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Not enough consumption?! If this makes your had spin, then you're too much of an environmentalist to be of much use in the approaching financial strom. But think about it. For example: there is not a large enough market for electric cars. Why? Because an electric car is too expensive? Or because the average worker does not make enough to afford an electric car and is forced to make the socially poorer choice of sticking with an internal combustion engine?
When I read Keynes' General Theory last year I was greatly impressed. And, in Keynes' view of macroeconomics, demand makes the world go 'round and expectations drive demand. That's how you get the focus on consumer confidence, which for many years I thought was a joke of an indicator when I saw if mentioned in the news.

Now, this may be down to my poor knowledge of economic writings, but I don't think Keynes' theory which he outlined in a qualitative, handwaving way, has actually been developed. IMHO he's economics' Galileo waiting for a Newton.

Now, if you're an environmentalist and believe in some sort of steady-state economics as the necessary configuration of our global economy, I am not quite sure how that is compatible with Keynes' macroeconomics. But it must be, somehow.

Great diary, by the way. And I really enjoyed the story of how Eccles ended a bank run in two days. Clearly too many retail bankers, even today, don't know about this. Or, at least, the bozos at the helm in Northern Rock didn't know about it.

We have met the enemy, and he is us — Pogo

by Migeru (migeru at eurotrib dot com) on Tue Dec 4th, 2007 at 10:29:59 AM EST
There's some interesting stuff from Gunnar Tomasson on the Gang 8 list at the moment...He takes a rigorously acadaemic approach (makes my head spin) but IMHO beats the bastards on their own ground by exposing the poverfty of their assumptions.

"The future is already here -- it's just not very evenly distributed" William Gibson
by ChrisCook (cojockathotmaildotcom) on Tue Dec 4th, 2007 at 12:28:27 PM EST
[ Parent ]
If you're truly an environmentalist, you must recognise that overpopulation is the cause of world-wide over-consumption.  Yes, we can squeeze in more people if we all consume less, but what's the point?
Overpopulation is also the fundamental cause of flat and decreasing wages: labour is worth less as its supply increases.  It is natural and nearly inevitable that income disparities grow as populations grow.
Being an environmentalist does not require a belief in a probable solution to mankind's or the world's woes.
by Andhakari on Wed Dec 5th, 2007 at 03:13:53 AM EST
[ Parent ]
If you assume a fertility rate of one child per woman you end up with a vegetative growth rate of about -1% which means it takes about 70 years for population to drop to the level of the 1960's which is where I believe it might be sustainable assuming average consumption also drops to 1960's levels.

In other words: overpopulation is so bad of a problem at this point, as there isn't much that can humanely be done to reduce population faster than 1% per year, that reductions in consumption also need to be undertaken. Over to you.

We have met the enemy, and he is us — Pogo

by Migeru (migeru at eurotrib dot com) on Wed Dec 5th, 2007 at 03:49:11 AM EST
[ Parent ]
I agree that modest population control and decline is not enough, absolutely; but I believe that any proposed 'solution' to the ills of the world, be they environmental, economic, social, or what-have-you, is just so much smoke in the wind if it ignores population issues.
Over-population IS the fundamental problem behind so many we face.  If we can't face it, then f%# it.
by Andhakari on Wed Dec 5th, 2007 at 10:01:27 AM EST
[ Parent ]
I'm beginning to lean towards triage.

We have met the enemy, and he is us — Pogo
by Migeru (migeru at eurotrib dot com) on Wed Dec 5th, 2007 at 10:26:16 AM EST
[ Parent ]
Overpopulation can only be remedied with an increase in literacy as Emanuel Todd has pointed out. There should be tremendous incentives to have the world's population become literate; then they can experience personal freedom and realize their quality of life will improve if they procreate less.
by An American in London on Thu Dec 6th, 2007 at 03:38:58 AM EST
[ Parent ]
I've heard that for the last 40 years, and the world population has bloomed like the red tide...
by Andhakari on Fri Dec 7th, 2007 at 05:13:59 PM EST
[ Parent ]
My rejection of over-population as a problem is shaped by being familiar with the rejection of Malthus, made explicit my American commentators and economists in the 1800s. Most especially, look at Henry Carey's 1851 Harmony of Interests, in which he assailed British economics.

Carey was the greatest U.S. economist of the 19th century; I generally find that I can take any recent book on economics and judge its worth by looking in the index to see how many mentions of Henry Carey there are. If there are none, or perhaps just a short note, the book has always, ALWAYS, turned out to be some apologia for monetarism or some other dementia.

British economic thinking, Carey wrote,

is unsound and unnatural, and second, a theory invented for the purpose of accounting for the poverty and wretchedness which are its necessary results. The miseries of Ireland are charged to over-population, although millions of acres of the richest soils of the kingdom are waiting drainage to take their place among the most productive in the world, and although the Irish are compelled to waste more labour than would pay, many times over, for all the cloth and iron they consume. The wretchedness of Scotland is charged to over-population when a large portion of the land is so tied up by entails as to forbid improvement, and almost forbid cultivation. The difficulty of obtaining food in England is ascribed to over-population, when throughout the kingdom a large portion of the land is occupied as pleasure grounds, by men whose fortunes are due to the system which has ruined Ireland and India. Over-population is the ready excuse for all the evils of a vicious system, and so will it continue to be until that system shall see its end... (pp. 64-65)

In conflict with the British system, Carey was a proponent of what was  known until about the 1920s, as the American System of political economy. There is an excellent write up of it on Wikipedia.

I would like to see, for example, a calculation of the lost opportunity cost of having thousands of the most brilliant minds in physics, mathematics, and computer science, working the past three decades on quantifying and modeling the behavior of the financial markets, instead of working on problems like replacing carbon-based fuels, or redesigning urban environments to end suburbanization.

by NBBooks on Thu Dec 6th, 2007 at 04:13:36 PM EST
[ Parent ]
Well, it's not as if the earth can support an infinite number of people, so there's clearly some limit to population. Whether it's 2B, 4B, 6B, 10B or 20B is another matter.

I'm in the process of reading Malthus, but the introductory essay suggests that, as usual, what we're told he said is not what he actually said.

by Colman (colman at eurotrib.com) on Thu Dec 6th, 2007 at 05:45:35 PM EST
[ Parent ]
Human Carrying Capacity of Earth
http://www.ilea.org/leaf/richard2002.html
by NBBooks on Thu Dec 6th, 2007 at 07:23:03 PM EST
[ Parent ]
So, between 500M and 14B is the carrying capacity? Given that we're close to 7B and population as doubled in the last 30-40 years, I think we do have a population problem.

We have met the enemy, and he is us — Pogo
by Migeru (migeru at eurotrib dot com) on Sat Dec 8th, 2007 at 06:05:14 AM EST
[ Parent ]
Let's be real for a moment.  Anyone spending their life modelling financial markets is, by definition, NOT the most brilliant.
You'd have to be an urban animal, and a very insulated one at that, not to see costs associated with population growth without resorting to convoluted and probably meaningless mathematical perambulations.
by Andhakari on Fri Dec 7th, 2007 at 05:26:36 PM EST
[ Parent ]
Right, the most brilliant minds in mathematics, physics and computer science are in academia. The idea that the financial industry is employing the smartest people on the planet is a marketing line.

We have met the enemy, and he is us — Pogo
by Migeru (migeru at eurotrib dot com) on Sat Dec 8th, 2007 at 06:07:57 AM EST
[ Parent ]

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