Green Capitalism - Waves of the Future
Climate Change, Non-Renewable Resources, Energy, Contaminants, Carbon Pricing...The Depletion Wall
9. Addressing the Problem of Population Growth
10. Depopulation Economics
Depopulation and Degrowth for Climate Change and Resource Depletion Prevention
A Carbon Emission Trading Alternative
Overview Reviews
See also Book I of the Waves of the Future Series
CHAPTER 9-10
PART IV
A LOOK AT THE SOLUTIONS
9. Addressing the Problem of Population Growth
The root of the current population boom is not so much an increase in fertility as a decrease in mortality rates. The vast advances we saw in medicine and health in the 20th century resulted, especially in developing countries, in a dramatic increase in the survival rate of infants and young children, which, in turn, produced a population explosion in the second half of the century. As such, some have argued that we should really be talking about a health boom.In the words of Nicholas Eberstadt (Henry Wendt Chair in Political Economy at the American Enterprise Institute for Public Policy Research), the reason for the 20th century's population explosion “was not because people suddenly started breeding like rabbits—rather, it was because they finally stopped dying like flies.... The population explosion, in other words, was really a health explosion” (p. 56-57).
Population control has many ins and outs. Firstly, there are ethical issues. The coercive One-Child Policy in China has raised many questions. There are also economic concerns. A smaller labor force would have to support a larger portion of the population in retirement. As well, potential incentive and information programs would require funding which can be afforded by developed countries but not so easily by developing ones. Following is a closer look at depopulation issues.
The United Nations and the International Community
First off, as already mentioned, depopulation efforts have to occur across national boundaries and economic regions. No country, rich or poor, is immune to the problem in terms of environmental footprint and resource use. The fact that there can be a significant lag—decades in countries with high birth rates—between the time when a country begins implementing policies—even coercive ones like those in China—and the time at which a population levels off and starts decreasing makes the matter urgent for that reason alone.Population control has to become a buzz word at the United Nations level. Although the UN has done a lot of work on the issue, the message has not gotten through, and neither has the sense of immediacy.
In the absence of depopulation strategies, short-term measures targeting immediate needs will continue to fail as they have so far—the one billion people going hungry today being evidence of that—and turn out to be destructive. They will also accelerate us towards the Depletion Wall, which will add to the problems of hunger, resource shortages, and increasing prices. Food provision initiatives need to continue but will only be constructive and meaningful within the context of a depopulation strategy.
Part of the difficulty in addressing the issue is that developed countries do not see themselves as having a problem. Yet, they do as their per capita impact on the environment is several times that of developing countries. The situation is made worse by countries—like the US and Canada—that promote high levels of immigration in order to increase the size of their consumer markets. North America saw its population almost double since 1960.
Another problem is obviously developing countries' high rates of population growth, regardless of the lower per capita consumption level that individuals may have. Overall, they have a significant environmental and resource-depletion impact. Large-scale deforestation in India and Nepal is but an example of it.
The United Nations has warned about the problem but to little avail so far. Resolutions have to be brought to the fore, and population reduction targets for all countries must be set just like we are attempting to do with greenhouse gases. Short of this, the issue will remain at the wishful-thinking level, and nothing will be done just as has been the case so far. The concept of depopulation has to become part of the everyday language just like global warming is today.
How Far Do We Have to Go?
Paul R. Ehrlich and Anne H. Ehrlich, authors of the best-selling book, The Population Bomb, studied the issue of population growth and consumption. One of the things that they point out is that economic research supports the idea that standards of living cannot be maintained under a scenario of continued population growth.They (2004) argue that consumerism is another issue that needs to be addressed if we want to avert disaster. Under current conditions, consumption would still keep growing even with a leveling off of the planet's population. People in the developed world want more and more, and developing countries will likely follow their example (p. 183).
In trying to estimate an optional population size, Ehrlich and Ehrlich considered many factors. Among others were the ability to provide everyone with the necessities for decent living, basic social and human rights, and intellectual, creative, and artistic activities. Maintaining a certain amount of cultural diversity, preserving the environment, and survival of the species in case of disaster were other factors considered. Based on the current availability of resources and the demands made on them, they (2004) came up with a number, two billion people, or roughly what the world population was in the 1930s (Ehrlich & Ehrlich, 2004, p. 185).
By any means, trying to estimate the world's optimal population size is a very arbitrary process. In their 2004 work, One With Nineveh: Politics, Consumption, and the Human Future, there are very few references made to non-renewable resources (our capital stocks) or the fundamental difference between them and other types of assets, such as fisheries, that can be sustained indefinitely if properly managed. In light of this, two billion people might not be an appropriate long-term world population target. Under those circumstances, an enormous amount of non-renewable resources would still be consumed.
According to the United Nations' classification of more developed countries and less developed countries, the wealthier part of the world comprises only about 1.2 of the total 6.9 billion people on the planet (United Nations Department of Economic and Social Affairs, 2010). In theory, cutting down the global population to two billion people could reduce consumption to fairly low levels. However, that would only be true for a standard of living based on a world average, not for one based on North American or Western European lifestyles.
According to calculations from statistics provided by the International Monetary Fund, World Economic Outlook Database (2010, October), the estimate of the gross domestic product based on purchasing-power-parity (PPP) per capita GDP (current international dollars) for 2010 was $36,430 in advanced economies (top 33 countries). The same figure for the developing world (150 countries) was $8,485. The average for all was $13,580. In comparison, the US and Canada were listed respectively at $47,132 and $39,034, for a North American average of $43,083.
Those numbers have serious implications in terms of determining an optimal population target for the world. What is a decent standard of living? Suppose that the planet's total population dropped to two billion people—or 29% of what it is now—and that this resulted in an equivalent decrease in resource use. Based on a world average per capita GDP of $13,580, the consumption of metals and other materials would generally drop to about 29% of current levels.
However, if decent living is interpreted as the North American average, $43,083—or 3.2 times the world average—then our consumption of resources would only drop by about 8% (29% X 3.2, minus 1). This is minimal and would not make any significant difference in terms of non-renewable resource use.
If decent living is interpreted as the average for advanced countries, $36,430—or 2.7 times the world average—then our consumption of resources would still only drop by about 22% (29% X 2.7 minus 1) with a two-billion-people population size. That would be better but a long way from being enough as far as long-term sustainability is concerned.
Even if decent living were interpreted as 50% of the North American average, or $21,542—a shocking and totally unrealistic expectation for most—our consumption of resources would drop by about 54%. If it happened overnight, it would double our years of supply of reserves and subeconomic stocks of minerals, but that would still mean only about a century before these are exhausted. Clearly, a two-billion population size is not a possibility for the long term.
Under normal circumstances, a reduction of the total number of people on the planet to two billion could take over a century even with aggressive population control measures in place. By that time, all current economic and sub-economic stocks of non-renewable resources will long have been depleted. At least, this is what the latest numbers show.
Just too horrible to contemplate? This is exactly what a Malthusian crisis is. Once wolves had passed the point of sustainable balance and started digging into the breeding stock of rabbits, the process of depletion was quick to accelerate and all that was left for them to do was to die. Humanity is in the midst of a Malthusian crisis, and we are totally impotent to stop it. The time to take measures to prevent it was in 1972 when the Club of Rome made the call for action. Now, the best thing we can hope for is to mitigate the worst of the crisis. Alternatively, we can let nature take its course and see how it brings the system back in equilibrium.
Assuming that we are able to transition through the resource crisis ahead, the standards of living currently existing in advanced countries would have to drop dramatically. A range of 500 to 750 million is likely to be much more realistic in terms of world population for the future. Even then, society would need to rely extensively on new technologies and materials as well as implement very stringent conservation measures.
Consuming Like North Americans
A useful benchmark to look at in terms of sustainability is the world consumption based on North American lifestyles. Those are probably what a lot of people around the planet aspire to and might be interpreted by many as the basis for improved standards of living across the board.What if we won the fight against poverty and everyone consumed at the average level for advanced countries? That would more than double (268%) the world's consumption of resources as well as our speed towards the Depletion Wall. The same figure based on US and Canadian standards is 317%. This clearly shows that poverty cannot be eliminated through economic growth. It just cannot. Depopulation is the only hope of averting disaster and bettering standards of living for the poor in the medium and long term.
The total number of people in developed countries—where most of the advances in technology and industrial production take place—was about 800 millions in 1950 (United Nations Department of Economic and Social Affairs, 2010). The 1950s may also be closer to what we can expect as far as medium-term consumption levels are concerned. Of course, these are broad measures, but they provide a strong indication that a small world population is very feasible.
In the last few decades alone, we have gained a lot of medical, scientific, and technological knowledge which would make today's life much better even if we still only had the financial means that countries did in the 1950s. For example, television and radio sets were available in those years, but their quality has dramatically increased since then. Today's models use less materials and are actually much cheaper in terms of percentage of income than they were decades ago. The amount of entertainment available (channels, movie rentals, etc.) has also vastly increased. Having a television or a radio set today has a very different meaning than it did in the 1950s.
Our children will build their world with a large preexisting amount of science that we did not ourselves have. This will mean a higher standard of living even if it does not translate into larger dollar or GDP figures. As well, today's mass markets will not be as important for them as they have been during the Industrial Revolution and the Information Age because of this preexisting knowledge. On the contrary, rather than making goods more affordable, large-scale consumerism would accelerate resource depletion and price increases as well as the potential crises associated with them. A smaller economy is not only feasible but also an option with greater prospects for better standards of living.
We do not need to use all available farmland or occupy every square inch of the planet. By doing so, we decrease the potential for better standards of living instead of increasing it. In a world with less than a billion people, most major cities would likely remain but shrink in size. Many villages and small towns would disappear. Large areas of land (especially those less fertile and drought-prone) would be abandoned to be reclaimed by nature.
Both self-sufficiency and globalization will be part of the solution. Electronic communications would remain a fundamental aspect of societies as they reduce the need for transportation. With plenty of land and more resources per capita, there would be fewer reasons to wage wars. We would be better able to establish a world government with the same rules and similar standards of living for everybody.
A small human population on a small planet makes perfect sense. It is our best shot at surviving the looming resource crisis and at maintaining good standards of living for everybody. In fact, it is our only shot.
In light of the latest research and resource numbers, it is becoming clear that the planet cannot support an increase in consumption levels in either developed or developing countries. Attempting to improve conditions for seven billion people through standard economic growth will only lead us faster to the end of the Easter Island road, to the Depletion Wall.
We have to reduce the planet's population as fast as we can, not only to avoid crashing into the Depletion Wall—which would spell disaster especially for poorer countries—but also to raise standards of living in the developing world. We could debate the question of an optimal world population size for years, but there is just no time for it. The world did get by very well with three billion people as was the case in the 1960s. For now, this is all we need to know, and we should get started down the depopulation road and do so urgently. It will take decades to get back to the population level of the 1960s; that would leave us plenty of time for debate on the issue of long-term targets.
Speed of Depopulation
We have to change the way we think and take our heads out of the sand. Global warming, the contamination of major ocean fish species, and the depletion of capital resources are all symptoms of the same disease. Many are in denial and refuse to look at reality primarily over fears of what that may mean for their standards of living.What we know is that we have to drastically reduce the world population and that all countries must be involved. The process will occur over time, but what we want to do is start quickly and set a reasonable and sustainable speed of depopulation.
We do not want to create chaos or undue hardships, but we have to keep in mind that we are no longer in the 1970s—when the World3 model was released and the total number of people on the planet was only about 3.5 billion. As the early simulations suggested, options are increasingly becoming limited and ineffective, and all choices may at this point involve some hardships... simply because we did not take action when the first alarm bells were sounded.
There are economic issues relating to depopulating. If we go too fast, we will have too few working-age people to pay for the financial and health costs related to an aging population. If we go too slowly, we will unnecessarily deplete capital resources and keep going down the Easter Island road. This is the essence of the population debate.
Replacement Rate Issues
Population growth depends on many factors: birth rates, childhood survival, death rates, lifespans, etc. These vary in different parts of the world. For that reason, it is impossible to determine exactly what an optimal birth rate would be for the entire planet.As such, it would be more useful here to look at benchmarks than try to determine exact optimal reproduction rates. A replacement rate is the number of offsprings per couple or person that enables a population to maintain itself indefinitely, neither growing nor shrinking. If all countries around the world kept themselves at that rate, the global population would remain the same year after year.
The first thing that comes to mind in terms of replacement rate is the number two. Two parents giving birth to two children would ensure that numbers are sustained indefinitely. Reality is somewhat more complicated. The actual replacement rate is affected by a number of variables. For example, any death before the age of parenthood would decrease the number of newborns. As such, the number of children per family needed to maintain a population stable is usually somewhat above two. As well, giving birth at an earlier age tends to amplify population growth. Doing so later on in life has the opposite effect.
A significant aspect of the population growth problem is that progression is geometric above the replacement rate. Just one more child per family can have a huge impact on a country's total number of people over time.
For example, suppose that a population renews itself every 80 years. At replacement rate, the total number of people in a country would be 100% after the first 80-year period and every other one after that. In contrast, a scenario where couples would have one child above the replacement rate would result in a sizable 50% population increase after the first 80-year period (100% X 1.5) and compound after that: another 80 years would yield an increase of 75% on top of the 150% for the first period, for a total of 225% (150% X 1.5) of the original population.
In the same way, progression is also geometric for birthrates below replacement. As such, depopulating countries would have to adjust their policies so as to produce a constant rate of decrease, for instance 5% a decade, and prevent an acceleration of the process. This may involve, for instance, stronger incentives at the beginning and progressively weaker ones after that.
A Few Benchmarks for Reduction Targets
Countries which currently have a high birth rate and a fast growing population will not likely see any net decrease in number of people for decades even under fairly stringent measures. What would happen at first is that annual growth would only slow down rather than drop below zero. This is what is currently happening in China. Despite having had a one-child policy for decades, its population continues to grow. On the other hand, developed countries—most of which have birth rates already around or below replacement—would see immediate drops. There would be no lag time as is the case with China.How far and how fast would 5% a decade take us? Over the next 90 years, countries currently at the point of balance would be looking at a real drop of about 37% (negatively compounded). Those above it would achieve less, with many continuing to grow for some time before actually seeing a decrease.
The world would have to reduce its population by 71% in order to achieve the optimal size of two billion people advocated by Ehrlich and Ehrlich. To reach this level would take about 244 years at a net 5% per decade rate of decrease, i.e. after the number of people on the planet has stopped growing and has reached its point of balance. The growth rate for approximately the last doubling of the world population was 14% per decade (1970-2010). That is, it would take us about three decades just to reach equilibrium assuming a 5% annual reduction rate.
A net decrease in world population would start occurring only around 2040. We would therefore be looking at reaching the two- billion-people mark some time after the year 2280. At a net 10% decrease, it would take about 118 years to reach it after the world population has stopped growing, placing the achievement of the optimal population level of Ehrlich and Ehrlich around year 2160.
The above are benchmarks that can help us understand the magnitude of the problem and what needs to be done. We also have to remember that this alone would not prevent us from hitting the Depletion Wall but only slow down the process. It could have been enough had it been applied in the early 1970s when the Club of Rome first warned us about the problem of exponential growth and the world population was only half of what it is now.
The Aging Baby Boomer Population
Many governments have expressed concerns about the cost of supporting higher numbers of retirees as baby boomers age. The current strategy in Canada and some other countries is population growth. This is obviously madness within the current state of resource depletion. But, just how big is the age boom?If you look, for example, at Canada's population age distribution as of 2010 (Statistics Canada, 2010, September 29), you can see that the youngest age group, 5-25 years old, comprises 24.4% of the total population. The next one, ages 25-45, represents 27.5% of it, and baby boomers, 45-65, account for 28.4% of the country's total number of people. The same figures for the US (US Census Bureau, 2009) are respectively from the lowest to the highest age group: 27.5%, 27.6%, and 25.2%.
In a normal population, you would expect to have fewer individuals in the middle range than at the bottom as people die with age. The top tier should also be significantly smaller than the other two for the same reason, giving a population its typical pyramid shape. In the current situation, people of working age will have to support a bigger than normal elderly population as baby boomers age. This is the essence of the problem and why some countries are considering population growth as a strategy to alleviate the problem.
In the last few decades, both the US and Canada have relied on very generous immigration policies to increase the size of their markets. The need for it, however, has significantly decreased since the signing of the North American Free Trade Agreement (NAFTA) and a general liberalization of trade worldwide. With the aging baby boomer problem looming ahead, the two countries are likely to extend these policies into the future.
This raises several concerns. From an environmental perspective, the US and Canada, the two biggest polluters and wasters of resources on the planet, have significantly increased their environmental footprint and resource consumption on account of population growth alone.
10. Depopulation Economics
Given that all we have known in the past is economic growth and population expansion, the task of decreasing the total number of people on the planet or even just considering the idea of lower consumption levels and economic output is daunting. Yet, although it would not be easy, it can be done given supporting policies and the right economics.Setting Reasonable Goals
The whole point of depopulating is to try to reduce our consumption of not only non-renewable resources but also renewable ones as we are currently unable to manage them in a sustainable way due to consumption and economic pressures—which have already led to the collapse of many fisheries, the loss of agricultural land through erosion, chronic deforestation, etc.The developing world needs to see an increase in standards of living simply because of the sheer poverty currently existing in several countries. This can actually be achieved under the growth-freeze strategy outlined further down. Such an approach would see a country's total gross domestic product remain the same while the per capita GDP increases from the total production being divided among fewer people. The concurrent implementation of the Green Economic Environment strategy could make developing economies greener and achieve some gains with respect to resources and the environment at the same time.
Developed countries—which are better off and whose environmental footprints per capita are dramatically higher—would have to opt for a more aggressive growth-reduction strategy in which total GDP would decrease but standards of living could be maintained (per capita GDP) depending on the chosen reduction targets.
The approach would result in additional leisure time for workers (shorter work weeks, more holidays, etc.). Combined with a GEE implementation, the strategy could provide a strong framework for resource conservation and environmental protection.
The two approaches are outlined further down, but first is a closer look at the economic principles underlying them.
The Myth of Larger Markets
One of today's most mind-boggling economic misconceptions is that increasing a country's population results in a larger market which, in turn, promotes economic growth. The assumption is that more people means more consumption.This can be seen, for example, when economists and politicians talk about gaining access to the huge Asian market, often regarded as the mother lode of all consumer markets, dwarfing the entire market of the North American Free Trade Agreement, which includes the US, Canada, and Mexico.
The problem is, people do not buy goods, money does. The total amount of consumption in a country does not depend on its population but on its wealth or how much is spent. In economic terms, people are only as good as the size of their wallets.
One person spending a million dollars a day is exactly the same 'market size' as a million people spending a dollar each. In both cases, the total consumption or purchase of goods is exactly the same. The difference between the two markets would be that spending would occur mostly on luxury goods in the first instance and only on food and basic necessities in the second one.
The US GDP (a rough estimate of a country's total production) in 2010 was about $14,624.184 billion (US dollars) or 2.55 times larger than that of China, which stood at $5,745.133 billion. Yet, the US population that year was only about 317 million compared to China's 1.354 billion people. As such, the US market is far bigger than that of China despite having less than a quarter of its population. It even dwarfs the Indian market—which has a total gross domestic product of $1,430.020 billion—by 10.23 times (International Monetary Fund, 2010, October, World economic outlook database, October 2010).
Canada, despite having a population of only about 34 million people in 2010, had a bigger GDP ($1,563.664 billion) than India whose total number of people exceeded 1,214 million (International Monetary Fund, 2010, October, World economic outlook database, October 2010 ). As such, Canada is a bigger market to the US than India is despite appearances suggesting the opposite.
The corporate sector as a whole does not generally have a vested interest in larger national populations. What should matter to them is spending, but they often seem to confuse the two. Some companies do benefit from certain types of markets while others are penalized by them. For example, while exporters strongly gain from expansion into the Far East markets, local industries often cannot compete with cheaper imports and go bankrupt.
Market size does reduce the cost of goods, mainly by spreading development expenses and capital outlays over a large number of items. What most politicians and business people fail to understand is that this too is not a function of population size but one of spending or money. It does not matter how many people there are. What is important is how many dollars circulate in the economy.
Increasing the planet's population from three to almost seven billion people as we did in the last five decades did not in itself increase the size of markets. It has not added one dollar to the world economy. It has only spread the wealth available more thinly, decreasing incomes on average by 50% of what they would otherwise have grown to.
The Changing Meaning of Market Scales
There is some truth to economies of scale making goods cheaper. In large part, the phenomenon was brought about by industrialization which made possible the mass production of consumer goods.In most cases, the environmental costs of a large world population in terms of pollution, depletion of non-renewable resources, etc. are rising rapidly. These are rarely, if ever, factored into the benefit equation of economies of scale. Trying to increase a country's population in order to achieve larger markets—if that were what actually happened—no longer makes sense for that reason alone.
Society does derive benefits from market scales, but that can better be achieved through trade expansion, for instance by joining trading blocks and removing trade barriers. The European Union (EU) and NAFTA are examples of that. In this way, the benefits of market scales can be enjoyed without having to increase a country's population and share wealth among more people.
Although decried by the political left, the globalization of the world economy has greatly expanded trade opportunities for all countries and will enable them to continue to achieve efficiencies of market scale in the future as the world depopulates.
Of course, there is a cost associated with increased trade: physical goods have to travel longer distances to markets than they would otherwise do if they were produced locally. However, energy will increasingly come from renewable and clean sources in the future and at reasonable prices. As such, long-distance transportation is likely to become a lesser evil than increasing the world population given the current state of reserves of non-renewable resources.
Note that bulky low-value items have always tended to be produced locally as the cost of their transportation generally outweighs any possibility of profitability. In contrast, high-value, small, and light items can easily be exported to other countries and remain profitable. For a few cents per unit, tiny computer chips worth hundreds of dollars can be shipped worldwide. In comparison, a ton of cement worth $75 cannot be transported very far before costs exceed profits. As such, both local and for export goods will remain in the picture for the future.
As the price of energy increases, markets will sort out what is profitable to ship over long distances and what is better produced at home. More and more, services, software, communications, and information represent a larger share of many countries' GDP and are not generally affected by transportation issues. This trend is expected to continue into the future.
Improving Standards of Living: The Basic Principle
To the economy, we are just meat. The only thing that matters is money. As expressed earlier, market size is a function of cash spent, not of the number of people spending it. From this, we can draw two conclusions.The first one is that spending (what creates jobs and economic activity) remains exactly the same regardless of population growth. The second one is that if the number of people in a country grows, money is only spread more thinly among them. That is, the real income or wealth per person decreases. While a country's total GDP may remain the same, individuals are poorer than they were before. In other words, a growing population does not in itself result in economic growth but forces us to share a limited amount of wealth between more people, impoverishing all.
In line with the market scale discussion in the previous section, the argument is often made that a larger national population means a bigger market, more people needing to buy cars and houses, etc. This is simply not true. Money is only spread more thinly, meaning that while spending on food and basics increases, it goes down for more expensive items. Cars are bought less often, people rent lodgings instead of buying, the size of houses and condominiums decreases, and individuals increasingly resort to credit (which has to be repaid later and shrinks back economies at that point in time) to finance their needs.
Many also mistakenly believe that population growth forces governments to spend more to support society (for example, increased welfare and various child and family allowances), hence promoting economic activity. Guess where the money for this comes from? Your wallet! Taxes are higher than they would otherwise be to make up for this. Again, money is just shifted around without any real rise in total consumption.
If governments borrow the money (increase the national debt) instead—as baby boomers have been doing—then taxes can remain the same temporarily but eventually the time comes when payments on the national debt have to be made and consumption shrinks accordingly at that point.
The economic growth we saw in the last century occurred as a result of what economists call monetary expansion or the addition of money into the system (various forms of credit, both personal and governmental). While it looks like population increases are responsible for the growth in world GDP of the last few decades, these really have nothing to do with it. It is actually chronic government indebtedness and increased use of credit at the personal level that have driven economic expansion over that period of time. Population growth itself has only served to impoverish us.
Society does derive benefits from economies of scale but these cannot be achieved by population growth.
The Ultimate Proof
The ultimate proof that population growth impoverishes us can easily be found in historical gross domestic product (GDP) figures. These give an approximation of total wealth at any one point in time, and estimates are available for individual countries.One of the issues that escape most people's attention when discussing economic expansion is the difference between per capita and total growth. A country's GDP may increase, but that does not necessarily mean anything to the ordinary person. The benefits from it may not accrue to someone for a number of reasons, one of them being population growth.
While this issue might not be a major concern in Europe where most countries do not see significant increases in their total number of people, it is not the case for North America. Both the US and Canada have seen a tremendous amount of population growth in the last few decades, respectively 48% and 57% from 1970 to 2010. Governments are quick to boast about positive gross domestic product figures when they come out. However, do these really add up to more wealth and better standards of living for regular people?
Let us look at some statistics. From 1970 to 2010, the world's GDP grew from $15,622 billion to $50,159 billion (in inflation adjusted 2005 dollars) or by 221% (United States Department of Agriculture, GDP, 2010). However, personal income or GDP per capita grew during the same period from $4,218 to $7,350 or by only 74% (United States Department of Agriculture, GDP Per Capita, 2010) instead of 221%.
There lies the problem with population growth. While the total wealth around the world more than tripled, individual income did not even double over the same period of time primarily because wealth had to be shared among almost twice as many people as before. Let us take a closer look.
If you made $30,000 dollars in 1970, your income would have been around $52,000 (in inflation adjusted 2005 dollars) in 2010 based on a 74% increase but would have otherwise grown to $96,300 had the world population not increased. That is how much richer we could be today. Bye, bye poverty! On account of population expansion alone, the North American economy has channeled two-thirds of the growth it saw between 1970 and 2010 to feeding new mouths (persons) as opposed to increasing standards of living.
In the same way, if you lived in a developing country in 1970 and your family went hungry because your total income was $2,500 instead of the $5,000 you needed, your 2010 income would have been $4,350 based on a 74% increase (still not enough as is the case with a billion people today despite more than a tripling of world GDP since 1970) but could have been $8,025 (over $3,000 or 60% more than what you needed) had the world's population not increased.
What would the world look like today if average incomes had tripled? Could poverty have been wiped out? Would the problem of hunger have been solved instead of there being one billion people going hungry today? The short answer is, we are able to feed about 6 billion people today and the world population in 1970 was about 3.7 billion, i.e. we would have massive food surpluses.
North American Immigration Policies
A lot of the population growth that occurred in North America in the last few decades resulted from immigration rather than higher birth rates. Although an increase in population size does not in itself create additional economic growth in the host country, the new capital that often comes with people when they resettle does add to the size of its market and wealth. It is, however, a contentious way of creating economic growth as that capital (not only in financial assets but also in the form of skills and education) is essentially stolen from other countries.The problem arises when rich countries like the US and Canada import through immigration the best minds (a phenomenon referred to as brain drain) and huge amounts of savings from developing countries. It is a form of reverse foreign aid that takes from the poor in order to give to the rich.
Depopulation Strategies
Historically, productivity increases have had the effect of pushing unemployment up. Whether through mechanization, technology, or the streamlining of procedures and practices, society has increasingly become able to do more with fewer people. Typically, workers are laid off and replaced by machines or computers that can do a given task at lower cost.Would depopulation eventually eliminate unemployment by reducing the size of the labor force? Probably not if a business-as-usual scenario is assumed. Productivity would keep creating unemployment through more efficient technologies as it has in the past. Governments would presumably also keep promoting economic growth through various forms of monetary expansion as they have been doing in the last few decades.
Take, for example, the US and Canada. Since the 1970s, the North American population has grown by about 50%. Over the same period, unemployment rates hovered between 5% and 10% in both countries and still do so today. This suggests that economic growth—which creates employment—has generated enough new work to offset not only the 50% rise in population but also the jobs lost on account of productivity increases.
In 1970, the North American GDP per capita was $20,616 (in 2005 real US dollars). By 2010 it had risen to $42,078, or by about 104% (United States Department of Agriculture, GDP per capita, 2010). This suggests that Canada and the US are able to produce today over twice as much goods and services per person as they were able to in 1970. As such, only about half of the people would be needed today to produce the total amount of goods generated in 1970. This can be viewed as productivity having created a little over 50 percentage points of unemployment over four decades.
As such, in a business-as-usual scenario, unemployment would likely continue to exist as we depopulate. We should have no fear of labor shortages, especially since the process is controllable: reduction targets can be adjusted, governments can take measures so as to promote increased productivity, etc. Economic growth would continue as it is not a function of the number of people in existence but of the total amount of money circulating in an economy: half of the people spending twice as much would add up to the same total consumption. What would change is that personal income and standards of living would increase.
Business-as-usual is not, however, a scenario that we should be contemplating. The problems of non-renewable resources and pollution would keep getting worse from continued economic growth and, according to World3 simulations and recent data, would potentially lead to disaster. The whole idea of depopulating is being raised here in an attempt to address these issues in the first place. If we are going to make progress, depopulation policies would have to be implemented as part of a broader overall strategy.
This would involve, for example, the implementation of a Green Economic Environment (GEE) system in order to make consumption and economies greener. It would provide additional gains in terms of pollution reduction and conservation of non-renewable resources—which would be badly needed given the massive size of the world population that is expected in the foreseeable future.
It should be clear by now that, at this point in time neither aggressive population control measures nor a GEE strategy alone will be enough to prevent us from crashing into the Depletion Wall. Both are sorely needed: the massive seven-billion-people consumption machine would not shrink fast enough to prevent the depletion of non-renewable resources in time to avert a crisis, and a green economic environment strategy would not be sufficient on its own to prevent it either.
The Three-Pronged Growth-Freeze Strategy
The needs of developed and developing countries are very different by nature. Realistic depopulation strategies for poorer regions of the world would have to involve some kind of improvement of standards of living. By the same token, continued economic growth is not a possible solution for either the developed or the developing world.A Three-Pronged Growth-Freeze Strategy combining a frozen GDP, population reduction policies, and a green economic environment could provide in developing countries both an improvement of standards of living and meaningful progress on environmental issues at the same time. What would such a scenario look like in reality?
The growth freeze would mean that countries would aim at stabilizing their GDP at current levels, i.e. zero economic expansion for them in the future. This, however, would normally mean that standards of living would not improve, but if population reduction measures are implemented concurrently, fewer people with the same total GDP would deliver a higher GDP per capita or personal incomes. As such, standards of living would be able to continue to improve for developing countries under a Three-Pronged Growth-Freeze Strategy.
A freeze on growth, however, would mean that no progress is made with respect to resources and the environment as total output or consumption would remain the same. This is where the implementation of a Green Economic Environment would come into play. By making both consumption and the production system greener, meaningful progress could be made on environmental issues, assuming that GEE targets are strong enough.
The strategy would also have a very significant added benefit: depopulation within a growth-freeze context would mean that the labor force would progressively shrink (fewer people to produce the same output). Hence, unemployment rates would go down, which would be a major improvement for most countries. Not only would workers be more easily able to find jobs, but countries would also save on the cost of unemployment and social assistance programs.
Could labor shortages eventually become a problem? Each time unemployment drops below 3% or 4%, the business sector complains about difficulties in getting qualified personnel and inflationary effects on wages and the price of goods and services. Governments often react by raising interest rates to slow down the economy and create unemployment to prevent inflation from spiraling out of control as it did in the 1970s and 1980s. The issue is a complex one and is discussed further down.
The Three-Pronged Proportional-Growth-Reduction Strategy
Because of developed countries' high levels of consumption per capita, a Three-Pronged Proportional-Growth-Reduction Strategy would be called for in their case. Such an approach would involve a decrease in GDP proportional to a reduction in population, as well as the implementation of a GEE system.What would that mean for standards of living? Obviously, there are various possible degrees of reduction. Let us assume that governments opt for a 10% decrease in population size over a given period of time. As this is a proportional strategy, the target for GDP reduction would also be 10%. This would result in the per capita gross domestic product (or personal income) remaining the same as a 10% smaller output would be divided by a 10% smaller population.
Under the Three-Pronged Proportional-Growth-Reduction Strategy, standards of living would be maintained, and some gains would be made for the environment on account of a lower total GDP. This would be a major component of political viability and selling point for the strategy. Anything involving a decrease in standards of living could yield stronger environmental gains but would be less popular with voters. The implementation of a GEE system would make production and consumption greener and further decrease a country's environmental footprint.
If both economic output and the labor force are reduced at the same time, there would not be significant changes in unemployment, at least initially. The same amount of goods would be produced per person although total GDP would decrease.
The Three-Pronged Aggressive-Growth-Reduction Strategy
A Three-Pronged Aggressive-Growth-Reduction Strategy would involve a decrease in GDP greater than a concurrent reduction in population alongside the implementation of a GEE system and would have different implications. For example, in a situation where GDP is decreased by 20% and population reduced by 10%, a country would see per capita income go down by about 11% (80% output divided by 90% population). Much more significant gains would be made for the environment, but standards of living would go down, at least in terms of consumption of physical goods.A larger labor force (90%) for a smaller amount of work (80%) would mean that unemployment would grow over time. This, along with productivity increases, would force governments to address the issue. Under a Three-Pronged Aggressive-Growth-
Reduction Strategy, countries would not be able to create more work in the traditional way, i.e. through economic growth. Governments would then have to turn to spreading jobs around as a means of addressing the problem. The work week could be shortened, holidays, increased, and retirement age, lowered to prevent unemployment from rising.
While the consumption of physical goods would go down under this scenario, people would benefit from more free time. While standards of living might decrease in dollar terms, the quality of life itself could see a net improvement. The Three-Pronged Aggressive-Growth-Reduction Strategy would signal the beginning of a new era of leisure for the countries that choose this approach.
The Three-Pronged Aggressive-Population-Reduction Strategy
A fourth approach could also be meaningful in terms of achieving significant progress for the environment and resource conservation. It would allow a country to continue increasing standards of living if stiffer population reduction targets are selected. Of course, it also involves the implementation of a GEE system. The option may look unlikely at the moment, but it might become the choice of many countries as we get closer to the Depletion Wall and a sense of panic sets in. As well, it has some significant benefits.A Three-Pronged Aggressive-Population-Reduction Strategy could involve, for example, reducing GDP by 15% while setting a 20% reduction target for population. Again, a GEE strategy would be implemented along with this. A 15% drop in GDP would then be shared by a number of people 20% smaller, yielding a growth in income of 6.25% (85% divided by 80% minus 1) for a given period.
Again, a betterment of standards of living would be a selling point and increase the political viability of the strategy. As well, the aggressive-population-reduction approach would also mean lower unemployment, which would benefit job seekers and lower the cost of support programs for society. As under the first strategy above, labor shortages could eventually be a concern.
Unemployment and Productivity Management
It is doubtful that unemployment rates would get to be excessively low under any version of the strategy for a number of reasons. Firstly, as we will see in the next chapter, there is a lot of slack in the system. While a country's official unemployment rate might be only 5% to 10%, the actual percentage of people that do not work is much higher. For example, it ranged from 20% to 35% (depending on the criteria being used) in Canada and the US in 2010. As well, there are a number of labor-saving strategies that can be implemented to address the issue (also discussed in the next chapter).Secondly, while economic growth and depopulation both decrease unemployment, productivity does the opposite: it pushes it up. It has also the advantage of increasing individual wealth (per capita GDP) since fewer people are able to produce the same output. That makes productivity increases the best possible tool for addressing the issue of low unemployment. Moreover, it does not have the destructive impact on resources and the environment that economic growth and population increases have.
Productivity is notoriously low in developing countries and the cause of continued poor wages and poverty. That makes it an ideal tool not only to mitigate the potential for labor shortages of a Three-Pronged Growth-Freeze Strategy in the developing world but also to increase per capita income (more is done with fewer people). All a country has to do is to promote mechanization and investment in technology.
Ironically, productivity has traditionally been the cause of much suffering in countries around the world as it increases unemployment by promoting the replacement of workers by machines and new technologies. However, within the context of a depopulating world, it would have the opposite effect: addressing the potential problem of labor shortages and increasing a country's output per capita, which eventually trickles down to workers in the form of higher wages.
All of the above strategies are simplified to some extent and do not take into account the aging of population effect, which would mean that a smaller workforce would have to support a larger-than-usual number of retirees. There are solutions. Those are discussed in the next chapter. With respect to the strategies outlined above, the aging effect would likely mean that standards of living would be affected to some extent, depending on several factors. Countries could easily counter that effect by adjusting GDP targets accordingly.
The economics of population growth do not add up. Increasing the number of people on the planet does not add one cent to economies but does force us to share national production among more individuals, making each and everyone poorer. Given the current state of reserves of non-renewable resources, economic expansion is not a possible avenue for the future. Fortunately, there are a number of viable options, and it was the purpose of this chapter to outline them.
Note that in two of the four strategies, personal income would actually increase. The other two approaches offer either the status quo in that respect or an exchange of income for quality of life, in which case people would live simpler and more leisurely lifestyles that would allow for less stressful, perhaps longer and healthier, lives as well as for more fulfilling ones by affording time for people to explore their creative side or volunteering and helping others instead of being the typical obsessive consumer—consumaton—of the modern age.
The Two-Pronged Aggressive GEE Strategy
The depopulation approaches discussed so far allow us to better understand the interplay of population size, total GDP, and per capita income as well as their effect on standards of living and quality of life. While those are solid and implementable strategies, many governments will balk at the prospect of freezing or reducing GDP. So will the corporate sector.Continued economic growth could occur in a context of a Two-Pronged Aggressive GEE Strategy. Such an approach would involve reducing a country's population together with the implementation of a GEE system that would use much stronger reduction targets than the strategies discussed earlier. This would ensure that while economic growth continues, the use of resources and countries' environmental footprint are minimized. The strategy would have the advantage of avoiding the unpopularity of freezing or reducing GDP.
While very appealing, the approach presents several drawbacks. Most governments would likely use the approach with watered-down GEE targets while presenting it as an aggressive strategy and continue current destructive growth patterns. As well, the approach would lead to a progressively tighter labor force, which can be mitigated as discussed earlier.