Thursday, March 9, 2017

Another Bloomberg 'Genius" Falls For The Myth That The U.S. Needs More People

The U.S. population clock shows 300 million on Oct. 17, 2006 at the U.S. Census Bureau in Washington, DC. The US population hit the historic milestone of 300 million at 7:46 am EDT.
Let's put it right out there in the open, that this country is bloody crowded with people. Here in Colorado if you decide to go to the mountains or Rocky Mountain National Park any given weekend, you are doomed to wait hours in long lines on the I-25. If you're in Miami or LA the highways are backed up 16 lanes with traffic almost all the time at peak hours. Here in Colorado Springs. unless you make reservations for most places - even 'Mom n Pop' cafes- you're likely to be out of luck. And woe betide you if you have to use an ER, you may wait for hours.

SO on basic observation the claim this country needs more people is bollocks. But here again, the economic eggheads who think they know better than anyone else, are convinced Americans need to make more babies given our decline in birthrate.  The latest one to make this argument is Bloomberg resident columnist Stephen Mihm whose piece 'Baby Bust!'  appeared in The Denver Post (front page Sunday 'Perspective', Jan. 8 )  He writes:

"Shortly before Christmas, the U.S. Census Bureau put some coal in the nation’s holiday stocking. It released data highlighting a worrisome trend: The population grew a subdued 0.7 percent, the lowest rate of growth since the Great Depression years of 1936 and 1937. Declines in the birthrate and the slowing pace of immigration are to blame.

Ask an economist why this matters, and you’ll get a welter of contradictory answers, as the relationship between population growth and economic expansion is a vexed and controversial subject. But if you sift through the historical data on the subject, it’s hard to deny that the demographic slowdown, should it continue, likely puts a damper on future economic growth."

Okay, two quick points to make at the outset. If the central argument is that the economy "needs more people" - which appears to be the case- then Mihm has already admitted (1st paragraph) that the cause need not be low birthrate, but  rather slowing immigration. This elides into another point I've made consistently in these economic arguments: that the world as a whole is overpopulated but any given nation per se may not be overpopulated. Thus, the world has more than ample people, but with different densities in different nations, regions. Hence, less densely populated places can make up for any perceived economic consequences by simply allowing more immigrants into their nations, while not increasing global population. I know this isn't popular with all the Reich wing populist nuts like Le Pen and Trump, but there it is. THAT is what you're going to have to do in an already overpopulated world.

In the OECD nations right now there are well over 230 m unemployed thanks to a combination of reasons including corporate restructuring, automation - and offloading jobs to cheaper nations.  So rather than add to the world's population burden (and the attendant environmental problems)  why not put these current unemployed back to work wherever needed? Make them 'citizen workers of the world' - since the whole market impetus is to globalization anyway.

Second, Mihm - like most of his economist brethren - misses the mark believing population is the major factor impacting economic growth. No, it is not. As I've noted before (Sept. 20, 2013), it is the decreasing energy return on energy invested (EROEI) of fuel sources. In other words, our energy-dependent civilization is becoming ever more impoverished as the efficiency of the energy to run it diminishes over time. Essentially, a nation which had become addicted to energy delivering 20 to 30 or even 40 times as much energy as it cost to extract, now faces a future with energy return 5 to 8  times less. This spells monetary-economic disaster because at the end of the day it is energy which  determines wealth of nations- money is only a medium to represent it.
A report issued by the London investment firm Tullet Prebon as recently as five years ago, and circulated via 'Strategy Insight' newsletter warned:

"For 2020, our projected EROEI of 11.5 to 1 is not as catastrophic as 5: 1 but would nevertheless mean that the share of GDP absorbed by energy costs would have escalated to 9.6% from about 6.7% today. Our projections further suggest energy costs would absorb as much as 15% of GDP (at an EROEI of 7.7 to 1)  by 2030."


This shows the trend in a nutshell and it has nothing to do with population, only that increasing it globally would make matters worse because all those added people would require much more energy to live, including for fuel, food cultivation, transport etc.. And 2b more are expected by 2030.

Again, this shows the problem is not too few people but too many and the core sane solution is to redistribute them for economic maximization. This as opposed to insisting all the more developed nations have more babies.  Not to sound too hyperbolic, but that's kind of like tossing cans of gasoline on a slow burning fire.

We don't need it. But don't try to tell that to these economists! Mihm goes on to admit, however:

"these declines in the birthrate — and the larger rate of population growth — weren’t bad news in and of themselves; if anything, they seem to have been quite positive, going hand in hand with dramatic economic growth."

Well, this is not really surprising given that it costs a hell of a lot to raise a kid from birth  As per a Denver Post Business story ('Discovering What It Costs To Raise A Child') from Jan. 3rd, 2013 (p. 5K) we learn an "average middle class family will need $245, 340 over 18 years, for a child born in 2013"(From a U.S. Dept. of Agriculture 'Cost of Raising A Child' report).   And this is bound to be more expensive in the future as medical expenses will rise, and health care is much more difficult to afford (thanks to the GOP).

That chunk of moola, nearly a quarter million or what each retiree needs to cover medical expenses Medicare doesn't,  includes: "diapers, formula, child care, baby furnishings, new clothes every year, electronic computers, smart phones...and other gear and seemingly don't end when the young one finds a job".

So it's no wonder economic growth would rise if that albatross was removed from many couples' necks.  Additionally,  recall this pullback is being done in an energy environment which is regressing in terms of efficiency.  Northwestern University's Robert Gordon has posited that the Industrial  Revolution (at the turn of the 19th century) had a vastly bigger effect on productivity, economic growth than the so-called "PC revolution" in the 20th. Think about it! The former meant a transition from the impossibly laughable energy of whale oil to kerosene, coal etc., a mammoth jump in the EROEI of available energy sources. The latter transpired over a period of roughly 20 years, over which the EROEI of oil actually decreased from 16:1 to roughly 12:1. So no wonder that even millions of computers were not able to match the sheer change in productive output that accompanied the Industrial Revolution- and within the scope of the latter's purview we include the internal combustion engine, electricity, and indoor plumbing.

Gordon argues, and he's correct, that by the time the digital revolution got under way- say in the 80s- the big payoff in productivity began shrinking. Meanwhile, the PC-computing payoff basically has "come and gone" dissipating by 2004, when EROEI reached below 10:1 and fracking began as a last desperate effort to snare the vestigial ""riches" of oil - along with deep sea drilling.

We come back again to Mihm's reliance on Canadian economist Clarence Barber's study tying economic growth to a nation's population:

"In theory, immigration might have picked up the slack. While Barber didn’t address this in his study, it’s worth noting that Congress put drastic curbs on inflows of people in 1924. That year, approximately 706,000 immigrants legally entered the country. The number dropped precipitously the following year, and by 1933, the number had fallen to 23,000, a decline of almost 97 percent.
How these demographic declines set the stage for the Great Depression is hard to know with certainty, but Barber believed that the decline in birthrates among native-born Americans was sufficient to set the stage for declines in aggregate demand."

But again, I can make the symmetric argument that Barber was remiss in not factoring immigration into his work. And if this is so, then the claimed drop-offs in aggregate demand are a function of labor inputs, numbers not native birth rates.  I can vouch for my own maternal grandfather who came to the U.S. from Croatia in 1914 and had his own corner grocery operating in Depression-era Milwaukee by the mid 1920s. His business did so well he could help many native born Americans adversely affected. Hence, one cannot and must not dismiss the role of immigration, particularly in an already overpopulated world.

The solution for nations perceived to be underpopulated, then,  is to allow a larger influx of foreign workers.  To be sure, I am not elated about adding any more people to this country, because I think 300-plus million is more than enough. We already risk a large surplus labor force which can drag down pay or at least keep it stagnant. But ...if the choice is between Americans having many more babies, and allowing in more immigrants to try to enhance economic growth - I am definitely in favor of the latter!

The truth?  Increased populations only assist Neoliberal  (or conservative - like the Koch bros.) elites who can afford to live apart - in their gated enclaves- but who can profit handsomely by the vast surplus labor pools created. As investors, or even owners,  they can basically bid down wages and benefits to whatever lowball number they want, and if the peons.....errr  workers.....don't like it....they can tell them they will send the jobs to China.  Or, automate them.

In terms of providing health care to the people already residing in the U.S. this is a big deal. There is already a projected physician shortage across all specialties and at least the immigrant physicians - say from India, Jamaica, Iran etc., had been making the shortage manageable. Now, with idiot Trump's new "EO" this may be truncated, even as he's altered his "bad guys" list from 7 nations to 6 - already showing it was contrived to begin with. (Apart from which a Dept. Of Homeland Security Report from a week or so ago stated clearly no attacks of any kind came from any of those 7 nations.)

In addition, the fact that the new GOP health care plan wants to pull the rug out from underneath families shows this is not the time to have more kids. What support - health wise- will you get,  especially if your child has autism, muscular dystrophy or some other condition that demands extraordinary  medical expense?  The answer is none. So the decision not to have children  is rational in this hostile environment. One in which the majority R -party is more exercised and outraged about the unborn than protecting the health of the already born.

Oh, and protecting their financial health too while also not emulating  Jacob Chaffetz- who actually suggested if people want to afford their new Reepo health care they should not buy that new I-phone. Evidently, this monkey isn't aware that a typical premium for health care now costs $18,000 a year, compared to a few hundred bucks for an I-phone. (With blabber like this, Chaffetz is ripe for a takedown by Katherine Allen, a physician from Salt Lake City now planning to run against him.)

By the end of his piece, Mihm seems to catch a glimmer of realism but then that recedes as he writes::

"data released by the real estate firm Trulia last week indicates that the number of young people living with their parents (or siblings) recently hit levels not seen since 1940. That statistic suggests that a baby boom isn’t likely, never mind a boom in consumption fueled by the formation of new households.

But at least the U.S. still has immigration, right? Perhaps not: President-elect Donald Trump has been vocal about his opposition to illegal immigration, but since the election, he has started to send signals that he intends to crack down on legal immigration, too. If that happens, only a homemade baby boom will save us from further decline in the Trump years."


But alas, as I showed, no such "baby boom" will save us because it merely means more biologic energy "sinks" to draw on ever diminishing EROEI energy sources. In addition,  it will massively add to the debt of any families that do have more kids - given their atrocious expense- and in an environment where Repukes will be slicing all possible benefits (including healthcare) to the working and middle classes.

All it will do is speed our nation's accelerating decline, especially given the upside down economics of the Trumpites.

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