This page has been archived and commenting is disabled.
Keynesianism Kapitulates To Kondoms? Bill Gross Suggests The Demographic Growth Crunch Will Put Keynesian Policies To Rest
After entertaining some potty humor for a page or two in his latest brief, Bill Gross conducts an interesting thought experiment in which he presents an anti-Malthusian economic hypothesis, which states that predicated by declining global population growth, the global economy will be unable to grow into its full potential, regardless of size (or usage) of any new trillions of stimulus. "This is not the Malthusian thesis, which maintained that at some point the world would run out of food to satisfy a growing population; it is an assertion that capitalism depends upon final demand and that if there ever comes a time when population growth slows, then the world’s most efficient economic system will be tested. If anything, my thesis is anti-Malthusian in its assertion that there will always be enough production to satisfy a growing population, but perhaps not enough new people to sustain growing production." Looks like all the Ph.D.'s from reputable universities just got a new challenge: look for many papers in peer reviewed publications (and we were wondering for a second why Gross used so much toilet humor initially) trying to refute this major kink supporting the new normal, and refuting a "special case" of Keynesianism, which of course was not relevant when the economist was alive, but is becoming the reality all too quickly. Could something as simple as a condom be the cog in the wheel that dethrones the religion of John Maynard Keynes?
From Pimco's most recent investment outlook:
Privates Eye
I write this month to condemn the inventor of the electronic “seeing eye” toilet. Yes, that’s right, I’m talking toilets here, doo-doo-stuff, some of which I hopefully won’t step in myself over the next few paragraphs. I know there must be more substantive and less objectionable topics to bring before you, but I have a sense that many of you join me in spirit if not common experience and so I devote this month’s Outlook to another trivial snippet emphasizing our joint humanity and sense of loss due to the recent disappearance of the hand flusher.
I don’t know where it is located exactly, but there’s an electronic eye in the plumbing of public toilets these days that can sense when you get up and down (or is it down and up) and are finally finished with your “business,” if you get my drift. My doctor says a proctology exam is a necessary evil but cameras in toilets? Never having seen myself from this particular angle, it is particularly embarrassing to turn over the assignment to a camera and in effect say, “Snap away – see anything that doesn’t look right?” I figure if there’s an eye there, then there could also be a little voice that says, “Have a seat,” which of course I do, usually with much haste and a sense that I’d better get on with it before I attract a crowd.
It’s after the dirty deed is complete, however, that the real intrigue begins. Does it flush or doesn’t it? Only the computer chip knows for sure. Sometimes, though, after the paperwork has been filed, pants pulled up and an attempted getaway initiated – nothing happens. No flush. Well, what is one to do in such circumstances? You can’t just leave it there, you know. Sometimes when the toilet’s plugged and there’s no plunger like in European bathrooms, you can get out of there quick with conscience in tact, but only, of course, after checking to see that there’s no one else in the restroom who might be able to testify against you in court for being a non-flusher. With electronic eye toilets, however, the conscience is never clear and so you wave your hand in front of the camera, hoping to convince it by the breaking of light waves that someone really has used the toilet and that somehow it just forgot, or maybe the deposit was so minuscule that it just didn’t merit a flush. Hello in there! Having failed to trick it, however, the next step is to look for that little button in the back that you supposedly push in an emergency – sort of like a “break glass in case of fire” toilet equivalent. But think of all the billions of germs! At least with an old handle you could kick it with your shoe, hold up your arms like a doctor scrubbing for surgery and make an exit looking like you’re auditioning for a part on ER. Finally I suppose you head for the door, all the while listening for the flush, the flush, that beautiful sound of the flush. I could have done it myself, you know, with a lot less hassle. Which is why I support a retreat to the old days, (not the backyard outhouse), but the good old-fashioned hand flusher. One push, and presto – you’re good to go!
I really do have a serious message this month, an adjunct to the New Normal that will likely impact growth and financial markets for years to come. Our New Normal, to repeat ad nauseam, is predicated upon deleveraging, reregulation and deglobalization, all of which promote slower economic growth and lower inflation in developed economies while substantially bypassing emerging market countries that have more favorable initial conditions. In recent months, Mohamed El-Erian has added a developing corollary that emphasizes the lack of an appropriate policy response to what is a structural as opposed to a cyclical development, and you should read his frequently published op-eds for a more thorough analysis as well as those written by Jeffrey Sachs and others who are constructively suggesting a way back to the old normal.
That return journey will be all the more difficult to accomplish, however, because of demographics, an influence that much like gravity is hard to see but whose effect is all too powerful. Demographics – or in this case population growth – is so long term in its influence that economists and observers are inclined to explain the functioning of economic society without ever factoring in the essential part that it plays in growth. Production depends upon people, not only in the actual process, but because of the final demand that justifies its existence. The more and more consumers, the more and more need for things to be produced. I will go so far as to say that not only growth but capitalism itself may be in part dependent on a growing population. Our modern era of capitalism over the past several centuries has never known a period of time in which population declined or grew less than 1% a year. Currently, the globe is adding over 77 million people a year at a pace of 1.15% annually, but slowing. Still, that’s 77 million more mouths to feed, 77 million more pairs of shoes to make, 77 million more little economic units of demand – houses, furniture, cars, roads, oil – more, more, more. Capitalism, I would assert, thrives on more, more, and more, but not so well when there is less or an expectation of less. This is not the Malthusian thesis, which maintained that at some point the world would run out of food to satisfy a growing population; it is an assertion that capitalism depends upon final demand and that if there ever comes a time when population growth slows, then the world’s most efficient economic system will be tested. If anything, my thesis is anti-Malthusian in its assertion that there will always be enough production to satisfy a growing population, but perhaps not enough new people to sustain growing production.
Observers will point out, as shown in the following chart, that global population growth rates have been declining since 1970 with no apparent ill effects. True, until 2008, I suppose. The fact is that since the 1970s we have never really experienced a secular period during which the private market could effectively run on its own engine without artificial asset price stimulation. The lack of population growth was likely a significant factor in the leveraging of the developed world’s financial systems and the ballooning of total government and private debt as a percentage of GDP from 150% to over 300% in the United States, for example. Lacking an accelerating population base, all developed countries promoted the financing of more and more consumption per capita in order to maintain existing GDP growth rates. Finally, in the U.S., with consumption at 70% of GDP and a household sector deeply in debt, there was nowhere to go but down. Similar conditions exist in most developed economies.
The danger today, as opposed to prior deleveraging cycles, is that the deleveraging is being attempted into the headwinds of a structural demographic downwave as opposed to a decade of substantial population growth. Japan is the modern-day example of what deleveraging in the face of a slowing and now negatively growing population can do. Prior deleveraging periods such as what the U.S. and European economies experienced in the 1930s exhibited a similar demographic with the lowest levels of fertility in the 20th century and extremely low population growth. Things did not go well then. Today’s developed economies almost assuredly offer substantially less population growth than the 1.5% rate experienced over the prior 50 years. Even when viewed from a total global economy perspective, population growth over the next 10–20 years will barely exceed 1%.
The preceding analysis does not even begin to discuss the aging of this slower-growing population base itself. Japan, Germany, Italy and of course the United States, with its boomers moving toward their 60s, are getting older year after year. Even China with their previous one baby policy faces a similar demographic. And while older people spend a larger percentage of their income – that is, they save less and eventually dissave – the fact is that they spend far fewer dollars per capita than their younger counterparts. No new homes, fewer vacations, less emphasis on conspicuous consumption and no new cars every few years. Healthcare is their primary concern. These aging trends present a one-two negative punch to our New Normal thesis over the next 5–10 years: fewer new consumers in terms of total population, and a growing number of older ones who don’t spend as much money. The combined effect will slow economic growth more than otherwise.
PIMCO’s continuing New Normal thesis of deleveraging, reregulation and deglobalization produces structural headwinds that lead to lower economic growth as well as half-sized asset returns when compared to historical averages. The New Normal will not be aided nor abetted by a slower-growing population nor by cyclical policy errors that thrust Keynesian consumption remedies on a declining consumer base. Current deficit spending that seeks to maintain an artificially high percentage of consumer spending can be compared to flushing money down an economic toilet. Far better to create and mimic other government industrial policies aimed at infrastructure, clean energy, more relevant education and less costly healthcare services. Until we do, policymakers will continue to wave their hands in front of the electronic eye – waiting for the flush, waiting for the flush, waiting for the flush, with very little success. Try another way, Washington. El-Erian, Sachs and other 21st century policy thinkers have a better way to push the handle.
William H. Gross
Managing Director
»
- 6991 reads
- Printer-friendly version
- Send to friend
- advertisements -
On a long enough timeline...
... the survival rate for keynesians will drop to zero
New Normal -> Collapse. All ponzi schemes collapse, there is no new normal of subpar growth. The global economy will be liquidated. We can rebuild after 10 or 15 years from now, nothing can save the system.
Agree. I've never understood how the new normal could support the debt payments, debt rolls, etc. The ponzi needs growth to feed it.
"boomers... are getting older year after year"
who knew? people age and bill is parnoid about toilet cameras (or maybe just sensors)
he should walk across the street for another yoga class
Don Coxe has said this for years.
Wasn't this busted condom (aka Bill Gross) one of the pigs at the taxpayer trough because he needed to be bailed from his GSE "investments"?
This has been my contention for a couple of years now, that policymakers are misdiagnosing and mistreating a secular demographic shift as a liquidity episode.
For decades, we've been told rising productivity spurred on by technology would solve all our problems. Is this the ultimate string no one can push?
Especially as that productivity is aimed at creating consumer products that have lower marginal consumer utility for each successive step? Iphone, Iphone II, Iphone III. 17" TV to 19" TV. Eventually people get to relative 'saturation'.
And most of the technology of the last 10+ years (I'm overstating of course) has been aimed at cost reduction. Web-based purchasing is a great example. Sure, lowers prices and increases selection, but minimizes community, interaction and has a detrimental impact on 1000's of small bookstores (and jobs, rents, taxes, etc.).
History would say yes. That alleged promise is mostly illusion for an inherently destructive reality.
So would I!
"Could something as simple as a condom be the cog in the wheel.."
no. something as ubiquitous as ROI
Toilets aside - you can count on Pimco to "talk their book". Gross and El Erian are nothing but frontmen conducting PR for this massive fund. Take what they say with a grain of salt.
Take what they say with a grain of salt
Perhaps on short term market calls you could say this, but they have been spot on with their New Normal call. Also, they have always said from the beginning that they want to invest in places that will "shake hands with the government" before the government gets there. In a nutshell, they have had some great calls.
Were they great calls or did they simply stand where they were told the rain was going to fall?I have a sneaking suspicion that TPTB needed them to play along. The reward for doing so was/is rain where they need or want it. These guys aren't playing the same game we are.
Just my opinion.
CD +1000
You could be right... with their amount of financial firepower the government sees a big buyer in Pimco to help them continue their BS. (the demographic shift in investment style will only add to this importance) Either way, they were pretty open about making their strategy public early. (early enough that they got mocked on the whole New Normal concept) Great point though CD... as usual. :)
The "talking their book" forewarning is the single dumbest counterargument any dissenter can present.
I hope to god the people that I am listening to are actually invested in the shit they are saying and predicting. Go listen to Krugman if you want some advice from someone who has none of his wealth correlated to what he says.
It's not just relative population decline - it's that population will still explode in World 3 (or the Gap, or The Places That Need Clean Water, Hospitals, and Sewers, or whatever)
Check this graphic: http://ericgarland.posterous.com/world-population-growth-developed-versu...
Not only is population likely to go forward, it's going to increase in cities, and specifically cities that have insufficient infrastructure. (Now, if you think that there's bound to be upside in the infrastructure business...I think you might be right.)
Not only will places like Nigeria, Pakistan, Iran, and Peru have all the people, specifically they will have the world's supply of working age YOUNG people, a resource that will be irreplaceable in places like Japan, Korea, Italy, and Czech Republic. The only reason the United States isn't on the latter list is the presence of Latinos, who are replacing its young population with vigor. The only reason France isn't on that list is the Muslims from Algeria and Tunisia and Turkey who are doing the same thing. If you find that interesting, so do I.
In the U.S. market: can a generation of 35 million Gen Xers possibly reinflate the Boomer Bubble of derivatives, McMansions, and mandatory healthcare spending? If you can't guess that one right, you probably never made it past the math problem required to post here.
The goal of the Neocons AKA the Ziofascists as well as the US military, is to trigger unrest in the Gap countries thus causing instability and possible break-up. The US military is positioning itself around the world to cripple the developing countries goals of growth. This will trigger a world wide arms race as China, India, Brazil and the Gap countries attempt to blunt the goals of western military and intelligence arms.
The goal of Odummo and Al Bore and other false environmental gods is to try and use CO2 and other scams to blunt the growth of China, India, Brazil and the Gap countries. If these "Greens" goals are not effective (and they will not be) you will see war after war break out as the western countries try to hold onto their present level of consumption and spending.
Political support for that kind of international chicanery is rapidly drying up. These sweaty military plans will never be enacted successfully. The green scam is dead.
Both mainstream ideologies are dead now. The game is winding down. Morale within the military itself is clearly weak and declining. The government has also begun to lose control of the news cycle. The old methods of PR that were so effective are no longer functional.
They're kaput.
Another false flag like 9/11 will make the sheep beg the politicians to command the US military to smite the evil doers.
The American public is as bloodthristy as they come. No country has come close in the last 60 years to killing as many people as we. We will never allow a bunch of brown, black and yellow people to stand between us and the American "Dream"
If only the green scam was dead. It'll be reformulated, from ethanol to cellulosic ethanol, from Gore to who knows who.
The worst part is the scam of green both obscured the true emerging ecological disintegration and created bad faith and knee-jerk reactionism sentiment in many.
A huge potential to create actual ecologically/economically enhancing jobs, reduce unemployment, etc...flat out squandered.
Are you thomas Barnett?
I agree with many of your thoughts, but the environmental damage in China is real. Just read the latest news on pollution, chemical/metal leaks, flooding, etc.
Agreed on the ecological damage. Even ignoring carbon (not that we should, necessarily), as you cite, there exist other emerging Planetary Boundaries.
That is the "New Normal".
Population may be currently exploding in the 3rd world, but it won't continue to do so because there won't be enough food to feed them. The only reason the Earth can sustain its current population is cheap oil. When that goes away, and it's going soon, there won't be enough food to feed the current population let alone any additional growth.
There is LOTS of Money! all around...
What we do NOT have is enough AFFORDABLE Fuel to break out of a flat line... that is to say that any real growth equates to $200 a bbl oil prices, which does what to the world?
Its NOT the money, its NOT even the Gold...
Utility Output Slows the Increase in Industrial Production
http://www.realclearmarkets.com/blog/Industrial%2520Production%2520March%25202010.pdf
This is just for the fun of it... call it perspective for some.
***** "January 12, 2020 - Even though the oil price crossed another barrier earlier this week with US$ 320 a barrel, we have probably not seen the end of it. With the stumbling of the world's current oil production even higher oil prices are to expect in the future.
When Saudi Arabia officially announced in 2010 that the oil production in Ghawar, the biggest oil field in the world, was significantly decreasing, the price for a barrel passed US$ 200. The current total world production of oil is 91 million barrels a day. To get down to the same oil price as before 2010, adjusted for inflation, an estimated world production increase of about 10% is needed.
This can only be achieved in three deposits in the world, Green River Oil Shale in the US, Athabasca Oil Sand in Canada, or Orinoco Oil Sand in Venezuela. However, all of them are extremely stressed at the moment with full capacity, which prevent them from increasing production for a lower oil price.
Some people also set their hopes for an increased output of the drilling in the deepwaters of the Gulf of Mexico. However, since the start of the production six years ago, it has not reached a substantial level to make a significant impact on the oil supply.
Even though the production eventually will increase at these sites, it will not match the current loss of production at conventional oil fields in the world, which means that we have passed the peak of world oil production. This will increase the oil price even more in the near future, some analysts believe it can reach as high as US$ 350 a barrel before the year ends. Hopes that were earlier set to find new reserves is now basically only focused on more efficient output from the three major sites." *****
http://www.newsoffuture.com/oil_price_in_near_future_peak_oil.html
I think we would need some extraordinary luck to have higher production in 2020 than we do today. Mining the oil shale and tar sands will be difficult, expensive, dirty work, and I'm pessimistic that they can replace current production, let alone increase it.
I'm not sure I want to psychologize Bill Gross' decision to open his investor letter with a discussion of his pooping habits.
We're all happy that you know how to go potty, Mr. Gross. Now stop being a pussy and dump those bonds.
he doesn't have a plunger! it's ok to walk out without flushing. weren't you reading?
Hmmmm. I can see the author's point of view, but let me posit one thing.
I think Keynes never realized his policies would be up against the monster of a massive military industrial complex. While this grew and eventually helped our economy by providing jobs during WWII, this beast started feeding off its host and became parasitic with every empire building policy enacted by our country afterwards. I have never really seen this taken into account by economists, who seem to overlook this tragic wastefulness of our taxpayer money of this scheme but who never fail to point out the costs of social programs. $8.7 billion missing in Iraq. The Pentagon's $500 hammers. 10,000+ NATO containers go missing in Pakistan. The money spent meddling in other country's affairs while our own go homeless and hungry is a crime that continues to go unpunished. We would have had more than enough money for our citizenry to be the healthiest, most educated and technologically sophisticated workforce in the world if it were not for the elite. They squandered our money on their empire-building schemes so their stock prices would make enormous returns at our expense and caused horrible bloodshed the world over.
We have spent nearly $3 trillion dollars in Iraq, which was basically a play to stabilize the region for oil production reasons. During this 7 year period the US has used approximately 54 billion barrels of oil. That works out to a $55 per barrel subsidy on oil for the entire world, paid for by the US taxpayer. Without this subsidy oil would likely be over $130 per barrel today. Factor that into hidden economic costs, yet economists never do that either.
There are other relationships like this one that hide real costs and foist them back on the US taxpayer. The US taxpayer, in turn, imposes an inflation tax on the entire rest of the world to help pay for this. This is why the inflation target is about 2% - the rest of the world won't accept a tax rate much higher than that so that's about as high as they want to go. Higher than that is considered a Bad Thing (tm) and must be avoided in order to maintain the power of the dollar as the global reserve currency, since it is precisely that status that allows the US to impose the inflation tax.
It is this role of the dollar that hyperinflationists fail to see. This is the "power" of the dollar, a 2% global tax on global GDP, which is worth approximately $1.2 trillion annually just by itself. Hyperinflation would destroy the dollar which would destroy the power of the Federal Reserve and of the NY banks behind the Federal Reserve. The only thing that hyperinflation saves are the politicians, but they no longer really control the Fed. Instead the Fed and its member banks control the politicians. So rather than the politicians offering up the banks as sacrificial lambs via hyperinflation, the banks will offer up the politicians as sacrificial lambs via deflation and austerity. The politicians will be blamed and the banks will pass under the radar, largely unscathed by the general public.
O no!
I thought all that super-exponential population growth and GDP growth was how we got to Dow 36,000 and the great singularity in 2050? You mean.... we might.... NOT?!
interesting and true
but what about the CENTRAL BANK FUNDED MANIPULATION OF MARKETS
what about that, eh?
I mean, seriously - that right now is THE ONLY THING OF RELEVANCE
damn banksters. freaking scumbags.
http://www.google.com/#hl=en&source=hp&q=the+secret+of+oz&aq=f&aqi=g10&aql=&oq=&gs_rfai=CE_BTl0xQTOGPC6eqgATg1ODJCQAAAKoEBU_Q4GDV&fp=d02fdb297b7f62dd
No one has mentioned this yet? whats the hold up boys? I wanna know why, other than the Bankers would die first... that this does not have legs?
Somewhat related, I was speaking with a GP yesterday and he was lamenting the fact that a large portion of US children are overweight. He pointed out how over the years, all the fat overwhelms the organs and you are left with 25 year olds wiht the organs of a 65 year old. He maintains the impact on medical providers will be crushing.
We are full of fun stuff!!!
not only is Gross literally talking shit here
but the subtext is that current mathematical truths have us in one shitty situation
and that we've been bathing in a shit charade, and will soon be flushed down the toilet
I find this argument interesting since I am 32, a later member of gen X. If a lack of workers is such an issue why is it my cohort can't find jobs? You know why, the few jobs left not cut by US corporations or left in the US gov't are being held by baby boomers. I have a hard time accepting that there will be a lack of people to support all of the retiring baby boomers. It will make things easier for people my age when the boomers retire by opening positions.
Right now the problem is not lack of workers. The current problem is malinvestment by the banks into loans that cannot and will ultimately never be repaid. That malinvestment means the banks are in trouble and cannot pay their depositers what has been deposited because they have loaned it out on projects that will never return the full value of the capital loaned, let alone the accompanying interest charges.
Additionally and because of this, businesses and individuals are buried in debt, unable to borrow more simply because they cannot service the existing debt. Unable to borrow, they are busy instead trying to pay own existing debts and to save cash. This process then withdraws demand from the economy which causes loss of jobs.
So the current situation is not related to what Gross is discussing. His discussion is a bit more abstract and future oriented. We've not yet hit the demographic wall he describes. That wall is yet to come. Right now we are bouncing off the brick wall of too much debt.
The world is full of educated and un-educated useless eaters. We have too many workers for the number of goods and materials that the world needs produced. The West's move toward employment that does not produce useful output is seriously flawed and doomed in the long run. The western worlds only play right now to show profit growth in a declining market is to trim the fat and lay off uneeded workers. The developing world can still afford to keep excess workers employed. Welcome to the new normal....
The problem that your generation and future ones will have finding jobs is due to globalization and automation. Cars these days are mostly made by robots. Auto plants only need a relatively few people to monitor/maintain the robots. That's it. I'm guessing that other manufacturing is organized around automation in a similar way. Same with farming. In the old days, you needed a lot of human labor on farms. Nowadays, we have mostly enormous corporate farms where a few guys ride on enormous tractors. On the other side, you have 2.5 billion Chinese and Indians looking for work who are willing to work harder and longer than you are for a lot less money. We are entering a period of permanently high unemployment and a general scarcity of good jobs. I don't envy your generation at all.
The modern "capitalist" state (and I use that term in quotes for a reason) is not so much capitalism as it is Mussolini style fascism, where the corporation ascends over the individual citizen and is therefore given preferential treatment by the state and also has a direct hand in the operation of the state.
This form of "capitalism" also happens to be dependent on infinite growth, because it is dependent on credit, which must generate interest and interest requires growth. If growth stops, for any reason, interest cannot be paid on the existing loans (in total, not necessarily certain individual cases) and the system must seize up.
Bananamerican makes the point that it is also ROI related, which is true as well and ROI is an expression of growth and the growth is to cover eternal interest charges.
People say they cannot imagine a sustainable society. Well, it's not that hard. Try a thought experiment around a self-contained space station that can house exactly 5,000 people. Go one person over that number and everyone starts to die due to inability of the biological systems to support the extra bodies. Yet also imagine that for those 5,000 people, the station itself has the capacity to create all things needed to sustain life. What kind of economy arises where growth cannot occur? Do you allow your neighbor to piss in your water supply? Obviously there must be some sort of economy but what does it look like and what are its priorities? There may be many answers but one that depends on growth (of the population) is not an answer at all.
Likewise, though it is much larger, the earth is also still a finite system and therefore modern "capitalism" MUST fail at some point. The only question becomes when? And a subsequent question might drive us to ask can we change the economic system before it collapses and achieve something more sustainable and better?
Yet the number of people who ask that question, versus the number of whores who lurk on Wall Street seeking to enrich themselves at someone else's expense, strongly suggests that we'll get the collapse, not the changeover, purely because of human greed.
NOTE: True free market capitalism would not have suffered the indignities of this latest bout of government insanity. Because of that, institutions like Goldman Sachs, Citibank, BOA, and others would already have been long gone. This is why the current system is more like fascism than capitalism, because of the extraordinary coddling of the corporations by the state and the control of the state by the corporations.
Not that I'm an expert on ninetenth century proto-economists/ sociologists, but an important aspect of his work was that it was population growth pressing against current limitations on production that formed the basis of poverty and suffering, but also fueled the growth of PROGRESS. Demand creates incentive to not only increase capacity, but also drives innovation. Groundbreaking work for its time, but Maltus completely under estimated this, which is why his predictions never came true, and science has moved on. Too bad there are those who follow this dangerous cult.
If population pressure is removed, production capacity will atrophy, as will the need and ABILITY to develop. The money, resources, and skills needed for research and innovation are drawn from production capacity. No one is advocating uncontrolled growth, but if the central planners think they can fine tune growth like a precision instrument, well, we know what their success rates look like. Ask all of those Chinese MEN who are never going to get a hook up. Of course the central planners will always come up with new projects in their decaying world, but will there be any determination and drive to do it? And what of organic development? Where would velcro, white-out, or Ginsu knives fit in the central planners schemes?
Why don't these people just move to some island and set up the closed loop controlled innovation lab experiment that their ideas require to function and leave the rest of us alone.
FYI ZHers, the toilets use IR sensors. They don't actual see anything. Would be nice if the emergency overide button was more conveniently placed. Hey, new innovation!! how about voice activated?
So how many people can we put on this planet, robobob? 10 billion? 100 billion? 1 trillion? The notion that growth can continue infinitely is childishly silly. The only question is what are the limits?
Some of us would prefer to find out before we hit those limits rather than after and make a changeover before hitting the wall kills people unnecessarily. Of course one possible answer is that war becomes the culling engine, destroying both excess humanity and excess productive capacity. That's actually what happened in WWII, the destruction of productive capacity and that, no other real reason, is why the US economy ascended so far above other economies. We were intact and became the manufacturing engine for the entire rebuilding world.
So since infinite growth is a mathematical impossibility, are you going to jump on the bandwagon of Orwellian infinite war as the ultimate answer to keep the fascist state operating? Or shall we look for another answer instead?
Yes, the big question of our time is "Will we be able to establish an economic system that addresses the end of exponential growth without conflict?"
Further reading on the topic of "Steady State Economics" can be found here:
http://en.wikipedia.org/wiki/Steady_state_economics
Alternatively, if we must continue to grow then we must expand off this planet - But that solution seems more and more unlikely with each passing day.
Who said uncontrolled infinite growth? An efficient, fair, regulated marketplace works automatically to control growth. As resources are depleted, prices rise NATURALLY and work to not only discourage use, but spur innovation to solve the problems. You want to see the world get serious about nuke power and fusion, just let oil use run its course. You'll see how fast those useless windmills and solars get tossed in the trash and people get serious about nuke and fusion power.
Malthus predicted wide spread famine in Britain by the late 1800's if immediate, BRUTAL action was not initiated. But, alas, it did not occur. Why? A myopic and short sighted view of human character and ingenuity. Revolutions in argiculture, industry, and migration solved the problems without resorting to totalitarian repression.
When a population exceeds the carrying capacity of its environment, it migrates, or innovates. There were times that Europe was unihabited. The pacific islands. Or the western hemisphere. What happened to the 1970's ZPG apocalypse? Right now there are amazing advancements in ocean distillation transforming deserts into farmlands. The US alone can hold a vastly increased population. In fact, everyone on earth could fit into the state of Texas if properly layed out. We have not even touched on earth's carrying capacity. Perhaps one day lunar or Martian colonies may be an answer. So yes, migration and technology can bring answers. Of course, those things require progress, and nothing is as dangerous to the elites as uncontrolled innovation. See how they squirming over the internet? A mistake to soon be corrected. Surrendering independent freedom to elite overlords, controlling innovation, rationing healthcare, chemical sterilization, selling children as food, and forced abortions just seem a little... oh...evil? Cause that's where that road leads. And many of the luminaries in the fields of planning have advocated those things. Just a question of nudging(bludgeoning) people into accepting it.
As to your your WW2 example. Yes the US benefited. Yes, there were those who wanted political consolidation, and there were strong profit motives, but I am unaware about any spontaneous overpopulation problems driving the policies verses just plain old racially motivated groups wanting to settle natural resource issues through force rather than free trade. In fact, it was elitist, STATISTS who were rationally PLANNING for THEIR thousand year future who implemented the most horrendous actions. And if you didn't fit in with their plan, oh well. The dark hand of Malthus reaching across the centuries to give justification to...evil.
And now they're at it again. The problem isn't inherently growth, its resorting to manipulative, repressive, evil means to twist circumstances to personal benefit, rather than using mutual cooperation to solve them.
Ah, the neverending assumption that human innovation will always, every single time, solve every critical problem before it wipes out some or all of those humans.
You really need a course in anthropology, sir. Easter Island, Chaco Canyon, the Mayans, Assyria, and many many more. There has never been a human society that succeeded in solving all of its problems "just in time" every time and the assumption by people like yourself that we are special, divine, empowered, and somehow superior to everyone who came before us is... asinine.
There's usually no way to have a rational discussion with people like you because you've already made up your mind that your belief is fact. You are no different than a fundamentalist Christian or a fundamentalist Moslem, clinging to beliefs in superiority and infallibility just... because.
I don't support any "elite" at all and openly reject those that claim such a mantle. But I do try to look at things with an open mind and with a scientific viewpoint as much as I can muster. You, on the other hand, appear wholly drunk on the perfection of technological man and his inability to do nothing wrong. Hint: For a small example of what we can screw up, have you checked the Gulf of Mexico lately? And that's just a small example.
History is replete with examples of civilizations that had the same hubris as you and yet they failed too. Tell me, what exactly is your magic secret sauce that will ensure perfection ever after? If you tell me free markets, I can tell you that free markets have already failed, catastrophically, in the past as well. Carthage was free market based. Chaco Canyon was free market based. Rome was free market based. None of those were socialist yet they collapsed too.
Your assumptions are wholly unwarranted, sir, and are deadly flaws.
P.S. Your assumptions of carrying capacity are also fatally flawed as well. Your assertion that everyone could fit in Texas "if properly laid out" reveals that you are just as much a control freak elitist as those you criticize. And the assumption that we will migrate in large numbers off earth are not showing any likelihood of coming true any time soon.
Hmm, where to begin, where to begin. Ocean distillation is going to take energy, lots of it. Peak oil is a reality. It's not that we're running out of oil, we're running out of cheap oil. Water distillation as a solution to desertification and soil degradation is a complete myth. If you look at the Earth right now, almost everything is a story of depletion/degradation. Topsoil is degrading. Fisheries are depleting. Deserts are expanding. Food reserves are at an all-time low. And this is with the current population. Any population expansion from this point on makes all of those problems worse.
Many argue, I think, at least partly rightly that consumption, not population, is the key issue:
http://e360.yale.edu/content/feature.msp?id=2140
Consumption in its current form. Biologically productive consumption dwarfs human consumption. We just do it badly.
Free exchange, the core concept of capitalism, does not depend upon rising or falling populations.
I would alert the reader that in other contexts like when he appears on CNBC, Gross is a full fiat money guy. I find that many people who accept Keynes appear to subconsciously be very conflicted by it. They think nothing of creating air-backed money (often called by a more accurate term, "liquidity"), yet the analytical side of their persona sets off alarm bells about the subsequent inflationary consequences. So, they attempt to reconcile these two by believing that if "liquidity" is withdrawn carefully enough, all will be well.
Keynes is sophistry. Keynes must die for the economy to live.
Two hundred years from now, Keynes theories will be taught in Universities about as often as Paracelsus' alchemic formulas are taught there today.
It's overwhelming how little we really know about what is going on in the power centers around the world.
It's like looking at the Milky Way with some fundamental understanding of it: The insignificance of ourselves in the massive scheming that goes on 366/24/7.
Excellent thesis.
I generally agree with Bill's points.
Very, timely, yesterday I was personaly researching Japanese demographics with respect to economic growth.
Bill's done a much nicer job than I would of explaning these points!
Aging population with costly illegal immigration..recip for disastr.
see Bell Ca, Maywood Ca.
Mako should be all over this.
Think for a moment. If the population of the earth were less than it is now, then there would be more:
1) space per person (space to move around in, to build a house and a yard in, etc.)
2) arable land per person
3) water per person
4) fish in the oceans per person
5) natural resources per person (rare earth elements, etc.)
6) energy per person (such as barrels of oil per person, hydroelectric megawatts per person, etc.)
7) wilderness and natural areas per person
And so on. In short, everything gets better for every human being and for the natural world if we can reduce our population. And each person on the earth is able to accomplish more because they are healthier, happier, and have more resources like energy at their disposal.
So who stands to benefit by increasing the population of the earth and making life more miserable for all of us? The wealthy and powerful! Those in charge of corporations, those in charge of the political and legal systems, and those in charge of religions.
For example, when population grows the Coca-Cola Company has more customers to sell its oh-so-healthy beverages to. Corporate profits go up, share price climbs, and the those in charge of the corporation claim credit for "growing the company." As a reward for "growing the company," the executives are given huge bonuses (after all, they "made" the share price go up, right?). Why would they ever want this Ponzi scheme to end? More people on the earth means more customers means more sales means more bonuses for the executives and wealthy shareholders. And means more misery for the rest of us.
What about politicians and lawyers? These people live to make rules and laws that others are forced to follow. The more people controlled by their laws, the happier they are. Politicians stay in office when corporations are growing and making profits, and the kickbacks and bribes are bigger when corporations are making more money. Plus, without population growth who's going to fill out the bottom of the pyramid in political Ponzi schemes like Social Security? And how is the national debt that politicians have so recklessly increased in order to stay in power going to get diluted on a per capita basis?
Then there's the religious fanatics. How better to spread the One True Word of God than to have lots of children who will, almost without exception, adhere to the religion inculcated in them when they were young? Catholics, Mohammedans, and Hindoos have been following this strategy for religious domination for centuries. More foot soldiers, more suicide bombers, more cannon fodder, more voters to spread the One True Word!
This is the three-headed beast that must be destroyed: the Corporation, the Lawyer-Politician, and the Religious Fanatic. Failure to do so means that life will get increasingly worse for almost everyone. The State will assume more and more control over the lives of the peasants until revolt is impossible. Beyond that, who knows. Perhaps Orwell's "boot on the face of humanity forever" will come to pass. More likely, mismanagement of the earth's resources will lead to total collapse.
So now do you understand why Bill Gross wrote what he wrote? Because Gross and his audience are those that will gain wealth and power from population growth (at least in the short term). The rest of us will lose.
Yep, that pretty much sums it up.
Some, I think rightly, argue that the issue was never population, but rather consumption:
http://e360.yale.edu/content/feature.msp?id=2140
Not sure all lawyers should go. Some fight to restrain the federal & state encroachment/negation of basic liberties. Particularly those more "old-fashioned". The political class yes, but these days the guy/girl off the street seems too dumb to assume a rightful position in politics (along with other blue collar sort of people like farmers).
Keynes was a member of the Fabian Society
http://www.nndb.com/people/248/000024176/
PS: 911 Inside Job