World Overpopulation

My Irish relatives have been emailing me from time-to-time about a sorry economy and clueless politicians.  Here is my response, which is a re-hash of my prior emails.

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We have about the same here. 

Guess we shouldn't take it too hard, as this is exactly what I've predicted.  Big picture is world population is going up about 220,000 per day, and the resources that sustain life are getting used up, and are not as easily available as before.  Of course, the most critical resource is oil, as this makes everything "go."

The key number to watch is the daily delivery of oil to the entire world market.  This number is kept track of, and not too hard to find.  (Check "peak oil" + wikipedia.)  Right now it's about 88 million barrels per day. 

Now the world population goes up about 1.4% per year.  This has become "inevitable," and is "unstoppable."  So, there are four cases:

FIRST.  The population goes up 1.4% and oil deliveries also go up 1.4% (next year's oil deliveries are 89.23 million barrels per day).  In this case, things will stay about the same as they are now.

SECOND.  The population goes up 1.4% and oil deliveries go up, say, by 2.5% (90.23 million barrels of oil per day).  In this case, there will be boom times, and businesses and government will add jobs.

THIRD.  The population goes up 1.4% and the oil deliveries stay the same at 88 million barrels per day.  In this case, there will be a recession, and businesses and government will lay some people off from their jobs.

FOURTH.  The population goes up 1.4% and oil deliveries actually go down, say to 87 million barrels per day.  In this case, there will be a depression, as businesses and government lay people off from their jobs, and the rate of layoff will be catastrophic. 

Another number to watch is the WORLD PER CAPITA availability of oil.  Actually, there is nothing to watch here, because this number hit a peak in 1979, and has been going down steadily every year.  In fact, the rate of population increase (1.4% per year) has been greater than the increase in the daily delivery of oil, so we are now always in a situation where the oil deliveries don't go up as fast as the population does.  Since 1979, we have been consistently between the FIRST and THIRD alternative. 

These are really simple concepts to think about, yet NO ONE talks about them.  Why?  Well, because they are really bad news, and it is believed that the public has a psyche of a 5-year-old child, and will throw a tantrum if it is told the truth.  Actually, I would appreciate it if the politicians and news media would level with people, and get it over with.

In my various emails to people I have learned some valuable new things.  One of these is that apparently, for most people, maintaining a "happy outlook" and "positive attitude" are put forward as being the MOST IMPORTANT way for them to be, and therefore they'll refuse to hear "dark" or "unpleasant" news, and in fact they don't hear it.  It's like their brains have a shield, and anything "dark" or "unpleasant" just bounces right off.  In particular, they have responses to the energy thing that are all the same, and they recite them all the same way too:  there is a new oil field discovery, and that's going to take care of the problem; technology is going to bail us out; they are working on electric cars, and you can get electricity from anywhere.  If you press them, they will take on a Louis XV, and say:  the oil will last my lifetime, and I don't care what happens after I die.  And neither should you.  

As I was trained in science, one of the attributes of this training is that you are trying to SOLVE problems, and therefore you absolutely MUST look at problems UNemotionally.  You must take YOURSELF out of this process.  What you "feel" about the problem is not relevant.  So, you get used to looking at the problem without bringing YOURSELF into it.  Then you set about to try to "solve" the problem.  The same thing has to happen with surgeons, otherwise they wouldn;t be able to make that first incision of a surgery.  Also maybe to lawyers, otherwise they wouldn't be able to defend a person who they suspect is guilty anyway.  But for the general population, now I know that they absolutely MUST bring themselves into things, and personalize things, and maintain a "happy outlook" at all costs.  This is what comes naturally to them, and also what they have been trained by society to do.  So, they are just incapable of looking at "unpleasant" or "dark" realities.  Therefore, they have no hope of actually solving problems that concern these realities.

When you actually solve a problem, that is actually a "happy" thing.  But first, it may happen that you MUST look at "dark" or "unpleasant" realities.  In fact, "reality" doesn't give a whit about what you think about it.  "Reality" is not really personal to YOU, and this realization is one of the keys to being able to solve problems effectively.  

So, it's not surprising that the politicians and media people don't tell us the truth.  Most of them can't figure it out for themselves.

Oil is the most critical resource that is under pressure from increasing population.  Most of the other resources are just barely able to keep up too - these include metals, timber, grain/food.  But the PER CAPITA availability of these things should be watched too.  But this is harder to find.  I'm pretty sure, however, that these numbers are behaving like oil - probably hit a high about the same time, 1979, and falling steadily ever since.

Now what this all means is that people, on the average, are going to get poorer.  And this is no mystery either, because there are only just a few ways that people actually CAN get poorer:

     Prices rise, but wages don't rise as fast (inflation)

     Asset values fall (stock and bond market, our own house, other real estate)

     Wages are stagnant, and government keeps raising general taxation anyway

     Unemployment goes up (people lose their jobs)

     Markets swing wildly up and down, increasing investment risk

     General rates of return on investments go down

Well, surprise-surprise.  Since 2008, we've already experienced ALL of these situations, and therefore, PEOPLE, ON AVERAGE, HAVE GOTTEN POORER.  The only exception is that some assets that are tied to basic natural resources (like forests, mines, farmland), and maybe some transportation assets (railroads and shipping) have actually gone up in value, relative to other assets.  However, the general public normally doesn't invest in this type of asset.  (Warren Buffett completed his purchase of the BNSF Railroad just after the 2008 crash - this is an example of a rare success story.)  However, these natural resource investments are not exactly risk-free either.  Generally speaking, even here the RATE OF RETURN per dollar invested has gone down in the last 40 years, so that they may reward your balance sheet, but not do much for your income statement.  In other words, we all have had to run faster and faster, just to stay in place, even those people who invested in basic resource assets.  This is another attribute of a world in which PEOPLE ARE GOING TO GET POORER.

Now the population and its financial condition depend on three things:  the natural resource base it has available to it to exploit; the level of technology that it has available with which to exploit the resources; and the level of organization it maintains (chiefly government, religion, and culture) in order to exploit the resources.  Since 1500, the level of technology (plus some spillover to organization) has increased by leaps and bounds, and this has enabled the world population to go from its "basic" steady-state number of about 1 billion all the way up to 7.3 billion today.  Technology has performed so amazingly well during this period that now people EXPECT that this long 500-year run of success MUST continue.  But there is no reason to expect that to happen.  Sooner or later, technology will falter, and when it does, then the population will fall.  

There are plenty of examples in history of falling populations.  (See the book "Collapse" by Jared Diamond for a discussion of these.)  A good example is what happened when the Romans left England.  When they came to England, the population has been estimated at about 1 million.  When they left, the population had risen to about 5 million.  A hundred years after they left, the population had fallen back down to about 1 million again.  In this case, the resource base was still healthy; and technology remained unchanged.  The catastrophe was caused by a failure of organization.  And, all it takes is ONE of the three elements faltering to create a catastrophe.  

In our present case, the organization will remain about the same, and the technology also.  What will cause the collapse will be a failure of the resource base.  Unless technology and organization improve by leaps and bounds, we will not be able to avoid this result.  When there is a collapse brought about by the failure of one of the three elements, eventually it will bring the other two elements down too.

Around the world, once you understand these forces, you can observe how different places are coping with these new stresses.  The chain breaks at its weakest link first, so countries like Somalia and Afghanistan already have descended into chaos.  A few years ago, Russia was also descending, but the big rise in the price of oil rescued it, temporarily.  In July 2010, the price of wheat abruptly, and without warning, moved from its long-term steady value of about 4.25 a bushel up to 10.00 plus.  In the Western World, food prices went up, and people tightened their household budgets.  However, in the Middle East - which has a high birthrate, and few resources except oil (and the oil is controlled by a small elite), what this meant was that the lower half of the population could no longer balance their household accounts.  Bread tripled and quadrupled in price.  In this situation, people have no alternative but to blame the government, and go into the streets.  And, that is exactly what happened.  Lately, Russia is making a play to retake the Ukraine.  Actually they MUST be successful here, because Russia as it now exists is not able to feed itself.  It has oil and gas, but is too far north to have the farm fields.  Those are in the Ukraine.  For the long-term viability of this region, both oil/gas AND food must be obtainable.  Putin knows this, and he is making his play.  After 2008, southern Europe crumbled (including Ireland, apparently).  This is because these areas are relatively resource-poor, on a per capita basis.  Since Europe had tied itself together (one type of survival mechanism, banding together for safety), its union was now under pressure.  The dominant partners - Germany and France - banded together with a lot of policy, the net effect of which was to preserve their own standard of living by drawing away wealth from the South and Ireland.  This was called "austerity" and "financial responsibility," but it actually was an attempt of one region to live from the pain of another.  Organization was also to be changed in the South - socialist societies were to be changed to fascist ones.  (Here the definition of fascism is a government which has few employees or real estate of its own, and therefore must contract out to for-profit enterprises, controlled by "special" people, whenever the public demands community projects and tasks.)  Midway through this process, France installed a socialist government, and Germany continued, more-or-less alone.  France bears watching, as the ultra-nationalist party appears to be gaining strength.  However, until today, Germany has been successful in maintaining its standard of living.  In the US, we have had this odd situation where the independent Fed has expanded the money supply in force, and driven interest rates down to unprecedented levels, but the Republican-controlled Congress has refused (for social reasons, favoring their constituency of the very wealthy) to lower tax rates for the general population.  This combination of policies has caused the "recovery" to be anemic and ephemeral.  And it also cause the Fed to lose control of the money supply, because to raise interest rates will plunge the economy back into ruin, and also, the government itself has issued so many debt instruments, that it ALSO can't afford higher rates.  Here, the realization is setting in, nevertheless, that the "power" that the US has enjoyed since 1945 is slipping away, and our ability to undertake monumental tasks, or influence world events for our profit, is slipping away.  Why?  Well for the very basic reason that we can no longer afford them.  

So, the reactions have varied.  Nevertheless, the population keeps growing, and the resource base that sustains life continues to decline.  So ultimately, no matter what policy alternatives are chosen, all people around the world, on average, will continue to get poorer.