I can calculate how many people are unemployed in each nation, and then tally the sum for the entire world.  The CIA provides the data for most nations, but not all.  Also, the data has to be somewhat suspect, given that there is much disagreement over the official unemployment rate even in the United States.  You can imagine that the data for third world countries is probably not all that reliable.

Nevertheless, it’s all we have to go by.  Also, I’m making an assumption that the labor force in each country is made up of exactly 50% of the population (relatively close to the figure for the U.S.), since the CIA provides no data on the size of the labor force.  Using the CIA’s data and this assumption, in 2012 the global unemployment rate was 7.9%, and 26 million people were unemployed.  In 2013, the unemployment rate rose to 8.6% and 28.8 million people were unemployed.

In 2014, the situation improved slightly, with unemployment falling to 8.3% and 28.1 million unemployed.  It should be remembered that the period of 2012 through 2014 supposedly represents a time of global “economic recovery.”  While three years isn’t really enough data to begin drawing conclusions, so far the data seems to bear out the theory that unemployment will worsen as the world grows more crowded – even during a period of “recovery.”

This is data that I’ll continue to track and will report on again when 2015 data is available – probably early next year.


America’s Worst Trade Partners in 2013

May 26, 2015

Top 20 Deficits, 2013

In a recent previous post, I reported that the U.S. suffered a record trade deficit in manufactured goods with those half of nations above the median population density, and a healthy surplus with the other half of nations. The relationship between population density and trade imbalance is clear.

To make it even more clear, let’s take a look at the opposite ends of the spectrum of trade imbalances – those nations with whom we have the worst trade deficits in manufactured goods and those nations with whom we enjoy the biggest surpluses. This post will look at the top twenty deficits. In order to factor out the geographic size of nations as a factor, these trade imbalances are expressed in per capita terms – dollars per person.

Above is a link to a spreadsheet showing the top twenty per capita trade deficits in manufactured goods in 2013. The following are some observations about this list:

  • Of these top twenty nations, eighteen are more densely populated than the U.S. Most are much more densely populated. The average population density of the nations on this list is 504 people per square mile. This is almost six times the population density of the U.S.
  • The thing that may surprise people the most is that China, the nation everyone thinks of first when the subject of our trade deficit comes up, barely makes the list of the top 20 deficits, coming in at number 17. In per capita terms, our deficit with other nations including Israel, Taiwan, Japan, South Korea and a number of European nations, is much worse.
  • Low wages are often blamed for our trade deficit in manufactured goods. Manufacturing jobs, it is said, are shipped overseas to take advantage of cheap labor. So I’ve included the “purchasing power parity” (or “PPP”) – essentially the gross domestic product of each nation per person – to see whether this claim holds water. PPP is a measure of the purchasing power of the citizens of each nations, and is a good indication of the average wages paid. As you can see, our worst deficit are with rather wealthy nations. (By comparison, the PPP of the United States in 2013 was $49,000.) The average of PPP of these twenty nations is $35,330. Only two nations are below $10,000: China and Nicaragua. It should be noted that China’s PPP has more than doubled in the last eight years. If “low wages” were the cause of trade deficits, then we should begin to see our deficit with China decline as PPP rises. Instead, our trade deficit with China set a record in 2013. Our trade deficit with Switzerland, the wealthiest nation on this list, also worsened in 2013 to $1,859 per person from $1,680 in 2012, moving Switzerland from 3rd to 2nd place on this list.
  • South Korea moved from 12th place in 2012 to 11th place in 2013 as our trade deficit with them worsened from $426 to $496 per person. Our deficit with South Korea continues to worsen dramatically in the wake of the 2012 trade deal which the Obama administration hailed as a “big win for American workers.”
  • In the most dramatic move on the list, Malaysia went from 13th place in 2012 to 21st place – vanishing from the list – as our trade deficit with them was cut in half in 2013. This allowed Mexico to move up to 13th place in spite of a 20% decline in our deficit.

There are a couple of key take-aways from this list. First is that population density plays the major role in determining trade imbalances. If it did not, one would expect the ratio of more densely populated nations to less densely populated nations to be somewhere around 1:1. Instead, the ratio here is 9:1. Secondly, low wages clearly have absolutely nothing to do with these trade deficits. This list is heavily skewed toward wealthy, high-wage nations like Ireland, Switzerland, Germany, Japan, Israel, Taiwan, Denmark and others.

The problem with attempting to trade freely with these badly overpopulated nations is not that their wages are too low. The problem is that they buy too little from the U.S., thanks to a level of per capita consumption that has been decimated by their extreme population densities. People who live in such crowded conditions simply can’t consume products at the same level as people who live in more reasonably populated conditions like we enjoy in the U.S.


“The shadow of crisis has passed.” Or has it?

January 21, 2015

Last night, at the beginning of what can best be described as a victory lap, President Obama began his State of the Union message by declaring that “…the shadow of crisis has passed …”  The crisis he spoke of included lots of things, but foremost was the economy which, at the time he inherited it, was indeed in a full-blown crisis.  Perhaps two decent quarters of GDP (gross domestic product) growth are enough for him to declare “mission accomplished,” but has the crisis passed or has it merely been swept under the rug?

Three sentences later, he asked, “Will we accept an economy where only a few of us do spectacularly well?”  Yeah, that pretty accurately sums up the state of the economy.  But that’s not stuff worthy of a victory lap, so he then went on to make some claims that merit closer scrutiny.

  • “We believed we could reverse the tide of outsourcing, and draw new jobs to our shores. And over the past five years, our businesses have created more than 11 million new jobs.”  The implication here is that we did, in fact reverse the tide of outsourcing and bring eleven million jobs home.  If only it were so.  The fact is that, while the economy has grown by 15% in real (inflation-adjusted) terms in the last five years, the trade deficit in manufactured goods has widened by 72%.  The only explanation for that is that the “tide of outsourcing” has actually gotten worse.  That’s no surprise when you look at Obama’s record on trade, especially the terrible deal he signed with South Korea.  And “eleven million new jobs?”  According to the household survey, the employment level has grown by only 9 million.  And, during those five years, the population has grown by 11.4 million.  In other words, almost all of the growth in the employment level is due purely to population growth, and not a matter of putting people back to work.  In fact, during those five years, of the 18.3 million Americans who were out of work in January, 2010, only 3.2 million have been put back to work.
  • “More Americans finish college than ever before.”  That’s because we have more Americans than ever before.
  • “… we’ve seen the fastest economic growth in over a decade … a stock market that has doubled and health care inflation at its lowest rate in 50 years.”  We have had two good quarter of GDP growth, preceded by a really bad quarter at the beginning of 2014, but the president didn’t mention that.  The best in the past decade?  That’s not saying much when you look at the past decade.  The stock market has doubled thanks to the Federal Reserve pumping $4 trillion into the bond market, crowding investors out of that market, leaving the stock market as the only place to invest.  And health care inflation is at its lowest rate in 50 years because overall inflation is also down that much.  Relative to everthing else, especially stagnant wages, the inflation in health care is still pretty bad.
  • “Wages are finally starting to rise again. We know that more small-business owners plan to raise their employees’ pay than at any time since 2007.”  Wages are rising – barely – until expressed in real (inflation-adjusted) terms. In those terms, they’re stagnant.  And planning to raise wages isn’t the same thing as actually raising them.
  • “We set up worker protections, Social Security, Medicare, Medicaid to protect ourselves from the harshest adversity. We gave our citizens schools and colleges, infrastructure and the Internet, tools they needed to go as far as their efforts and their dreams will take them.  That’s what middle-class economics is: the idea that this country does best when everyone gets their fair shot, everyone does their fair share, everyone plays by the same set of rules.”  True, we did all that.  Then we signed the Global Agreement on Tariffs and Trade, initiating a trade regime that completely undermined all of the aforementioned programs, deprived American workers of their “fair shot” and gave away millions and millions of our best jobs.  Is that “middle-class economics?”
  • “Of course, nothing helps families make ends meet like higher wages. That’s why this Congress still needs to pass a law that makes sure a woman is paid the same as a man for doing the same work.”  While I agree that women should be paid the same as men, this would do nothing to raise wages.  No company is going to raise its overall cost of labor.  If forced to equalize the pay between men and women, companies will simply lower the wages for men.  The only thing that can drive wages higher is a higher demand for labor, like we’d have if we really did turn the tide on outsourcing.
  • “… to make sure folks keep earning higher wages down the road, we have to do more to help Americans upgrade their skills.”  Here we go again.  Job training as a solution to unemployment.  No one ever takes note of the fact that we lost our manufacturing jobs to people who were uneducated and practically devoid of job skills.
  • “…  we still live in a country where too many bright, striving Americans are priced out of the education they need.”  That’s because far too many of the seats in our college classrooms are filled with foreign students.
  • “… 21st century businesses, including small businesses, need to sell more American products overseas. Today, our businesses export more than ever, and exporters tend to pay their workers higher wages.”  We don’t sell more American products overseas because so many countries are so badly overpopulated that they can’t even consume their own productive capacity.  Yes, we export more than ever, but not much more.  In the meantime, imports have exploded, draining our economy of those manufacturing jobs that the president admits pay more.  In the past five years, manufactured exports have grown by $27 billion per month.  But imports have grown by $47 billion – all thanks the president taking the chicken’s way out on trade and deluding himself into thinking that exports can be grown by just wishing it so.
  • “I’m asking both parties to give me trade promotion authority to protect American workers with strong new trade deals from Asia to Europe that aren’t just free but are also fair.”  Following this assertion, the president admitted that trade deals have gone badly for American workers.  And now he wants to double down on that trade policy.  (Mr. President, if it doesn’t make any sense to continue the same policy with Cuba that has been a proven failure for 50 years, why does it make sense to continue pursuing trade deals that have been proven a failure for just as long?)  There is no “free” trade.  There is no “fair” trade.  There is only trade, and trade with overpopulated nations is a sure-fire loser.  But bend over America.  Here comes more of it!
  • “… 95 percent of the world’s customers live outside our borders. We can’t close ourselves off from those opportunities.”  This is the very heart of our trade problem – the pursuit of more customers – customers capable of producing more than they consume.  That’s good for companies who couldn’t care less where their products are manufactured, as long as they sell more products.  But it’s an absolute disaster for American workers and the American economy.
  • “More than half of manufacturing executives have said they’re actively looking to bring jobs back from China.”  We’ve heard this for years, but how many of them actually do it?  Very, very few.
  • “I want Americans to win the race for the kinds of discoveries that unleash new jobs: converting sunlight into liquid fuel; creating revolutionary prosthetics, so that a veteran who gave his arms for his country can play catch with his kids again.”  We do win those races, but every time we do, the manufacturing of those new products very quickly ends up in some badly overpopulated country.

No, the crisis hasn’t passed.  Nothing has been done to fix the problems that caused it in the first place – our trade deficit and our use of population growth as a crutch for economic growth.  In fact, these issues have gotten worse.  The crisis has been swept under the rug and will slither back out sooner than most people – especially the president – think.


A Happy Day for Illegals, a Sad Day for Americans

November 22, 2014

Obama finally did it, granting amnesty to roughly 5 million illegals.  In the recent mid-term elections, Democrats were trounced by voters who, more than anything else, were incensed by the president’s amnesty plan.  He did it anyway.

So, for five million people who made a mockery of our immigration laws and made fools of those back home waiting in line to enter the U.S. legally, life has gotten much better.  But for 320 million Americans, life just got incrementally worse.  More competition for their jobs.  More downward pressure on wages.  More crowding, more traffic, more burden on the public school systems that are already short on funding.  The economy is incrementally worse.  In general, the quality of life for Americans has just declined.  Like polls have been telling us, America is on the wrong track – toward a dead end.  And immigration is the engine that’s driving us there.

Republicans are indignant about the president breaking our laws and failing to uphold the constitution, or so they say.  What they’re really indignant about is that the president beat them to the punch on pandering to the Hispanic vote.  Neither party is any better than the other when it comes to immigration.  Both parties have two constituencies to deal with.  Both parties have the voters to contend with, voters who are pretty much split on the issue.  But the Democrats have big labor on their side, and big labor loves the influx of unskilled labor that illegal immigration brings, which translates into potential growth in their membership.

Republicans, on the other hand, are in the pockets of big business, who loves the huge influx of skilled workers that H1B visa immigrants bring, keeping downward pressure on wages.  So, with Republicans you get posturing (and maybe a little more border enforcement) on the illegal immigration issue, but a huge influx of legal immigrants.  With Democrats you a huge influx of illegals, each wave attracted by the amnesty granted to the previous.  They all know that U.S. immigration laws are practically meaningless.

But, if you’re out of work and find yourself competing with immigrants for a job, does it really matter to you whether they have green cards or not?  You’re out of a job just the same.

It’s pointless to be angry with one party or the other.  Our anger needs to be directed toward economists and their idiotic reliance on population growth to stoke macroeconomic growth, a strategy that is ultimately doomed to failure.  If population growth is such an economic cure-all, then Japan, a nation ten times as densely populated as the U.S., should have an economy that’s not mired in decades of stagnation.

Nothing will change until the field of economics pulls its head from the sand and considers the full range of economic  implications of population growth.  Until then, we’ll get more of the same – presidents who hand their economic policy over to academic economists – the blind leading the blind.