American Millenials Far Worse Off Than Their Parents at the Same Stage in Life

January 16, 2017

http://www.usatoday.com/story/money/2017/01/13/millennials-falling-behind-boomer-parents/96530338/

An analysis of Federal Reserve data by the advocacy group “Young Invincibles,” released on Friday, finds that the millenial generation – especially white millenials – are far worse off economically than their baby-boomer parents were at the same stage in life – in 1989.  (See the above linked article.)

  • The median net worth of millenials is 56% lower.
  • Median income has fallen 21% in spite of the fact that a larger percentage of millenials (approximately 50% more) have a college education compared to baby boomers.
  • Home ownership is down by 3%.
  • Millenials are saddled with “drastically higher” student debt.

The article observes that “the analysis fits into a broader pattern of diminished opportunity.”

Looking beyond the Federal Reserve data, millenials are clearly much worse off than their parents in many other ways:

  • While most employers offered pensions in 1989, few do today.
  • The cost of health care is orders-of-magnitude higher than it was in 1989.
  • Good jobs were still fairly plentiful in 1989.  Not today.  The example cited in the article of a college-educated lady earning minimum wage making pizza isn’t a one-off.  It’s pretty typical.
  • The millenial generation is famous for depending on their parents for housing and additional support beyond that.  It’s not a matter of immaturity among millenials.  They do it out of necessity.  In 1989, no self-respecting baby boomer would be caught dead living with his/her parents.  There was no need.

None of this should come as any surprise to those who understand the consequences of the inverse relationship between population density and per capita consumption.  It’s precisely what I predicted in Five Short Blasts, which I began writing in 1993.  Since 1989, the U.S. population has grown by approximately 25%.  But, worse than that, our effective population density has exploded by 200% since 1989 by economically erasing our borders and attempting to trade freely with badly overpopulated nations who prey on our market and bring nothing in return to the trading table but bloated labor forces, hungry to take jobs from Americans.  Diminished opportunity and worsening poverty is inescapable in those circumstances.

Sadly, most millenials are oblivious to what’s been done to them through globalization, which has been slickly packaged and sold to them as some sort of utopian state where we all live in perfect harmony together, masking the underlying truth – that their economic civil rights have been trampled by the greed of global corporations who feed on population growth to stoke their bottom lines.

 

 

 

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“Brexit” Another Failure of Economics

June 30, 2016

Why is it that all the big stuff happens while I’m on the road and unable to comment?  So it was with the “Brexit” vote last week when Britons voted to split from the European Union – the EU.  Well, better late than never.  So the following are some thoughts regarding the “Brexit” vote.

There has already been a lot of analysis of the underlying reasons for the surprising results of this vote.  They focus on three main issues:  immigration, trade, and the fact that Britain was being fleeced by the EU to the tune of about $350 million per day – only about half of which was returned to Britain in the form of “subsidies.”

The real root cause goes much deeper.  For decades, the main thrust of the United Nations has been the eradication of hunger and poverty among undeveloped nations – a noble goal.  But instead of helping such countries by fostering real, organic economic growth that begins with self-sufficiency and nurtures domestic industrialization to meet the growing wants and needs of the people, economists decided on an easier route.  They relied instead on “free” trade and population growth.

There was once a time when nations were free to strike trade deals with one another that were of mutual interest to both.  Both sides benefited.  Each gave something and each got something on terms that worked out to the best interests of both.

But faced with the challenge of elevating the fortunes of undeveloped countries, the United Nations and the World Trade Organization seized on a quick fix – the implementation of a trade regime that would tilt the playing field such that jobs and money would slide from the developed world to the undeveloped world.  “Don’t worry,” they assured the developed world.  “It’ll benefit you, too, when these nations develop into customers for your goods.”

Well, they haven’t, and now we have a system of trade where the rules are rigged in favor of one country over another – where developed countries are forced into trade relationships that are actually detrimental to them and their citizens.  This situation is now referred to as “free trade” while the previous system in which countries were free to make their own trade deals is decried as mercantilism.

The other tool in economists’ bag of tricks is population growth.  Population growth translates to GDP (gross domestic product growth), something that business loves, so the economists found ready and willing allies among global corporations, chambers of commerce and others.  None recognize that such cancerous growth actually degrades the quality of life of individuals and fuels more poverty.  The EU is no different and has seized upon immigration-driven population growth as a tool to prop up GDP.

There is just one problem with this grand scheme – democracy, and the fact that all of the ballyhooed intangible benefits of these approaches couldn’t obscure from the people the fact that they’re getting screwed.  I’ve occasionally high-lighted cracks that have been appearing in “globalization,” mostly in the form of skepticism about whether “free” trade was really any benefit at all for the donor countries or if it was actually dragging them down.  Now comes the “Brexit” vote, ripping a gaping hole in it.

Congratulations to the British people who rejected the econo-babble of the EU elites and applied common sense to their evaluation of what’s become of their country.  And it doesn’t stop with Britain.  Other EU nations who find themselves being fleeced to prop up the likes of Greece and Spain are also ready to jump ship.  In the wake of “Brexit,” EU leaders commented that, with the loss of British revenue, the EU may now be forced to raise taxes and implement even more austerity.  Smooth move, Brussels!

Speaking of dumb moves (dumb from the perspective of the globalists), how about Obama’s trip to Britain in which he chastised the “leave” supporters and threatened that the U.S. would relegate them to 3rd class status in trade negotiations if they did, in fact, leave the EU?  If any Brits were on the fence on this issue, Obama’s comments offered proof that Britain had been subjugated to the interests of the global elite.  Obama may very well be responsible for pushing Brits over the edge.  Yet another foreign policy blunder on his part (right on the heels of his disastrous trip to Japan, during which he was publicly berated by the Japanese president).  Continuing down that tangent, just yesterday he met with the Canadian and Mexican leaders in support of NAFTA, a meeting that the press hailed as “the three amigos.”  Could he possibly have made a more tone-deaf move when the nation is already fed up with illegal immigration from and job losses to Mexico?  Now Obama is known as an “amigo?”

As proof that sentiments that drove the “Brexit” vote go beyond the EU, Donald Trump has also blown a big hole in America’s one-party Republi-crat support for free trade and mindless pursuit of population growth as a crutch for a sick economy that was long ago ceded to the World Trade Organization.  The Republican elite are abandoning him in droves, but voters couldn’t care less.  They’re fed up with their leadership, just as the Brits were fed up with theirs.  America’s “Brexit” from globalization may come in November.

 

 


Overpopulated Nations Sucking the Life out of American Manufacturing

May 11, 2016

I’ve finished my analysis of trade in manufactured goods for 2015 and the news isn’t good.  The effect of attempting to trade freely with nations that are much more densely populated than our own intensified yet again in 2015, dragging our deficit with those nations to a new record.

Check out this chart:  Deficits Above & Below Median Pop Density.  First, some explanation of the data is in order.  I studied our trade data for 166 nations and separated out those product codes that represent manufactured products.  Subtracting imports from exports, I was able to determine the balance of trade in manufactured goods for each.  I then sorted the data by the population density of each nation and divided these 166 nations evenly into two groups:  those 83 nations with a population density greater than the median (which, in 2015, was 184 people per square mile) and those 83 nations with a population density below the median.  I then totaled our balance of trade for each group.

As you can see, in 2015, our balance of trade in manufactured goods with the less densely populated half of nations was once again a surplus, but a smaller surplus of $74 billion.  This is down from $132 billion in 2014 and is less than half of the record high of $153 billion in 2011.

Conversely, our balance of trade in manufactured goods with the more densely populated half of nations was a huge deficit, plunging to a new record deficit of $722 billion, beating last year’s record by $53 billion.

Some observations about these two groups of nations are in order.  Though these nations are divided evenly around the median population density, the division is quite uneven with respect to population and land surface area.  The more densely populated nations represent almost 77% of the world’s population (not including the U.S.), but only about 24% of the world’s land mass (again, not including the U.S.).

Think about that.  With the people living in 76% of the world’s land mass, the U.S. enjoyed a surplus of trade of $74 billion in manufactured products.  But with the rest of the world – an area less than a third in size – the U.S. was clobbered with a $722 billion deficit!  Population density is the determining factor.  Not wages or wealth.  Wealthy nations were just as likely to appear among the deficit nations as among the surplus nations.  Not currency valuations.  Virtually ever currency in the world weakened against the dollar in 2015.  Population density is the key factor that drove these trade imbalances.

Some may point to the increase in the trade deficit as proof that currency values and manipulation are driving the imbalance.  But the data from previous years has shown that no such relationship exists.  A much more likely explanation is that American exports are declining and imports are rising because as more and more manufacturers lose ground to foreign competition, there are fewer and fewer products available for export or for purchase by domestic consumers.  Like a horde of mosquitoes, the overpopulated nations of the world are literally sucking the life out of American manufacturing and, with it, the American economy in general.

So what’s to be done?  “Give free trade enough time to work,” free trade advocates say, “and these imbalances will even themselves out.”  Wrong.  Free trade policy has had decades to work, beginning with the signing of the Global Agreement on Tariffs and Trade (GATT) in 1947 and the result has been that the trade deficit with densely populated nations just gets worse and worse.  This happens because free trade theory doesn’t account for the inverse relationship between population density and per capita consumption.

The only remedy that would restore a balance of trade is the same trade policy that the U.S. employed until 1947 to maintain such a balance – tariffs.  The use of tariffs to compensate the U.S. for nations’ inability to provide us access to equivalent markets – markets that have been emaciated by overcrowding – would restore a balance of trade and breathe life back into the American economy.

 


Per Capita GDP Contracts in 1st Quarter

April 29, 2016

Recessions are determined by two consecutive quarters of contraction in the nation’s Gross Domestic Product, or “GDP.”  But what if the GDP grows, but more slowly than the growth in the population?  In that case, your share of the economy has shrunk, as it has for every American, and it’ll feel like a real recession to you.  So that’s how recessions should really be defined – in terms of per capita GDP.

By that measure, the next recession may very well already be underway.  Though GDP grew in the first quarter, though by a paltry 0.5% (as announced yesterday by the Bureau of Economic Analysis), per capita GDP actually contracted by 0.2%, thanks to the population growing at an annual rate of 0.8% in the same time period.

This is the 2nd time in four quarters that per capita GDP declined.  It happened in the same 1st quarter time period last year, falling by 0.2%.  The difference is that last year the economy was already beginning to rebound by the end of the first quarter as we emerged from an extremely harsh winter.  This year, the economy stalled in spite of relatively mild weather and, with the first month of the 2nd quarter already behind us, the economic slowdown appears to be intensifying.

This stagnating of the economy isn’t just a one or two-year phenomenon.  It’s been developing for a long time now.  During the 8-year period beginning with the 1st quarter of 2008 (just before the onset of the “Great Recession”), per capita GDP grew at an annual rate of only 0.5%.  (Check this chart:  Real Per Capita GDP.)  During the 8-year period prior to that (2000-2008), it grew at an annual rate of 1.4%.  And during the 8-year period prior to that (1992-2000), it grew at an annual rate of 3%.  Though the economy continues to grow, albeit ever more slowly, in terms of GDP, per capita GDP has essentially ground to a halt.

This is exactly what the inverse relationship between population density and per capita consumption would predict – that eventually over-crowding would erode per capita consumption to a point where per capita GDP would actually begin to contract.  That’s exactly what we see happening now.  Though we continue to lean as heavily as ever on population growth to stoke the economy, that strategy has begun to backfire. We are all becoming worse off as a result.  It’s time for economists to wake up to the fact that this blatantly-flawed economic strategy is doomed to failure – that population growth has become a drag on the economy.


U.S. Trade: A Tale of Two Worlds

January 21, 2016

Divide the world in half by population density and the results couldn’t be more different.  In 2014, it grew worse again.  The half of nations with a population density above the world’s median – 184 people per square mile – left the U.S. with a trade deficit in manufactured goods of $669 billion in 2014.  That’s up by $35 billion from the record set in 2013.  It has worsened every year since 2009.

The other half of nations – those with a population density less than the median – yielded starkly different results.  The U.S. enjoyed a trade surplus in manufactured goods of $132 billion with those nations.  That’s down from $147 billion in 2013 and down from the record of $153 billion set in 2011.

Here’s the chart:  Deficits Above and Below Median Pop Density.  If this isn’t proof of the relationship between population density and trade imbalances, I don’t know what is.  The number of nations is the same, but the less densely populated nations give us a $132 billion surplus, while the more densely populated nations leave us with a $669 billion deficit.  Still the U.S. applies the same free trade policy to all nations without any consideration to population density.  Doesn’t make much sense, does it?

One may counter that the results are skewed by the fact that the more densely populated half of nations includes more people than the other half, and that it includes China, which accounts for more than half of the above deficit.  Fine, so let’s analyze the data in some other ways:

  • Dividing the world in half by population is a little awkward, because China falls right in the middle.  It requires including some of China’s people in the more densely populated half, and some in the less densely populated half, and dividing our deficit with China proportionately.  If we do that, we find that the U.S. has a trade deficit in manufactured goods of $464 billion with the half of people living in more densely populated conditions.  By contrast, we have a trade deficit of $72.8 billion with the half of people living in less densely populated conditions.  The trade deficit with the more densely populated half of people is more than six times worse than our deficit with the half of people in less crowded conditions.
  • Let’s look at it another way.  Let’s divide the world’s land mass (not including Antarctica) exactly in half and compare the more densely populated half to the less densely populated half.  Then we have a trade deficit in manufactured goods of $666.8 billion with the people living in the more crowded half of the world, and a trade surplus of $130 billion with the less crowded half of the world.
  • Instead of dividing the world in half, let’s divide it around the U.S. population density – those nations more densely populated vs. those less densely populated.  Of the 165 nations studied, 112 are more densely populated than the U.S. and 53 nations are less densely populated.  The U.S. has a trade deficit in manufactured goods of $701.2 billion with nations that are more densely populated, and a surplus of $164.5 billion with those that are less densely populated.  That’s a difference of $865.7 billion.
  • The U.S. has a trade deficit in manufactured goods with 56 nations.  Of these 56 nations, only four are less densely populated than the U.S.:  Sweden, Finland, Estonia and Laos.

Any way that you look at it, the relationship between population density and trade imbalance just absolutely screams out at you.  But economists don’t see it.  They don’t see it because they won’t look.  They won’t look because of their adamant refusal to give any credence to the notion that population growth has any economic consequences.

Trade deficits, they say, are the result of other factors:  low wages, currency manipulation, lax environmental and labor standards, etc.  Or they say that trade imbalances are merely transitory, that such imbalances will correct themselves as the economies of underdeveloped nations grow.

Proving that trade imbalances are caused by disparities in population density also requires disproving the above pet theories of economists.  We’ll tackle that in my next posts.


Global Economic Growth Slowing. What a Surprise.

August 26, 2015

Though it seems that nearly everyone lately is alarmed by a global economic slowdown – especially in China, no reader of Five Short Blasts or this blog should be surprised.  You may recall that, late last year when I published my annual predictions for 2015, I warned of a faltering economy and, specifically, a slow-down in growth in China from 7.5% to less than 6%.  Last week, China’s growth rate fell to 6.7%, a story that sent global stock markets into a tail-spin.  At the time of my predictions, coming off of a strong 3rd quarter in 2014, virtually everyone was bullish on the prospects for accelerating growth.  Now, everyone is wondering, “What the hell happened?”

What happened is delusional economic growth theory running smack into the  economic reality of the inverse relationship between population density and per capita consumption.  On the news this morning I heard that only three countries account for 80% of the world’s economic growth – China, India and the U.S.  Since growth in the U.S. is practically negligible, that leaves China and India – the two most populous nations on earth.  Let’s focus on China.

To be sure, economic growth in China for the past two decades has been phenomenal.  Twenty years ago, China was among the poorer nations on earth.  It was a nation with a population four times that of the United States, but one that consumed virtually nothing.  Corporations drooled over the seemingly limitless growth potential.  Just imagine turning every Chinese citizen into a western-style consumer!  So they rushed in to build factories and infrastructure to make it happen – more development in two decades than the U.S. saw in two centuries.

Now their economy has gone as far as it can go on exports.  China’s continued growth now depends on domestic consumption, and it just isn’t there.  China’s consumers consume more products than ever before – far more – but nowhere near the level that was projected.  What economists have been unable to see is that China’s severe over-crowding caps its economic potential at a much lower level than they thought – at a level that it is very close to reaching, if it’s not already there.  In fact, it may have already over-shot its economic potential, with the export-driven economic momentum propelling it beyond that point.

This is actually good news.  Anything that exposes economic growth theory as the fraudulent pyramid scheme that it is hastens the day when economic stability and sustainability reign, a day when corporate lust for population-driven sales growth takes a back seat to the common good and an optimum quality of life.  But there’s a hell of a long way to go.

 


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.