Is population growth a Ponzi scheme – my take

It’s a good question.

A friend sent around this thinking point as a response to the population white paper released today. It’s the title of a paper by Joseph Chamie in The Globalist, written on March 04, 2010 (appended below)

Personally I think Mr. Chamie’s paper is a bit of a rant. But, his question raises 2 valid points:

(1)    Adding more population to create growth so you can distribute to those born earlier is indeed like a pyramid scheme.

(2)    At some point, the economies of scale begin to level off, either because the market becomes saturated in traditional pyramid schemes, or because there is no longer enough land and resources or the environment can no longer absorb the waste material generated.

I accept its necessary to have a vibrant country and not a backwater. To some extent this means a global city with interesting and profitable industries. To some extent this means being an international place open to foreigners.

I’m not one of those people who reject foreigners just because they are strange or troublesome.

What I found troubling in the white paper was that we started thinking about population policy from the view point of GDP growth rather than sustainability.

GDP growth comes from increasing inputs of labour, capital, natural resources and productivity growth. Given we have no natural resources,  it is quite hard to do anything but  grow “population” if our end target is overall GDP growth.

But. what does it matter to the citizens if the country’s overall GDP continues to grow but quality of life deteriorates.

I wonder where we would have come out if we decided to focus on GDP/capita (counting only citizens)?

Population growth might then not be a driver in the equation.

Might we have a different type of population policy then? A policy that is bottoms up rather than top down? One that considers the human and personal dimensions?

What do you think? Leave a comment.

__________________

Is Population Growth a Ponzi Scheme?

By Joseph Chamie | The Globalist, Thursday, March 04, 2010

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.

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.

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.

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.

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).

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

Comments
2 Responses to “Is population growth a Ponzi scheme – my take”
  1. Kui Toh says:

    Rising property value is also a Ponzi scheme. Current house owner benefitting from the wealth transfer from future house owner to be. A Ponzi scheme depending on more in the future to pay for what the present owners are gaining. A transfer of wealth. While isn’t anyone concern about that too?
    Seven lame cooling attempts and more to come to squeeze in the 6.9.

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