Saturday, October 22, 2011

Is Population Growth a Ponzi Scheme?

By Joseph Chamie
Thursday, March 04, 2010
The Globalist

The basic pitch of those promoting population growth is straightforward in its appeal: "More is better." Joseph Chamie, who has spent a lifelong career as a demographer, including 12 years of service as the director of the United Nations Population Division, finds that more is not necessarily better.

Bernie Madoff's recent Ponzi scheme has drifted out of the world’s headlines. However, there is another even more costly and widespread scheme — "Ponzi Demography" — that warrants everybody’s attention.

While it may come in many guises, Ponzi demography is essentially a pyramid scheme that attempts to make more money for some by adding on more and more people through population growth.

While more visible in industrialized economies, particularly in Australia, Canada and the United States, Ponzi demography also operates in developing countries. The underlying strategy of Ponzi demography is to privatize the profits and socialize the costs incurred from increased population growth.

["Privatise the profit and socialise the cost" was the specific indictment of the bank bailout. Where the banks made huge bets for huge profits, but when the bets when the wrong way, they suddenly became too big to fail and got bailed out. This has nothing to do with and does not explain "Ponzi Demo". This happened because of lax financial regulation that allowed banks to gamble. Throwing in a "Ponzi Demo" theory and conflating it with the bank bailout sounds like the first step in shifting the blame away from the investment banks and to start blaming immigrants.

How does Ponzi Demo privatise profits and socialise costs? He does not say. He simply assumes that you know what he means. It's like a spiritual medium. Someone with a name starting with "R" is calling...]

The basic pitch of those promoting Ponzi demography is straightforward and intoxicating in its pro-population growth appeal: “more is better.” However, as somebody who has spent a lifelong career as a demographer, including 12 years of service as the director of the United Nations Population Division, I find that more is not necessarily better.

As has been noted by Nobel laureate economists Joseph Stiglitz and Amartya Sen as well as many others, current economic yardsticks such as gross domestic product (GDP) focus on material consumption and do not include quality-of-life factors.

Standard measures of GDP do not reflect, for example, the degradation of the environment, the depreciation of natural resources or declines in individuals’ quality of life.

[The writer is a hack. Brilliant, but still a hack. Using Madoff and Ponzi as the hook, he then strings together a series of soundbites that taps upon the zeitgeist or shared consciousness of his readers. The first two soundbites are drawn from environmental issues and are valid concerns, but it is generally irrelevant to the Ponzi Demo hypothesis. But it's nice to pull in the "environmentalist" support.

The third is a humanistic concern. While valid, it's like saying, "the doctor takes my pulse and blood pressue, but those tests don't tell me about the quality of my life!"]

According to Ponzi demography, population growth — through natural increase and immigration — means more people leading to increased demands for goods and services, more material consumption, more borrowing, more on credit and of course more profits. Everything seems fantastic for a while — but like all Ponzi schemes, Ponzi demography is unsustainable.

[More borrowing, more credit is specific to the US and UK, and also perhaps the PIGS in Europe who were emulating the US. It is not a necessary, or even a supplementary part of the Pop growth strategy. ]

When the bubble eventually bursts and the economy sours, the scheme spirals downward with higher unemployment, depressed wages, falling incomes, more people sinking into debt, more homeless families — and more men, women and children on public assistance.

[Again conflating the sub-prime triggered financial crisis that rose from poor financial practices and regulation with population growth policies. Oh wait. Maybe I'm being hasty. Which bubble is he talking about? The tech bubble in 1998? The Asian Financial Crisis in 1997? The Sub-prime housing bubble in 2008? They all have different catalysts and causes and if the writer wants to make a case that the common thread in all these bubbles were because of the Ponzi Demo effect, he needs to provide proof. Otherwise, the other theory that I have, Human Greed works as well as an underlying theory.]

That is the stage when the advocates of Ponzi demography — notably enterprises in construction, manufacturing, finance, agriculture and food processing — consolidate their excess profits and gains. That leaves the general public to pick up the tab for the mounting costs from increased population growth (e.g., education, health, housing and basic public services).

[Analyse this para carefully. He is saying that construction, manufacturing, finance, agriculture and food processing industry are advocates for population growth. Really? McDonald's is an advocate of population growth? Apple is an advocate of population growth?Nabisco? Proctor & Gamble? Ford? Goldman Sachs? Citibank?

And when the bubble burst, these "advocates" will consolidate their excess profits and gains? In what world did this happen? Which one of these advocates were consolidating their excess profits and gains when Lehman Brothers went bankrupt?

As for the mounting costs, see below.]

Among its primary tactics, Ponzi demography exploits the fear of population decline and aging. Without a young and growing population, we are forewarned of becoming a nation facing financial ruin and a loss of national power.

Due to population aging, government-run pensions and healthcare systems will become increasingly insolvent, according to advocates of Ponzi demography, thereby crippling the economy, undermining societal well-being and threatening national security.

[This is a welfare state US social security issue. The problem does not arise from pop growth, but rather because the underlying policies of US social security system has the young of today paying for the benefits of the old today. The question then is who will pay for the social benefits of the young today when they get old? That's why they need population growth. 

Even so, there may be evidence that the US system would have been sustainable except for corruption.

To be sure the CPF system is a save for your retirement plan that is not dependent on a govt pension or retirement plan.

As for Healthcare, the US govt spents 17% of their budget, Singapore spends about 5%. And our healthcare is actually more accessible.]

Low birth rates, especially those below replacement levels, are considered a matter of national concern. Without higher fertility rates and the resulting population growth, the nation, it is claimed, faces a bleak and dreary future.

So Ponzi demography calls for pro-natalist policies and programs to encourage couples to marry and to have more children, which will lead to the promised sustained economic growth.

In addition to financial incentives and other benefits for childbearing, appeals are also made to one's patriotic duty to have children in order to replenish and expand the homeland: “Have one (child) for mum, one for dad and one for the country.”

In addition to measures to increase fertility levels, Ponzi demography also turns to immigration for additional population growth in order to boost companies' profits. The standard slogan in this instance is “the country urgently needs increased immigration,” even when immigration may already be at record levels and unemployment rates are high.

[Employment rates in SG are low even when immigration is high.]

Among other things, increased immigration, it is declared, is a matter of national security, long-term prosperity and international competitiveness. Without this needed immigration, Ponzi demography warns that the country’s future is at serious risk.

[Here you have to wonder. Who the fark goes around saying increased immigration is a matter of national security?]

Another basic tactic of Ponzi demography is a pervasive and unrelenting public relations campaign promoting the advantages and necessity of an increasing population for continued economic growth. Every effort is made to equate population growth with economic prosperity and national progress.

"Economic growth requires population growth" is the basic message that Ponzi demography wants the public to swallow. No mention is made of the additional profits they reap and the extra costs the public bears.

[No mention is made because... it doesn't happen! See comments above on the profiteering of advocates of population growth. See again how clever he is? "They don't mention it" thus implying that it happens? That you know it happens? ]

Attempts to question or even discuss Ponzi demography are denigrated and defamed to such an extent that concerns about population growth become radioactive. Politicians, journalists and environmentalists, for example, choose by and large to sidestep the entire issue.

[REALLY? Environmentalists would side-step the issue? You must be hanging out with the wrong kind of environmentalists. No, what I hear from environmentalists is a concern that increasing population and urbanisation will severely stress the biosphere. Oh you mean sidestep your theory of Ponzi Demo like it was dog turd? Oh yes, I can see that happening.]

When confronted with environmental concerns such as climate change, global warming, environmental contamination or shortages of water and other vital natural resources, the advocates of Ponzi demography typically dismiss such concerns as unfounded and overblown.

[Actually, in the US, the people against immigration tend to be Republicans, and the people who tend to dismiss climate change evidence are... also Republicans.]

And they claim there is no scientific basis, or they obliquely stress “innovation,” ingenuity and technological fixes as the only appropriate and workable solutions.

Many are complicit with Ponzi demography or at least tacitly support its goals. Few politicians, for example, are able to resist promises of campaign financing, the appeal of increased numbers of supportive voters, prospects of increased tax revenues and the political backing of pro-natalist and pro-immigration lobbyists and special interest groups.

[Pro-natalist and pro-immigration in the same group? Pro-natalist would be pro-life and these tend to be Republicans. But they tend to be Anti-immigration. Incredible that the pop growth party can pull together such diverse political enemies.]

Many environmental groups are also reluctant to take up or even touch the volatile subject of population growth, especially those that have been burned on this issue in the past. Such groups fear possibly offending some members and donors, which might undercut their organizations and efforts.

[In Wikipedia, these are called weasel words. Vague accusations, nameless victims, shadowy perpetrators. Actually, the whole article is full of weaselly words and statements.]

Despite its snake-oil allure of “more is better,” Ponzi demography’s advocacy for ever-increasing population growth is ultimately unsustainable. Such persistent growth hampers efforts to improve the quality of life for today’s world population of nearly seven billion people as well as for future generations.

[There is some truth in this article. But it is the truth of a broken clock. That is, even a broken clock is correct twice a day. And if you write long enough, sooner or later, you will accidentally say something that is right. Though maybe for the wrong reason. Does he think China believes its population should continue to grow? Oh wait, he probably doesn't know or care. But no. China would like it's population to stop growing, but there is a natural momentum that cannot be stopped without horrific humanitarian issues. So it will continue to grow for a while. China's problem is not a lack of population growth, but feeding and housing and providing jobs for them all.

But yes, SG is pursuing a replacement level birthrate supplemented with some immigration in the best case scenario. However it is not ever-increasing population growth indefinitely. There will be some optimal sustainable stable population level. ]

Moving gradually towards population stabilization, while not a panacea for the world’s problems, will make it far easier to address problems such as climate change, environmental degradation, poverty and development, human rights abuses and shortages of water, food and critical natural resources.

Fortunately, most couples around the world have chosen — or are in the process of choosing — to have a few children rather than many and to invest more in each child’s upbringing, education and future well-being. Nations need to make the same vital transition with respect to their populations.

The sooner nations reject Ponzi demography and make the needed gradual transition from ever-increasing population growth to population stabilization, the better the prospects for all of humanity and other life on this planet.

[And he ends with some handwaving to the hot button topics of the day. Wow, he even manages to wave ti human rights abuses. Fantastic!

Seriously, taking this at face value it is a nice article, not terribly bad and not terribly insightful. Read it, mull over the ideas, toss it. 

But if you are suspicious type like me you wonder. There are a lot of red herrings, nudge-nudge wink-wink, soundbites, shared and assumed knowledge, but very little actual evidence of a Ponzi Scheme. The so-called advocates of ponzi demo are non-starters. I don't see Citibank asking the US govt to be pro-immigration anymore than I see DBS asking the SG govt to let in more immigrants. 

So in summary, if there is a Ponzi Scheme based on population growth, the parties he charges as being the advocates of such a scheme are not in fact the advocates. He claims that these advocates make excessive profits during boom times and when the bubble burst they consolidate their profits. They don't. In a bust, almost everybody suffers.]

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