Saturday, September 29, 2007

Some Thoughts on the American Crisis, Part Two

I saw a graph this morning of this year's third quarter showing the daily close of the Dow Jones. The stock market took a major dip in August but is now almost back to the highest point reached in July. I can't help feeling that the recovery of the stock market is either an illusion or is seriously disconnected from the economy that most Americans are experiencing. Everyone, myself included, wants the economy to do well. Recessions, economic malaise, higher monthly mortgage payments, lower real wages, higher health insurance premiums and other economic twists and turns are not fun. Of course, some of these things have been happening for some time.

In general, I am unable to ignore the growing sense that we are in a period of illusion. One illusion is that everything is going well. The other illusion is that we have to attack others out of fear of another 9/11. It is a schizoid time.

Let me mention briefly one illusion. I keep hearing that American industry is getting a handle on pollution of various kinds. But this is not really the case. I grew up in Southern California at a time when heavy industry still existed in the greater LA area. Smog was bad because of the area's geography, weather and prevailing winds. Slowly, the industries that were the heaviest polluters began to move out of the area. Although cars were one of the primary culprits behind smog and were dealt with to some extent over time, there's no question that when the heavier industries left the area, cleaner air was left behind. But those heavy industries were still polluting. They were just doing it elsewhere, though I have to admit I'm not certain where they were doing it. We weren't paying close attention in those days.

Of course, today, there's no question that much of America's pollution has been exported overseas, sometimes by our own corporations, sometimes by foreign corporations who, by proxy, handle much of the pollution once generated by our own companies. Now there's a point here that gets overlooked as other countries are getting a reputation for pollution. A significant portion of that pollution is being driven by the needs of 300 million Americans, not just by the new economies that are emerging. So what's going to happen if another 1 or 2 or 3 billion people around the world start living like Americans and generate the same amount of pollution? It's been a practice of conservatives for the last thirty to forty to fifty years to ignore issues like this. But in the last fifty years the world has been changing. Sometimes we forget just how much the world has been changing.

I was born in 1950; the world population at that time was roughly 2.5 billion people (there are different estimates and here's a table of some of those estimates). The world population today is about 6.6 billion. That's more than double the number in 1950. I realize those numbers are almost incomprehensible but it's important to get our arms around them. Since 1950, the world has added roughly 4.1 billion people; that's almost 14 times the current population of the United States. Does the world have the resources for 14 new economies the size of the United States? Can the world safely absorb the pollution from 14 such new economies?

I'm an American and I like living where I am. To a large extent, I like the modern world. I like computers and eating out. I like borrowing books from the library and turning on the heater in the winter. I know perfectly well that I would not have survived childhood in the 19th century. I very much appreciate penicillin. I have no desire, in general, to go backwards, but I'm not so sure anymore how much we're going forward when we add up all the factors. Now it's in my temperament to be optimistic about the future, but reality is coming up fast on us. As things now stand, it's probably a fact that we cannot sustain the population growth of the last century. There's growing concern that a world population of 6.6 billion people is simply not sustainable.

Let's back up a moment and look at the world population for 1900. By 1900, the Industrial Age was more or less a century old. But there was enormous disparity of wealth in the world. Most of the wealth was in Europe and the United States. The Industrial Age was still decades away from reaching much of the rest of the world. Despite the abuses of the 19th century, there were still enormous resources in the world. Resources like petroleum had barely been touched by then. In 1900, there were 1.6 billion people spread around the globe.

Again, we have a number: 1.6 billion. It's abstract. It's even from a long time ago. But in reality, a hundred years isn't all that much time in human history. I have a great aunt who was born in 1901; at 106, she's still alive. My aunt's older sister, my grandmother, used to tell stories about their father; their father was born in the middle of the 19th century but I retain numerous stories about his life and the wilderness he came to when he arrived in California in the 1860s. In California, then, there seemed to be a lot of room, and plenty of resources. In 1860, there were almost 380,000 people in California. In that era, there was a lot of room per person. Today, there are over 37,000,000 people. California has achieved one of the fastest growth rates in the world. In 147 years, California grew nearly 10,000 per cent!

To be honest, California had a lot of room to absorb people. But for those willing to observe, California has changed enormously, and not always for the better. One change alone should give pause for thought for rest of the world. For 147 years, the water table in California has been getting lower and lower. And more polluted. In some areas, ground water is not usable without expensive treatment. California is constantly on the search for new sources of water but new water is not cheap. Sometimes there are unpleasant surprises. A few miles north of San Francisco is a body of water called Tomales Bay; until fifteen to twenty years ago, it was considered one of the most pristine bodies of water in the world. Then the algae and bacteria count started going up because of fertilizer and other chemicals used by ranchers in the surrounding hills that were being flushed by rain into the bay. A nastier surprise was the appearance of mercury in the water from an old mercury mine up in the hills that everyone thought had been properly contained and sealed after being mined out. These may seem minor incidents but they are canaries in a mine in a state that pays close attention to limiting environmental damage.

If California can handle its water and smog problems, it will probably continue to grow. It is not among the most densely populated places in the world (though it's getting closer). And of course if one flies over the US, it's hard not to notice all the empty land as well as sparsely populated agricultural areas. But if one looks at a map of China showing population densities, there are large areas of China that have low populations per square mile, particularly in Tibet and the Gobi Desert. Looks, however, can be deceptive. Some years ago, a single building in Hong Kong was famous for having some 10,000 residents who entered through the basement by using the produce elevators situated in the sidewalk. We need to remember that agricultural lands have to be matched to the large populations they support elsewhere.

Let's go back to that figure in 1900 of 1.6 billion people in the world. How much land was available in that era per person? The estimates for the land surface of the earth vary somewhat but don't differ by significant amounts. Let's settle on the figure of 57,393,000 square miles. We're talking about the amount of land available to humans. Immediately, since nobody is going to live there in large numbers anytime soon, we better subtract the 5,100,000 square miles of Antarctica. That leaves 52,293,000 squares miles. Let's convert that into acres; an acre is something that can be seen easily with the naked eye (when I was a kid, we lived on a quarter acre lot; four of those lots made an acre). Rounded off, there are roughly (we're being generous here) 33.5 billion acres of usable land in the world for humans. That means in 1900 there were about 21 acres per person available in the world. A family of four, on average, had 84 acres available to them (of course it rarely worked out that way). It was far short, though, of the acreage available per person just two centuries ealier but by 1900 the industrial age was in full bloom. Still, 84 acres for a family of four was not bad.

Let's jump to the year I was born, 1950, when the earth's population had grown to 2.6 billion people. There were billboards in that era that showed a happy family of four driving a brand new American car. The modern world was in full swing. It was the age of oil and the automobile. A few years earlier, major oil reserves were found in Saudi Arabia, and the United States itself seemed awash in oil. Oil was expected to last a long time. In 1950, there were almost 12.9 acres of usable land per person available in the world (remember, the definition of usable land is generous at this point). For a family of four, there were more than 50 acres available in resources. Actually, there was real concern at the time whether agriculture could keep up with the world's growing population. Fortunately, the green revolution would soon arrive and there were still food sources in the ocean to be exploited. The green revolution, however, was to a large extent driven by tools and chemicals that oil and natural gas made possible.

Now we come to the year 2007. The picture is not quite as rosy. There are 6.6 billion people in the world. The world is still growing and there is no immediate prospect that the growth will end anytime soon. But still, there are troubling signs. There are now a little more than 5 acres available per person in the world. And a little more than 20 acres for a family of four. From a little more than 80 acres for a family of four in 1900, we have dropped to 20 acres for a family of four. And that's if we continue with the generous definition of usable land.

Some areas of the world are harsh and yet they are able to sustain low numbers of people. How many more people can the following areas sustain?
Sahara: 3,500,000 square miles (or 2,240,000,000 acres)
Australian Deserts: 1,300,000 square miles
Gobi Desert: 1,295,000 square miles
Greenland: 831,109 square miles
Tibetan Plateau: 604,000 square miles
Canadian Tundra: 300,000 square miles
Saudi Arabia's Empty Quarter: 225,000 square miles

This is far from an exhaustive list though it covers some of the largest areas. Notice that I omitted Siberia only because I couldn't find a consistent number, but any population density map shows, for the most part, the vast emptiness of the northern part of Siberia. Also, I omitted considering the hodgepodge of deserts in the western United States. Subtract all these areas from the Sahara to the Gobi Desert to Greenland that are unlikely anytime soon to have large populations and the land available per person drops significantly. One should also point out that large areas are being turned into deserts by poor agricultural and grazing methods.

What about the ocean? Can the ocean be a source of future growth? Perhaps. But the sad truth we've been discovering for the last few decades is that the ocean's natural supply of food is not inexhaustible. Just as we have overgrazed large areas of the earth, we have also overgrazed the oceans and there are now restrictions in many areas of the world on what can be harvested by the fishing industry.

Population alone is a problem. The earth's ability to absorb the pollution of the last hundred years, and particularly the last fifty or so, is limited. The damaged ozone layer was proof that there are sufficient numbers of humans to affect the environment on a global scale. When it comes to carbon dioxide alone, the earth is simply unable to handle the excessive load put out by human behavior. And now a problem is clearly on the horizon that has been ignored, for the most part, by the United States for the last thirty years: there may not be enough oil or alternative energy to sustain our current way of living.

I'm optimistic that some kind of modern living can still exist but not if we continue to ignore the abyss that lays before us. Senator Ted Stevens of Alaska is famous for wanting massive federal funding to build a 'bridge to nowhere.' That is a perfect metaphor for the way business in our country is being conducted these days. But we in the United States are not the only ones facing the abyss. Fortunately, the Europeans and the Chinese are far more aware of some of these problems than we are, though the Europeans are the ones who seem to be the most forward thinking.

US leadership is needed on a growing list of issues facing the world. Rather than face these problems, we have an incompetent president and an ideologically rigid political party caught up in a war, and possibly a series of wars, that our country and the world do not need. Time is becoming critical. Our economy at this time is not capable of turning on a dime though that is nearly what happened during World War Two. We forget that change takes time. It took decades to build the railroads. It took years to get an interstate highway system built. It will take years to make changes simply to survive the next twenty years with our economy reasonably intact.

We are entering an era that will still have its billionaires and multimillionaires who don't see what the problem is and who will fund ridiculous campaigns for whatever nonsense they seem driven by, but average Americans are the ones who will lose the most if our country doesn't find a way to take more responsibility for its future. Responsibility cuts many ways and perhaps the most important area for responsibility is the individual and family and local level. I'm going to admit something terrible: I don't have the answers and I don't really know anyone who does. But there are hundreds of small answers that may help all of us get through the coming years. Many of us, including myself, are going to have to change habits. We're going to have to think about what we're doing and learn new tricks for survival and new tricks for simply being a human being.

The US economy has enormous momentum. Metaphorically speaking, if someone turned off the locomotive that drives the US economy, the economy would go on for miles before anyone would likely notice something was wrong. But something has been wrong for many years. Is there really hope for the future? Maybe. But the terrible truth is that no one really knows. But if there is hope, we're already on the wrong track. And that has to change. Maybe we're not so much on the bridge to nowhere as on the bridge to the exhausting turmoil of some past era like the 17th century. If so, there are already many Americans who want to get off and find a way, if possible, to build a bridge to the 22nd century.

This is not an abstract situation. It is real. Almost everyone knows a child or people who know a child who is in grammar school. The children of those children will live to the 22nd century. If there's a way, we need to give them a chance. But it's not a certain thing. That's how close we are to the abyss. That's how much things have changed in the last fifty years.

Humans have always thrived when they help one another. This doesn't mean the powerful scratching each other's backs while ignoring millions of people. It's clear that there are some Americans and people elsewhere who would choose a much harsher course for the future; such a course would mean losing the best of what we are; it would mean ignoring the valuable lessons since the founding of our country. In World War Two, the American people won the war. Roosevelt may have been the president but he is one who unlocked the genius of our people. That genius was found everywhere from assembly line workers to army engineers to decent business people who discovered their companies could do far more than they had ever dreamed. The kind of largely incompetent wheeler-dealers who whine about taxes or buttonhole politicians for favors or try to fatten their wallets at the expense of flawed products that kill our soldiers or our workers or our children did not win that war. And yet, today, more and more of these self-centered cavaliers are in charge of our country. There will be no future with such people in charge. We need reform. Our future requires reform. We are in crisis and it's time we admit it.

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Anonymous S.W. Anderson said...

On Friday evening, I watched Bill Moyers interview John Bogle, a Republican, an enlightened thinker and founder of the Vanguard Funds. Remarkably, Bogle lamented the evolution of our economy to being a financial-services economy. That's as opposed to being, in succession, an agricultural, industrial and services economy.

To put it in terms I've used in recent years, too many people are trying to make money off of money. Too few are inventing, designing and actually producing things people here and abroad need and want to buy.

Going along with this fundamental degradation of what America is and what Americans do, there's the ominous matter of growth.

Once upon a time, growth was limited by the amount of crops that could be harvested and shipped to market before being destroyed by the weather. Then, growth was limited by the output men and machines were capable of within a work day. More recently, growth has been limited by the amount of information handling people, machines, telecommunication and computer technology can handle within some period of time.

Owing to our national psychology, tradition and the bedrock belief of our financiers, entrepreneurs and business-executive class, greed is accepted as good. Growth is seen as imperative and potentially limitless, the only real brakes on it being the lack of ambition some exhibit and the contrariness of others.

You mentioned illusion. Well here's my candidate for the root cause of our dangerous illusion: Every one of the notions in the previous paragraph is not only untrue but dangerous if accepted uncritically and blindly acted upon.

6:48 PM  
Blogger Craig said...

S.W., thanks for the Bill Moyers perspective and the other comments. I'm glad you put some of this on your own site. I'm going to borrow a portion of the last couple of paragraphs in your comment for a post tomorrow.

I still think back to the 'new economy' econobabble of the late 1990s. The innovations in the Internet at that time were quite real but the way money followed money when there was no profits being made by numerous startups made absolutely no sense. We still have that pattern but, as you say, with not much behind it.

A minor detail that makes me uneasy is the amount of paperwork involved with mortgages; although the paperwork can be inch thick or more, it is mostly boilerplate, but absolutely no one I know understands what it means. I suspect it's room for even more mischief.

5:08 PM  
Blogger Yehuda Draiman said...

American economy in crises - a long time coming

When a country and its society import more than they export for over a quarter of a century, it is bound to erod the economy to its primate state.

We have only ourselves to blame, what goods and products are we exporting, what goods and services are produced in the USA, the answer is very little by comparison.

In the past 50 years as our population has increased, technology advanced, we have become a nation that consumes enormous amounts of resources, we shop for competitive prices. Corporate America is constantly looking to increase the bottom line.

Most of the goods for and by Americans and its companies are produced overseas and in the past decade with the advancement of telecommunications, many of the services sector are also imported.

The increased costs of energy over the past 10 years, has affected the economy to unimaginable comprehension.

This economic activity has eroded our economy to its core. It seems that the situation is getting worse every year. American debts are increasing beyond our wildest dreams, endangering the future economic vitality of our future generation.

I hope it is not too late for our society to recognize the graveness of our economic predicament and its resolve to take appropriate action to stem the tide of our economic downturn.

Americans are a nation of great technology and knowhow. We must utilize that technology and our resources to find new means to regain our economic independence.

We must face and implement fiscal responsibility, both by the government and the population with its infrastructure of corporate America.

It is no longer an option, it is a must if we as a nation want to survive and retain our way of life and economic vitality.

Inflation, recession and financial crises are here. Let us take the bull by the horn, initiate immediate actions to minimize and hopefully reverse our economic crises.

Yehuda Draiman, Northridge, CA.

4:41 AM  

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