Growth for Growth’s Sake! A Specious Assumption
Growth for Growth’s Sake! The Unmaking of Globalization and the New World Order. By Dr. Noel Mark Noël Posted June 29, 2016
Conventional wisdom holds that the more a population expands the more income increases. Many often think that the growth of a city or metropolitan area is directly linked to population growth and use it to gauge regional growth or decline. This generally accepted theory is specious thinking which can lead to terrible decisions especially by corporate managers, governmental planners, and an ill-informed public. Edward Abby, stated, “Growth for growth’s sake is the ideology of a cancer cell.” As a respected environmentalist, Mr. Abby took aim at the ‘madness of linking growth to population’. So have a number of respected public policy economists who clearly find no lockstep relationship between income and population growth. Indeed, economic research (Gottlieb 2002) provides conclusive evidence that many metropolitan areas in the United States have seen an increase in per capita income among its residents without population growth and its accompanying problems. Population growth does not equal economic growth. Allowing unchecked migration along our borders won’t solve economic problems assumed to be caused by a slowing population. Businesses have long learned the lesson that more customers don’t necessarily translate into increased profits.
Noted urban economist Paul Gottlieb dubbed this disconnect between population and economic growth “growth without growth”. He divided metro areas into “population magnets” where population grew but not income, and “wealth builders,” where incomes rose much faster than population. He categorized Palm Beach and Sarasota Florida as population magnets based on tourism and retirement whereas, Tampa-Clearwater-St. Pete would be an example of wealth builders where incomes grew faster than population. Incomes thereby reflect jobs and productivity. Of course there are the ‘growing’ major inner big cities where population exceeds income with calamitous results. America’s economic winners, according to Gottlieb, are not those places that are growing population fastest, but those that are developing the skills and capabilities that improve their underlying productivity. Population growth, in fact, creates a troubling fake illusion of prosperity.
Many U.S. citizens living in the sunshine states, as well as the lush environs of as the Pacific Northwest, would heartily love to ‘pull up the drawbridge’ so that future migrants do not follow them. Other such ‘nativists’ agree as seen in parts of Europe with open immigration policies. They see these migrants as added congestion to the landscape, increased infrastructure costs, a drain on water and other natural resources, longer commuting times, crowded schools, higher taxation, and the perception by many residents of a slow and inevitable decline in their quality of life.
These same perceptions apply not only to the in-migrants from other cities and municipalities, but from immigrants of other countries in this brave new world of globalization. Reports abound of a flood of undocumented transients entering the USA. Likewise there is the deluge of refugees, across the 27 (now 26) member nations of the EEC, of those fleeing wars and terror. Population dislocations are happening more frequently and across a number of emerging countries. All largely ignored by governments and the mainstream public, and seen as generally good for the growth of the economy that receives them. However, what are the consequences to those countries or municipalities that lose to emigration or out-migration? The NYT (2014) documents the domestic ‘blue-state diaspora’ as people move out of ever increasing fiscal and regulatory oversight and into less burdensome red state outposts. It is doubtful their economies will improve unless they fully address the reasons why their citizens left in the first place. Often these reasons are political incompetence based on over taxation and regulations suppressing productivity, innovation and freedom. Burgeoning populations are bound to explode based on incompetent governmental policies and outright corruption. All with the implicit acceptance by the general public that the ‘more the merrier’ misunderstanding of the economic consequences.
Globalization was first sanctioned, when in front of Congress, President George H. Bush (1991) coined the phrase the “New World Order”. The NWO was latter endorsed by President Clinton’s passage of NAFTA, and the European Community’s adoption of the Maastricht Treaty in 1992, which relaxed monetary and immigration policies on both continents. The drawbridges at the borders of most sovereign nations have been abandoned. Thoughtless ‘globalization’ has led to the assumption that countries with declining populations can simply open their borders and allow anyone the possibility of buying a car, a refrigerator or a pair a Nikes to contribute to the country’s ‘economic growth’. Retailers have long known that the overuse of promotions train consumers to buy only when there is a sale, and each new round of discounts must be deeper to get their attention resulting in lower profits. This addictive behavior to senseless growth deeply damages countries and corporations alike. Linking population growth to sales growth is specious thinking.
Interestingly, so has the abandonment of the once popular term: Globalization. Recall the angry demonstrations against globalization like the Battle of Seattle in 1999 that hosted the annual meeting of the Keynesian central bankers, the International Monetary Fund (IMF), along with other ruling class elites. The elite central bankers now schedule meeting in exclusive resorts protected from outside demonstrators and the prying eyes of the public and media. The proponents of globalization tend to conclude that dissent and criticism are the result of ignorance of the general public or other vested interests. They argue for economic growth to overcome poverty, however, they confuse population growth as the antecedent to prosperity. Critics of globalization often cite social disintegration, a breakdown of democracy, a rapid and extensive deterioration of the environment, a spread of new diseases, increased poverty, and alienation – all based on unchecked population growth. Joseph Stiglitz took aim at the IMF when he became disillusioned as its chief economist. He regarded globalization as a success or failure dependent on its management. “There is success when managed by the national government embracing the characteristics of each individual country, however, there is failure when managed by international institutions like the IMF.” Let us assume this also includes the likes of the European Central Bank, the bureaucracy of the EEC and even our Federal Reserve Bank. It’s been over 25 years since the embrace of globalization – time to consider how it has worked out given the decline in global economic growth. The downturn is not caused by declining birth rates nor an aging population, as some may believe, but simply wrong assumptions behind monetary and fiscal policies.
Japan’s population growth, or lack thereof, provides a telling lesson for other developed countries facing declining birthrates. Japan stands alone in its cultural policy against immigration in the face of declining birthrates. The Japanese have done quite well in terms of per capita GDP, despite not dealing effectively with their real estate bubble in 1990, and their continued monetary and fiscal mismanagement. The population has only slightly increased from 123.9 million in 1990 to 127.3 million in 2013. Births added merely 3.4 million Japanese to the population with a decrease in birthrate of .03% in 1990 to a negative .02 % in 2013. Given a decline in birthrate, Japan’s per capita income increased from 25,223 (USD) in 1990 to 38,633 (USD) in 2013 or 53% (inflation adjusted). Good economic prosperity considering little to no population or immigration growth.
Indeed, Forbes cites a Reuters resource indicating Japan (green) outperforming the USA (orange) in real GDP per capita over the last decade from 2005 to 2014.
The Nugget: Population growth creates a troubling fake illusion of economic prosperity. The take away nugget is that immigration (legal or otherwise) is not a panacea for economic growth. Indeed, there may be more of a downside to haphazard population growth – even in context of domestic migration patterns. Smart monetary and fiscal decisions give birth to a vibrant and dynamic population – that of quality, not quantity.
