## Optimum Population Density

May 10, 2008

I have used the term “optimum population density” quite a bit, but what exactly does that mean and what is the optimum population density for the United States?  It’s a really tough question to answer.

To me, an optimum population density is attained when the following conditions are met:

1. A large nation – certainly one the size of the United States – is self-sufficient in natural resources.  Now, obviously, no country can be self-sufficient in terms of each and every resource, since God has chosen to concentrate various resources in different areas scattered around the world.  For example, in spite of our size, the U.S. can’t be self-sufficient in providing our own coffee and bananas, because none of our geographic area extends into the tropics.  However, we can be self-sufficient in natural resources overall by trading what we have in excess for what we don’t.  If the dollar value of those exchanges is in balance, then we’re self-sufficient.
2. We have sufficient labor to provide all of the products and services that we need to maintain a high standard of living.  This includes labor to man our factories, plant and harvest our crops, provide services, staff our governments, man our military, etc.
3. At the same time, we need to maintain our work force in a state of full employment.  Here I’m talking about true “full employment,” in which everyone is able to work as much as they want to support themselves at a standard of living that they’re comfortable maintaining.  In fact, it’s beneficial to maintain a supply of labor that is slightly below the level of demand in order to drive improvement in productivity.
4. Finally, the population cannot exceed the earth’s “carrying capacity” in terms of our effect on the environment.  That is, it cannot exceed the level at which the environment is able to absorb and break down our wastes.  This final point may be the most difficult to quantify.

It would be a very interesting exercise, one that the government should undertake, to load these parameters into a computer program and see what comes out.  It would probably yield an algorithm that would require a mainframe computer to crunch.  Factors 3 and 4 above would require knowing exactly how the per capita consumption of every product and service is affected by population density in accordance with the theory I’ve presented in Five Short Blasts.  A computer would probably have to run trial-and-error scenarios, assuming a certain population and then determining the effect upon consumption and the corresponding effect upon the demand for labor.  I think this would be a truly fascinating exercise, one that I’m surprised hasn’t yet been attempted by the world of academia.

But what does my gut tell me?  Well, it’s been decades since we were energy sufficient, but we were at one time, when our population was about half of what it is now.  And, at that same time, despite what the Labor Department’s official “unemployment rate” says, we were much closer to “full employment.”  Incomes were high, health care was affordable and pensions were secure.  Good jobs were plentiful.  And, although pollution was a problem in those days, it wouldn’t have been if environmental control technologies in use today were available then.

So, my gut tells me that a population density of about 40 people per square mile, about half of today’s level, would be about right.  I came across an interesting microcosm just a couple of days ago that seems to lend support to this level.  I’ve been reading Fair Wind & Plenty of It, a chronicle of a modern-day round-the-world voyage on a square rigger brigantine ship, by Rigel Crockett, one of the ship’s crew.  In Chapter 23 he tells of the ship’s stop at Palmerston Island, a tiny one-square-mile patch of land in the middle of the Pacific Ocean, settled by one man, William Marsters, and his three wives in 1863.  Mr. Crockett observes that:

With William Marsters as that island’s strict autocrat, the family established a tribe that grew to one hundred, shrunk to thirty, and today hovered at forty souls, still living with remarkable self-reliance.

Forty souls on a one-square mile island in the middle of nowhere, completely self-reliant.  That’s exactly the population density – about 40 people per square mile – about half of today’s level of 83 people per square mile – that my gut says is about right for a much bigger land – the United States – and perhaps for the world as a whole.

## Middle Class Can’t Afford Homes

January 31, 2008

http://money.cnn.com/2008/01/29/real_estate/Housing_unaffordability_persists/index.htm?section=money_mostpopular

This article is proof of what I’ve been saying about our current recession.  You have to look past the most obvious symptoms – like the burst of the housing bubble – to find what’s really going on if we want to take meaningful action.

Even in spite of the decline in housing prices, the middle class still isn’t even close to being able to afford an average home.  Why?  Because incomes haven’t kept pace with inflation?  Why?  Because we’ve carved out much of the entire manufacturing sector of our economy and given it away to foreign countries for nothing in return.

Labor obeys the law of supply and demand as much as any other commodity.  Take away a big piece of the labor demand and the price will drop.  Wages will go down.  Balance our trade equation with a tariff structure (one indexed to population density), and that demand for labor will come back home and restore wage growth.

We can cut interest rates and pass stimulus packages until the cows come home; in the long run it won’t make a bit of difference in stemming our economic decline.  We have to take meaningful action to address real problems instead of treating only the symptoms.  You can’t cure the flu by wiping your runny nose.  Neither can we fix our economy with actions that don’t address the real problem.

Pete