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dwot (99.49)

The Population Pyramid

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March 27, 2009 – Comments (11)

The last 500 years the world has had enormous human population growth, which is roughly the same period of "proof" that over the long term the markets are a good investment.

I think (I haven't done the research to say for sure) population growth has exceeded market growth, at least that is what my number sense suggested to me just glancing at data on the two.  Indeed, that population graph for the 20th century looks almost straight up.

So, where does your business and market growth come from?  The real business growth comes from expanding sales which can be done with increasing population.  Then there is the "growth" due to increasing money supply or inflation, which is not really a true growth but more of a keeping up with the money supply.

So, the world truly has a mature population now.  And for that matter, because the population is so large now the rate of growth has declined.  

The world is finite and we don't have business data on what happens with a declining rate of growth, nor do people seem to be considering this in their investment decisions.  The ability to expand into new markets is declining as many markets are well developed now and population growth is declining.  

I do not see how business experiences growth in the future as it has in the past.  New markets and vertical population growth gave business the opportunity to grow by expansion, but how do these business do in an environment where the expansion part of the business is likely over or at least very limited?

And what happens with a declining population?  Certainly that is a possibility when you consider the over crowded conditions in many places and the lack of clean water.

I have seen little or nothing on considering investments with world population and I think that those who start thinking this through are going to make the better investment decisions in the future.

11 Comments – Post Your Own

#1) On March 27, 2009 at 9:32 AM, fransgeraedts (99.93) wrote:

Dear Dwot,

there certainly is an interconnection between population growth and economic growth.

However, there is no reason the economy should stop growing if the population shrinks. What is needed is rising productivity on the one hand, more demand on the other.

Lets imagine the population of the world stops growing now -today -immediately -which it will not.  

Would that mean that demand would collapse? Certainly not  -to get the rest of the world at the level of consumption the US is at now, would create demand for decades to come, surely?

Would that mean that the rise in productivity would stop? To get the productivity of the labourforce of the rest of the world to the standards of the US and Europe alone, would take again decades, surely?

And, of course, that is without taking into account the new forms of demand and productivity new technology brings ..think about the information-economy in that respect..it has only just started to grow...think about the greening of industry in that respect...

I do expect population growth to slow quicker then people foresee. Immigration especially will have that effect. But i do not think that that will curb economic growth.

 

fransgeraedts

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#2) On March 27, 2009 at 9:39 AM, abitare (99.34) wrote:

FYI -

The Reverend Thomas Robert Malthus FRS (13 February 1766 – 23 December 1834[1]) was an English scholar who did influential work in political economy and demography.

Malthus came to prominence for drawing attention to the potential dangers of population growth: "The power of population is indefinitely greater than the power in the earth to produce subsistence for man". [2] As an Anglican clergyman, Malthus saw this situation as divinely imposed to teach virtuous behaviour: he regarded optimistic ideas of social reform as doomed to failure.[3] He thus presented to the reader a dystopian, negative, view of the world, in contrast to the eutopias of writers such as Rousseau and William Godwin. A disaster occuring as a consequence of population growth outstripping resources is known as a Malthusian catastrophe.

Malthus placed the longer-term stability of the economy above short-term expediency. He criticised the Poor Laws,[4] and (alone among important contemporary economists) supported the Corn Laws, which introduced a system of taxes on British imports of wheat. He thought these measures would encourage domestic production, and so promote long-term benefit.[5]

Malthus became hugely influential, and controversial, in economic, political, social and scientific thought. Many of the later evolutionary biologists read him,[6] particularly Charles Darwin and Alfred Russel Wallace, for whom Malthusianism became an intellectual stepping-stone to the idea of the survival of the fittest.[7][8] Malthus remains a writer of great significance.

Modern commentators generally refer to him as Thomas Malthus, but during his lifetime he went by his middle name, Robert.


 

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#3) On March 27, 2009 at 9:52 AM, chk999 (99.98) wrote:

You should read "The Origin Of Wealth" by Beinhocker. It is a truly elegant explanation of what generates wealth in a society. And it isn't what you think it is.

What you are missing is the growth in productivity per person that comes from new technology and new social arrangements. This has been the big driver over that 500 years and the population growth is the result of the increased food supply. (You have the cart before the horse.)

Think about the computer that you typed this on. It was not available to an Egyptian Pharaoh at any price whatsoever. Yet you and I can afford one easily. It 50 years holophrasters will be cheap and ubiquitous and yet today the most powerful man on earth can't get one.

Because techology growth is a compound interest type of thing (more technology makes it easier to make more technology) this will continue to accelerate.

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#4) On March 27, 2009 at 9:54 AM, JeanDavid (82.82) wrote:

If production is the conversion of natural resources into marketable goods that then wear out or are otherwise consumed, then it cannot increase indefinitely because natural resources (air, usable water, usable earth, and energy) are limited. At the moment, we see some of the effects of this here and there in the world.

Some solutions to some of these problems are offered, but many require increasing consumption of energy.

So, since production cannot increase indefinitely, an economy that requires steadily increasing production is doomed. What is really needed is an economy that can function in a satisfactory manner without depending on increasing production.

It seems to me that the necessity of a growing economy is mainly because for the rich to get a lot richer, the poor must also get a little richer at the same time so they have hope, even though it is never realized except in small segments of the population. So the wealth in a non-growing economy would have to be much more evenly distributed than at present.

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#5) On March 27, 2009 at 10:31 AM, ralphmachio (24.58) wrote:

In my opinion, humanity cannot develop any further without more respect for one another.  Our technology has made for an impersonal world, where one trusts his government more than his neighbor.  Nobody knows how to grow anything, or what is edible from nature.  Technology has been used to increase the space between the rich and the poor, and instead of having people work less for more pay (the true function of technology) we have people working more for less pay and an amount of taxation that should have been questioned generations ago.  The reason our current system is on an irreversible path to self destruction is the greedy just got too greedy.  not for money, mind you, but for power.  Money is simply the tool they use to control us, we've built their empire, and we really are not of much value anymore.  For the last twenty years I've listened to legopeople attack the alternative views of those who theories have turned out right!  I guess it's just a coincidence that China and Russia are trying to get a global currency!  Just the way these random economic events took place could NEVER have been planned, right?  And bush pushed right so hard, people are still leaning left as hard as they can, setting them up for an effective jiujitsu throw that they do not see coming.  The goverment uses its right hand to slap you to the left, and the left is about to knock you out.  In science, the ability to make laws revolves around the principle that matter and energy are neither created, nor destroyed.  riddle me this- How did all that matter and energy get destroyed in the stock market? ( to those who've never worked for a living, money most certainly represents energy) Quite obviously, the whole game is rigged.

peace 

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#6) On March 28, 2009 at 6:04 PM, FleaBagger (33.10) wrote:

Chris is right. Malthus and his followers have been saying for centuries that we have more people than the world can support, and some of us need to die in famines, wars, family planning, etc. so that the intelligentsia can have the lifestyle that they are destined to have, in their quaint, Jane Austen-style country estates. Meanwhile, free, law-abiding people have been advancing technology and science to the point where each acre of farmland can support 10 times as many consumers as it could in Malthus' day, and requires 1/4 the labor force.

Central planning is not the solution. I know most of you think that deregulation caused the current financial crisis, and that if government did more to curtail greed, then the poor and the middle class would be a lot better off. To the contrary, Government consistently conspires with the rich to exploit the poor and middle classes, and the more power we hand to government, the more exploitation we suffer. 

Who do you think has greater access to the ones writing the byzantine regulations and tax codes that control our lives, the middle class, or the rich? Do we have more votes than they do? Of course. But who gets to talk to the lawmakers once they're elected? The rich. And they can keep adding subtle burdens to us that, individually, we never notice, but collectively are enough to wipe out the middle class over time.

Look at the sugar tariff issue. The $1.9 billion cost is spread amongst hundreds of millions of Americans, but the hundreds of millions of dollars of benefit are concentrated to a few domestic sugar and sugar beet growers, ADM, and a few other corn growers. And they know what's going on and the rest of us (largely) don't. They lobby for their riches at our expense, and we don't notice it, because it's only a few dollars per person, per year, or maybe $40 or $50 if we're really unhealthy.

Now multiply that by hundreds of issues, and you have tens of billions going to the rich and well-lobbied for, at an expense of hundreds of billions, perhaps trillions, imposed on the rest of us. Furthermore, the bureaucracy administering all of this imposes billions more for salaries, offices, wasted electricity, etc.

The malinvestment of big government goes largely to big business, and largely to the rich. All the while, we think we’re taxing the rich to give to the poor, making the playing field level, or whatever excuse for increasing the government’s power. We’re shooting ourselves in the foot.

Now, with the bailout and TARP and whatnot, it should be clearer than ever before that government serves the rich at the expense of the poor and middle class, even when the government is completely controlled by those best at pretending to be for "the little guy." 

So, yeah, let’s get some of our best thinkers working on the population pyramid, and maybe they’ll have some recommendations about how to take care of that. We’ll solve this problem if it kills us.

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#7) On March 28, 2009 at 6:52 PM, outoffocus (24.48) wrote:

Wow Flea. I wish I could rec that response.

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#8) On March 29, 2009 at 1:41 AM, dwot (99.49) wrote:

Interesting comments...

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#9) On April 02, 2009 at 3:22 PM, OleDrippy (39.71) wrote:

Anyone who thinks we are overpopulated has never been on a plane or driven cross country.. There is so much free space in the US alone it is silly. The problem is that everyone wants to live in the SAME PLACE. Move to Nebraska where we are paid to NOT FARM to keep the supply of food down and prices up and tell me about overpopulation... People are crazy.

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#10) On April 09, 2009 at 7:32 PM, lucas1985 (< 20) wrote:

Adding to the discussion:

http://en.wikipedia.org/wiki/Steady_state_(macroeconomics)

http://en.wikipedia.org/wiki/Ecological_economics

http://www.newscientist.com/article/mg20227026.800-the-heat-to-come.html?full=true

 

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#11) On April 28, 2009 at 8:04 PM, HackMage (< 20) wrote:

I believe Harry S. Dent did some work on population trends in "The Next Great Bubble Boom." I can't remember if it was in there or it might have been in one of Stephen Leeb's books. Next time I'm by the library I'll check again. But I remember seeing a lot of human population graphs that stay really low for the first 10,000 years then skyrocket and go nearly vertical in the last two centuries.

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