Weekly Musings 48 12-11-11
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240 million More People in One Country, in One Decade, and 600 Million More Vehicles
I read a news item today that India added its 1 billionth citizen in the year 2000, and that it has added 240 million people in the decade since. This was roughly the population of the U.S. in 1988 (current U.S. population is around 312 million) and is almost half the population of the European Union (EU) nations (about 492 million).
It is not at all clear that India has the capability to feed another 240 million residents by 2021.
I suspect we all "know" global population is rising toward unsustainability: this is "obvious," yet like many other "obvious" things we have habituated to this knowledge because it hasn't yet hit the wall.
We also "know" that fossil-fuel consuming vehicles will eventually reach a point where there is insufficient supply to meet the demand for fuel. But since we haven't yet hit that wall, then this too has slipped from our zone of concern.
There are an estimated 800 million ICE (internal combustion engine) vehicles currently in service in the world, with about 60 million more being churned out every year. Thatis a run-rate of about 600 million per decade. Of course many vehicles will be retired in that time, but the number added greatly exceeds the number scrapped.
The U.S. has 256 million registered vehicles, of which 136 million are passenger cars. This is rather remarkable given its population of 312 million people.
From a strictly consumption point of view, the "big stories" of the past 30 years were the development of hybrid and genetically modified grain crops that enabled much higher yields in shorter growing seasons--the so-called "green revolution," and the discovery and extraction of new super-giant oil fields that greatly boosted fossil fuel production.
These discoveries, and the advances in technology which enabled their widespread exploitation, allowed technologists to sneer derisively at the abject failure of the "Limits of Growth" model championed in the 1970s by the fledgling environmental movement.
Now we face an interesting juncture in the next decade, as population, consumption and resource depletion all continue rising as if there is no upper limit on population, food and fossil fuel production. The technologist (and perhaps the eternally optimistic) reckon that some new "miracle technology" will emerge to maintain rising grain yields and energy production, but common sense suggests that the risks of asymmetry between supply and demand are increasing.
I have mentioned these reports in previous Musings, and recommend absorbing them in the following order if you haven't yet read them:
Joint Operating Environment - a DoD Peak Oil report that created a modest stir that has long sicne faded to zero
After reading these reports, it seems "obvious" that in one critical area after another, we have topped out on the S-Curve and have either plateau'd or are in the first stages of decline. It seems increasingly likely that the decade ahead will be characterized by either "unexpected" collapses (the Seneca Effect) or more gradual but just as unexpected declines.
Have We Reached "Peak Government"?
Ultimately, government spending is drawn from the surplus produced by the nation. Governments can "fool Mother Nature" for a time by printing money, but printing money does not create wealth, it simply steals purchasing power from all holders of the debased currency.
If energy is no longer cheap and abundant, and debt has reached the saturation point where additional debt no longer stimulates "growth," then we might have reached Peak Government.
Governments around the world made promises based on optimistic extrapolations of demographics and economic growth. This has created a systemic asymmetry between what was promised and what can actually be paid.
As analyst John Mauldin noted in a recent newsletter:
"In France 67 percent of the income of the elderly population comes from public funding and in Germany it is 61 percent, compared with 35 percent in the United States and Japan. These percentages are projected to rise only slightly over the coming decades, but because the elderly population is growing so rapidly, actual outlays will soar. Not surprisingly, if you add in medical costs the percentage of public spending increases significantly, even assuming no new benefits."
He goes on to estimate that tax rates: "If the increase were paid for entirely by tax hikes, not one European country would pay less than 50 percent of its GDP in taxes, and France would be at 62 percent. By comparison, the U.S. tax share of GDP would rise from 33 percent to 44 percent. Japan's taxes would be 46 percent of GDP...."
What these rates would do to consumerist spending and the willingness to work is obvious.
It seems likely that the developed world has reached Peak Government: the governments cannot collect more tax revenues as their economies contract, yet theyhave promised more than the surpluses of their economies can deliver. Resource depletion and debt saturation limit the "we'll grow our way out of this" solution favored by governments and ivory-tower economists.
Models that are constantly "saved" by "growth" appear to be reaching their intrinsic limits. As the S-Curve analysis shows, nothing grows to the sky and then beyond.
From Left Field
For those who follow the stock market, here are three compelling Bear analyses:
10 Brands That Put 'Wood' in Their Food - wow, talk about "fiber" in one's diet....(via Ishabaka M.D.)
I suspect these clips of devastating explosions are drawn from various films.... click on the detonator to activiate the booms... sorry, no nuclear blasts in this series.
U.S. expatriates pursue American dream in China: I wonder how these 71,500 Big-Noses will do when the Central Government finds it useful in terms of domestic distraction to "blame America first"....
"Most of America's well-to-do are corporate executives, doctors, lawyers, bankers and the like. Their rewards are tied to positions, not performance. Corporate managers are paid a lot more than average employees, even if they're not worth it."
I am not sure this sort of blanket statement is valid, but the general argument that position is now more powerful than performance is worth considering.
"Where there is ruin, there is hope for treasures." (Rumi)
Thanks for reading--
charles