Amerika

One interesting fellow who commented on early articles on this blog is Pete Murphy, who worked for thirty years in manufacturing and engineering for a major chemical company and now writes in his spare time.

What’s interesting is that his book, Five Short Blasts, take an economic approach to analyzing the population problem in the United States — and economics, like mathematics, relies heavily on real-world modeling of granular, bottom-up systems, unlike the “personality-based” viewpoints of most political thinking.

It’s an interesting book by an interesting author, and we’re fortunate to have him for a round of questions.

How would you describe yourself politically — you seem fiscally conservative or libertarian, but other aspects of your philosophy seem to be more futurist.

The problem that I have with both the political left and right is that neither is addressing what I believe to lie at the root of our problems. For the past few decades, in spite of oscillating back and forth between the left and right approaches of the Democratic and Republican parties, our economy seems to get worse. This is because even the political center is completely off target. While macroeconomic indicators like Gross Domestic Product seem to show an economy that, while having its ups and downs, is steadily growing, anecdotal evidence seems to suggest that something is wrong. It’s becoming more of a dog-eat-dog world everyday. Well-paying jobs with good benefits are becoming ever more scarce. Real wages are declining along with our net worth. People are literally working themselves to death out of fear of losing their jobs. I think that most of your readers can relate to what I’m saying, especially older people who can remember when times were different. I believe that these are consequences of what I call “economical overpopulation,” both the home-grown consequences and those imported by attempting to trade freely with nations that are even more economically overpopulated than we are. Neither party addresses this issue because both are guided by the belief of economists that population growth is an essential element of a healthy economy. And both parties support unfettered free trade.

Do you believe that any systems can be purely regulated by an “invisible hand”? In other words, leave guidance of our nation to the free markets, or the popular vote, or other forms of counting granular approval.

I’ll answer with a qualified “no.” I generally believe in free markets but, because there are parameters at work that are unaffected by market forces while simultaneously having an effect on markets themselves, boundaries must be established within which free markets may operate. In the first half of the 20th century, we found it necessary to establish boundaries regarding the just treatment of workers, banning abusive practices like child labor. In the second half of the 20th century, we found it necessary to establish boundaries to protect the environment. I believe that two additional boundaries are required. First, population growth cannot be relied upon as a mechanism for driving economic growth. Secondly, we must have a balance of trade. No nation can run a large trade deficit indefinitely. Since the U.S. trade deficit is financed by a sell-off of American assets, an obvious limit is reached when the supply of assets is depleted. With a $9.2 trillion cumulative trade deficit of thirty-three consecutive years, that point has been reached and the ongoing global economic collapse is the consequence. When you understand the role of disparities in population density between nations in driving that imbalance, you come to understand that market forces are powerless to correct it.

You point out that as population density increases, consumption decreases, which makes that for us to trade with more densely-population nations leaves us at a disadvantage. As world population grows, however, most places are going to become more densely-populated. Do we have a strategy for countering that, or would we be better off trading less outside our borders?

First, a little background is necessary in order for folks to understand my answer to this question. There is what I call an “optimum population density,” the point at which we have a sufficiently large population to provide the labor force necessary to produce the products required for a high standard of living, but not so large that we begin crowding together more than we’d like, a point at which overcrowding begins to erode per capita consumption. This “optimum population density” is difficult to define and we may not know that it’s been exceeded until anecdotal evidence suggests that the line has been crossed.

But once that line is crossed, over-crowding begins to erode per capita consumption, due simply to a lack of space for using and storing products. Perhaps an example will help. I like to use Japan because they are a modern, prosperous country like the U.S., but ten times as densely populated. As a result, the per capita consumption of dwelling space – the size of their homes – is less than a third of the average American’s, not because they like living in tiny homes but because there isn’t room for anything larger. This means that their consumption of all products used in the construction, furnishing and maintenance of their homes is dramatically reduced. And their per capita consumption of virtually everything (with the exception of things like food and clothing) is similarly affected to a greater or lesser extent. As a result, their per capita employment in producing goods and services for domestic consumption is quite low, making them utterly dependent on manufacturing products for export to employ their excess labor capacity.

So you can see that, by engaging in free trade with such a nation, our economies combine and the work of manufacturing is spread evenly across the combined labor force. But, while they gain access to a healthy, vibrant market, all we get in return is access to a market emaciated by over-crowding and low per capita consumption. The result is an automatic trade deficit and loss of jobs for the U.S.

Finally, to answer your question, this means that, while free trade in natural resources with all nations and free trade in manufactured goods between nations with similar population densities is indeed beneficial, free trade in manufactured goods with badly overpopulated nations is a sure-fire loser, tantamount to economic suicide. What I have proposed for such situations is a tariff structure for manufactured goods that is indexed to population density.

It seems to me that your idea of “smart tariffs” calibrated by the difference in population densities fits between the libertarian view of
unfettered free markets, and the moderate view that government regulation is good. It’s regulation by principle. How does this escape the problems of regulation by bureaucracy?

It probably doesn’t. Unfortunately, administering tariffs, “smart” or otherwise, is going to require a certain amount of bureaucracy. Perhaps the most famous example of attempting to reduce the bureaucracy involved in administering tariffs was the Smoot-Hawley Tariff Act of 1930. Free trade advocates like to point to this act as a turn toward protectionism by the U.S. that caused the Great Depression. That’s simply not true. Smoot-Hawley was only the most recent in a long history of tariff acts and barely raised tariffs at all above the previous Fordney-McCumber Tariff Act of 1922.

It’s real purpose was to reduce the bureaucracy involved in setting the tariff rates. All tariffs had been previously set in “ad valorem” terms, which means that they were set as a percentage of the products’ values. It was then up to bureaucrats to determine the values, and the figures had to be reviewed and revised over time. So Smoot-Hawley set the tariffs in firm dollar terms, eliminating the value-determining bureaucracy. If anything, it was expected that the tariff rates would actually decline with time as inflation eroded the effective rates. But exactly the opposite happened. With the Great Depression came a new phenomenon – deflation – which actually sent the effective rates of the Smoot-Hawley tariffs soaring. The lesson of Smoot-Hawley was that tariffs should always be “ad valorem” tariffs.

I think a better question is how “principled” tariffs, designed to counteract the tendency of high population densities to drive trade imbalances, would be received by the rest of the world as compared to tariffs that seem arbitrary and born out of selfishness and a fear of competition. We tend to speak of unfettered free trade and blanket applications of protectionism as the only two choices for trade policy when, in fact, these are nothing more than the two extremes of a trade policy spectrum. Smart trade policy employs both, preferring free trade but using tariffs in those cases where it is the only mechanism to assure a balance of trade. Such a policy would make a trade war unlikely, since most nations would enjoy the benefits of free trade with the U.S. while only the manufactured goods of overpopulated nations would be subjected to duties.

For example, why would we want to jeopardize the extremely beneficial free trade relationship we enjoy with Canada? At the same time, the imposition of tariffs on nations like Japan, Germany, Korea and China is the only hope we will ever have of restoring a balance of trade with them. Would Canada react with tariffs on U.S. goods to protest U.S. tariffs on Japan? Not likely. Instead, they’d probably be keen to adopt a trade policy similar to that of the U.S.

You show how immigration is a cause of poverty and unemployment, but is favored by corporations because it creates new consumers. However, it seems to me that ideal consumers are those who are by ability placed into the upper half of the middle class, because these consumers buy what they perceive to be superior products, allowing competition on the basis of quality. How does immigration affect this?

I’d like to begin my answer by distinguishing my case for reducing immigration from the more classic claims that immigration drives down wages. There is some truth to that argument, but my primary concern with immigration is that it contributes dramatically to population growth, driving our population density further beyond the economically “optimum” level. I want to be clear that my concern with immigration is not rooted in racism or xenophobia. I really wouldn’t care if the entire population of the U.S. emigrated to foreign countries, to be replaced by immigrants from those lands. It’s the imbalance that’s the problem. Each year approximately 1.5 million immigrants (both legal and illegal) arrive in the U.S. while only about 50,000 people emigrate from the U.S. Whether these immigrants are upper class, middle class or poor makes little difference.

It is true that each immigrant adds to total consumption. Each must purchase or rent dwelling space, transportation, food, clothing, staples, etc. So each new immigrant is another customer, making corporations happy, and each adds to our gross domestic product, making economists happy. But each also contributes to over-crowding which very slowly and almost imperceptibly erodes per capita consumption.

This can best be illustrated by returning to the example of the per capita consumption of dwelling space in Japan. Even though it is less than a third of the average American’s, because they are ten times as densely populated as the U.S., the total consumption of dwelling space is more than three times what it would be if their population density was the same as the U.S. This is great for corporations involved in building, furnishing and maintaining Japanese homes but it’s not good at all for the Japanese people who have to live in such crowded conditions. Again, what’s worse is what it does to per capita employment in these industries. The low demand for labor drives up unemployment and puts downward pressure on wages. This is my concern with immigration – it’s contributing to overpopulation, driving down per capita consumption and wages while driving up unemployment and poverty.

In order to keep value, do we want to achieve constant growth, or could we achieve superior social stability and superior products and as a result, live better as merchants to the world not consumers of the world’s products?

It’s the quest for constant growth that’s actually ruining our economy. Once the economically optimum population density has been breached, further growth becomes cancerous, fueling unemployment and driving down the purchasing power of our citizens at the same time that it’s boosting GDP. But economists have yet to recognize this, and can’t envision a healthy economy without growth, including growth in the population. You either grow or die, they say. Of course, this is nonsense. We can have a stable economy that is, at the same time, healthy and robust. Regarding the second half of your question – whether we would be better off as the world’s consumers or as its merchants – the answer is neither. Both imply an imbalance in trade that is ultimately unsustainable. After more than three decades of consecutive annual trade deficits, we’ve been bankrupted. For us to become merchants to the world, other nations would eventually be bankrupted, just as we have been. Ultimately, for a nation as large as the U.S., the only way to have a sustainable, viable economy is to provide for ourselves the full range of products and services we consume, while trading what we have in excess for things that we lack.

Does immigration lead to more jobs and more overall income, or does it lead to a “thinning” of jobs with more jobs in low-paid labor, with a consequent proliferation of bureaucratic jobs to manage these workers?

Immigration does lead to an increase in the total number of jobs, just as population growth does in general. But we have to begin thinking in per capita terms. Although the total number of jobs rises with population growth along with a total rise in demand for products, it doesn’t keep pace with growth in the labor force and per capita employment begins to decline as over-crowding begins to erode our per capita consumption. Again, consider the example of housing in Japan. Even though the total consumption of housing is three times higher than it would be if their population growth had stopped at the current density of the U.S., their per capita employment in that industry (and other industries that make products for domestic consumption in Japan), is much lower. Whether the population growth is due to immigration or growth in the native population is irrelevant. What matters is the growth and, here in the U.S., immigration accounts for well over half of our population growth.

If America were to stop being a debtor nation, stop growth and stop immigration, would her power and prestige diminish or rise?

That’s really two separate questions: what happens if we stop being a debtor nation and what happens if we stop growth? If we stop being a debtor nation by eliminating our trade deficit, we would soon realize huge benefits. Six million manufacturing jobs would come home. Federal spending required to offset the negative consequences of those lost jobs – unemployment benefits and so on – could be eliminated, helping to reduce the federal budget deficit and, ultimately, taxes. And foreign policy would no longer be influenced by our dependence on foreign sources of oil and other products. These are just a few benefits.

Regarding the question of whether our standing and prestige would be diminished if we stopped growing relative to the rest of the world, I think that on the surface it may appear that way at first. Ultimately, however, overpopulation will prove to be source of weakness, not strength, as rising unemployment leads to civil unrest and strife and becomes a drain on nations’ resources. In the end, it will be nations who have dealt with the problem of overpopulation and have evolved into sustainable, healthy economies that will be the most powerful and they will be the nations the rest of the world looks to for leadership.

Many of your economic ideals seem to me similar to those of the upper half of the American middle class: quiet, small cities with low crime and an emphasis on an economy primarily driven by knowledge workers, instead of a relatively flat economic hierarchy with a predominance of unskilled manual laborers. Economically, do you think this will be a better long-term model?

If that’s the impression I’ve given regarding manual labor, then I’m afraid I’ve been misunderstood. You cannot have a viable economy without manual labor. Farming, construction, manufacturing ? all of these activities involve some manual labor. During the summers when I was in college, I worked as a manual laborer myself, building fence along highways. All honest work is noble, including manual labor, and the people who do these jobs should be able to earn enough to make a living.

Some say that Americans won’t do this kind of work any more, and that’s why we need immigrants. Since I’m an advocate of dramatically reducing our rate of immigration, both legal and illegal, I obviously believe otherwise. Americans will do any work for decent pay. Here in Michigan, I see Americans every day collecting the trash and pumping septic tanks. Corporate farm operators complain that they can’t find people to pick their crops, yet the parking lot of every ?U-Pick? farm that I pass is full of cars bringing people eager to spend a couple of hours picking crops to save five bucks over what they’d pay at the grocery store. Those who say they can’t find Americans willing to do the work are either being disingenuous or haven’t tried very hard.

The notion of a ?knowledge-based? economy became popular with economists as they attempted to tamp down concerns about manufacturing job losses with a vision of a new economy that relied less upon manufacturing. But now we can see that, if anything, at least some ?knowledge-based? work may be even more easily out-sourced than manufacturing work. Information technology jobs and some jobs in the medical field, like reading X-rays and analyzing test results, are just a couple of examples. Nearly every person who walks the earth has a brain capable of doing ?knowledge-based work? given the proper training and, unless there is something that makes the ?knowledge-based work? impossible to do from a remote location, it’s just as susceptible to being out-sourced as any other job. In the final analysis, every sector makes a necessary and valuable contribution to our overall economy and we can’t afford to write off any jobs, regardless of how skilled or unskilled they may be.

One factor I did not see mentioned was political instability. From my readings of history, when societies grow too fast they produce large numbers of disenfranchised and irresponsible laborers, who then join in revolt against their elites, usually killing them. Does this future ever threaten America? Europe?

That’s a real concern. Overpopulation produces rising unemployment which, beyond some point, can result in social unrest. In addition, badly overpopulated regions are breeding grounds for hatred and intolerance. It was high unemployment that fostered Hitler’s rise to power. And it’s no mere coincidence that the other main antagonist of World War II, Japan, was (and is) badly overpopulated and was looking to expand. Virtually everywhere you look across the globe, wherever you find the worst civil strife is where you’ll find overpopulation, whether it’s the Israel/Lebanon/Palestine region of the Middle East, Rwanda in Africa or, going back a few years, El Salvador in North America.

Although I would like to see the U.S. restore a balance of trade, this would certainly raise unemployment in those nations where gross overpopulation makes them utterly dependent on exports to sustain themselves. These are the places I worry about most as having the potential for civil unrest and political instability.

“Five Short Blasts” seems to point to a difficulty in the paradigm of growth itself — that is, what goes up must go down. Is there a way we can balance ourselves so we can stay at the middle of the growth curve, without experiencing the decline?

This may be one of the more difficult concepts to understand — that for a society that has grown beyond the economically optimum population density — a falling population would actually yield an improvement in the economy as measured at the “micro” level. There would be no decline! It may be easiest to understand if you imagine a graph depicting standard of living or quality of life vs. population density. You’d see a parabolic curve, slowly rising as the population density increased from zero ? the situation economists have witnessed for most of human history. But then, at some point, the curve levels off and begins to decline as overpopulation begins to drive unemployment up. Wages and benefits begin to decline. Savings are eroded. And the quality of life in general begins to decline as overcrowding precludes opportunities for recreation and, in general, makes life more of a dog-eat-dog world.

Reversing that process by reducing population would send us back-tracking up that same curve, increasing our standard of living and quality of life until we had returned to the optimum population density. Those who measure the economy in macroeconomic terms like GDP would be dumbfounded by what they witnessed. GDP would certainly decline and, as the process unfolded, it would look like a recession with falling home sales and vacant stores, but unemployment would actually decline and median wages would begin rising again as the decline in total consumption was outpaced by a decline in the labor force. The demand for labor, relative to the size of the labor force, would actually increase.

There would be some problems along the way. Eliminating blight as the ?un-development? process progressed would be an issue. But the big issue that economists wring their hands over is the problem of an aging population with a shrinking percentage of workers to support them. Taxes may have to rise as that population bubble works its way through the age spectrum and slowly vanishes. But consider this: since it’s impossible for population growth to continue indefinitely, it’s a problem that has to be faced sooner or later. It will be much easier to deal with it now instead of waiting until our population has perhaps doubled, making the size of the aging population twice as large. It’s time to deal with reality instead of dumping it onto future generations.

If growth is not the path to prosperity, how will society have to adjust its values systems to adapt to a better path? What is that path?

I suspect that path is something that would evolve over time, and it’s difficult to predict what form it might take. But I think a couple of elements are fairly predictable. First of all, it’s easy to see that the construction sector of the economy would decline significantly, as new construction to accommodate an expanding population would vanish, leaving an industry with only a replacement market ? replacing old homes, buildings and infrastructure as they wear out. This also means that it wold be that much more important to restore the manufacturing sector of our economy to employ displaced construction workers.

Secondly, people will not be able to rely upon investment returns that out-pace inflation to fund their retirements, which means they’ll have to save more. That may seem like a daunting task in today’s environment, but the environment will be quite different. Thanks to a high demand for labor relative to the smaller size of the work force, well-paying jobs with benefits (perhaps even pensions!) will be plentiful. A reduced demand for resources will yield low inflation. All of the stresses associated with constant growth will be gone.

This may be an appropriate time to point out that economists often warn of dire consequences of a declining population, pointing to examples where population decline has accompanied a declining economy. But, in every one of these cases, they’ve reversed the cause and effect. The population decline has been caused by economic problems, and not vice versa. It’s only natural that people will move away from a bad economy to look for work elsewhere. This is exactly the situation we see in my home state of Michigan today. But blaming the economic decline on the falling population is putting the cart before the horse. I can’t think of a single instance in which the population was reduced in a healthy economy. Yes, some European nations have below-replacement birth rates but the population is propped up with immigration in each case. So we have no model to predict what will happen. But for a nation in a state of overpopulation, my theory predicts that the decline in GDP will be slower than the population decline, resulting in a boost in the standard of living of the people who remain.

As population density increases, consumption increases — but this consumption proportionately favors entertainment-based goods and services. This seems to be a result of the expansion of a demographic of urban people who fit a new profile: middle-level, educated, middle-class but not prosperous, single and entertainment-oriented employees. Is this difference in types of consumption important?

You’re speaking of what people do with their disposable income once their more basic needs of food, clothing, housing and transportation have been met. These basic needs consume the vast majority of the income of most urban dwellers, just as it does for the suburban and rural populations. The problem is that even the per capita consumption of products that meet some of these basic needs ? like housing and transportation ? is dramatically affected by population density. City dwellers, on average, live in much smaller quarters like condos and apartments and are more likely to eschew the luxury of owning a car in favor of public transit, due the high cost of parking (if it’s available at all). In addition, since these urban dwellers in condos and apartments have no lawns or gardens to maintain, their per capita consumption of lawnmowers, rakes, shovels and so on falls to basically zero. So, in a country with very high population density, the per capita employment in all of the industries involved in producing and maintaining all of these products is dramatically reduced.

Yet, the city-dwellers generally have no more disposable income to spend on entertainment and travel than their suburban or rural counterparts because the relatively higher cost of housing and transportation has consumed a bigger proportion of their income. So, does it matter if that disposable income is then spent on movies, theater and electronic gadgets as opposed to such things as golf and boating equipment? It’s difficult to say, but the point is that before the first dollar of their disposable income has been spent, the bulk of their per capita consumption of other products has already been seriously eroded.

One of the things that attracted me to your ideas was your proposed balancing of population and resources, and an emphasis on quiet living
instead of radical consumption of transient products fueled by entertainment marketing. This reminds me of what parts of the
conservation and environmental movements have been saying for years. Do you think there’s compatibility?

My theory is absolutely compatible with and complementary to the environmental movement. You’ve probably noticed that, even though I am concerned about overpopulation, I’ve said very little about its role in environmental degradation and resource depletion. That’s not because I’m not concerned about these issues. Rather, it’s because I was able to arrive at this theory only by setting aside such concerns. When I first became aware of the seriousness of the overpopulation problem, I was already aware that economists claim that there’s really no cause for concern because man has demonstrated over and over again that he is ingenious enough to deal effectively with any obstacles to further growth. Even though I had my doubts, I decided to assume that they were right, but still couldn’t shake the feeling that there was something that economists were missing — some barrier that would prove to be our undoing. Only then was I able to see the consequences for per capita consumption, unemployment and poverty. And it is poverty that has been the greatest killer throughout human history. If ecological disaster doesn’t befall us first, poverty will be our downfall.

Environmentalists have done a wonderful job of raising awareness of the issue. I do wish they would be more courageous in tackling the subject of overpopulation. But every time they do, they run into the same wall — economists who at once raise alarm about the problems associated with an aging population and also assure us that there are technological solutions to every problem. So my mission is to bring something new to the debate ? a parameter of population growth that is only exacerbated by attempts to mitigate it ? one for which there is no solution except returning to a stable, sustainable population. I see this theory as a sort of ?ultimate weapon? for environmentalists, an economic argument against population growth.

Would the ?economically optimum? population I speak of also turn out to be an environmentally sustainable population? Honestly, I can’t really say. I think it would be a fascinating challenge for mathematicians, probably requiring the largest super-computers available, to attempt to calculate what that optimum population would be. The inputs for such a calculation would include the definition of a desired standard of living, the level of consumption of every product required for that standard of living, the resources and labor required to make every product, the manpower required to man factories to produce all of these products, and so on. I’m kind of surprised that no one has ever attempted it, as far as I know.

Ultimately, however, it may come down to anecdotal evidence. My gut feel is that sometime in the latter half of the 20th century is when we (the U.S.) breached our economically optimum population density, perhaps when we had half as many people as today, just based on my lifetime of experience in the labor force. There was a clear transition from emphasis on manufacturing volume and efficiency to cost-cutting and down-sizing. From a micro-perspective, the economy clearly took a turn for the worse. So, if the U.S. is overpopulated by a factor of two, then China is overpopulated by a factor of eight. Japan is overpopulated by a factor of twenty. Korea is overpopulated by a factor of thirty, and so on. Reducing populations around the world accordingly would be quite a dramatic reduction. But only environmentalists could determine whether it would still be enough. But, if not, we’d have taken an enormous step in the right direction.

On the other hand, I’ll concede that environmental parameters may prove to be the upper limits for population growth before the poverty that my theory predicts really takes hold in a big way. Either way, the dawning of a new age will have begun and I’ll be just as happy.

Your ideas could be a line into what one might see as the beginning of meta-politics, or a political system that avoids polarity to an ideology and instead focuses on the pragmatic needs of our situation. This gets outside political language, which while self-consistent may not be consistent with reality outside the political sphere, and forces a change in focus from the marketing of ideas to practical adaptation. Do you think such a meta-politics is possible in our lifetimes?

Had you asked me this question ten years ago, I would have replied “no,” it’s not possible that my ideas could be incorporated into mainstream thinking and into politics in my lifetime, or in the lifetime of anyone alive today. But one of the things that continues to amaze me is how rapidly change is unfolding, including the economic collision I warned of with Five Short Blasts. Although I expected it may take decades for the real consequences of our trade deficit to be felt, it’s already upon us, collapsing the global economy. And thanks to the rapidly evolving acceptance of the dangers of global warming, although economists and world leaders still cling desperately to the notion that technological fixes alone will be sufficient, widespread recognition of the role of overpopulation can’t be far behind.

But real progress may not come until these ideas begin to take root in the field of economics. I targeted Five Short Blasts at average Americans, hoping to start a grass roots understanding of the role of overpopulation in our economic demise, believing that I could never be taken seriously by economists for two reasons: because anyone raising the issue of overpopulation is immediately dismissed by economists as a ?Malthusian? and because my background is not in the field of economics. But that hasn’t stopped me from pushing these ideas with economists, and I’ve found a few who would listen. Helping matters is the fact that the field of economics is in some disarray now, following the economic meltdown. Many are questioning whether economists are missing something, and the field seems more open to new ideas.

It’s interesting that you’ve ended this interview with this question because it’s similar to the question I posed in the final two paragraphs of the epilogue of my book:

I’ve been asked by others how I will know if I’ve been successful. I probably will never know. To be successful, I don’t need to sell a million copies of this book. I only need to get one copy into the right hands.

Thanks Pete for a great interview. Gentle readers, you can visit Pete’s site and learn more about him, the book and his theories.

Tags: interview, overpopulation, peter murphy