Beyond Ponzi Economics

Tom Flynn

I’m not an economist, and I’ve never played a political scientist on TV.* But I peruse their literatures, and I’m puzzled by how seldom their discussions seem to focus on a problem that I consider desperately important. If I’m wrong—either because the problem is being tackled or because it’s less important than I think—I hope the economists and political scientists among our readers will set me straight.

The problem I have in mind is the ad­dictive dependence of human eco­no­mies and political systems upon growth. Across history, the societies that successfully delivered “the good life” for their members have been societies engaged in growing in terms of population, wealth, physical territory, or natural resources. We associate growth with economic vigor, cultural vibrancy, and advances in human welfare. Stasis, or even growth that’s too slow, heralds malaise. Real shrinkage is often accompanied—or caused—by soc­ial or economic collapse, military conquest, or epidemic disease.

Consider Western Europe’s welfare states and the creaky U.S. system of private pensions and health care. Both work best when population and wealth are increasing—when each generation can count on richer and more numerous successors to absorb its members’ retirement costs. Similarly, in the business world, an organization whose revenue or market value does not increase each year is viewed as failing. Former Disney CEO Michael Eisner used to say, “If it’s not growing, it’s going to die.”

As far as I can tell, in human history there’s never been a polity, economy, or institution efficient enough to deliver aspects of the good life without the steady drip-drip of growth.

One sign that the social sciences are not yet mature is that human beings still don’t know how to create establishments that can excel without growing a percent or so each year. Idealists say “Small is beautiful,” but we haven’t figured out how to achieve “Small is workable.” This would pose no problem if limitless growth were possible. But it’s not, at least while humans remain constrained by the finite resources of planet Earth.

It worries me that the best social and economic systems human beings have devised are all—let’s admit it—glorified Ponzi schemes. As a group, we might call them “Ponzic establishments.” For them to thrive requires incessant growth, and that is ultimately unsustainable.

As best I can tell, few social scientists consider this a problem. Little effort seems to be focused on developing post-Ponzic establishments—social, economic, and political structures able to sustain a humane society through a period of real shrinkage.

That also worries me, because there are good reasons to think real shrinkage might be desirable—maybe even inevit­able. Specialists have been warning about overpopulation since the 1950s. (In FI’s August/September 2004 issue, I followed the lead of some leading population activists and called for a long-term target of just 2.5 billion humans; in his new best-seller The World Without Us, Alan Weisman notes that an even lower target of 1.6 billion persons could be achieved as early as the year 2100, given an admittedly unlikely global one-child policy. Mean­while, scientist James Love­lock, father of the Gaia hypothesis, worries that a collapsing ecosystem may be able to support as few as 500 million humans long-term.) Over­population anxiety is out of fashion, so we seldom hear about the 1995 metastudy in which Joel Cohen, head of Rockefeller University’s population lab, cross-correlated fourteen estimates of the planet’s capacity to support human life. The experts’ median high and low estimates for an indefinitely sustainable world population (given realistic assumptions about available technologies) ranged between 2.1 and 5 billion people. Of course, we’re way past that: there are now more than 6.6 billion of us. United Kingdom scientist Sir Davis King told a parliamentary inquiry last year, “It is self-evident that the massive growth in the human population through the twentieth century has had more im­pact on biodiversity than any other single factor.” Research­er Gigi Richard stated the obvious: Earth’s population must “be reduced in order to be sustainable.”

If raw numbers don’t move you, consider some quandaries of more recent notoriety: carbon loading, global warming, the movement of developing countries toward first-world patterns of production and consumption, the near-total utilization of freshwater resources, ruinous overexploitation of groundwater and fishing stocks, and contamination of coastal waters by agricultural runoff, to name a few. While there may be specific fixes for each of these problems, all would be more tractable in a world with fewer people. All are less tractable in a world with more people. And all add to the evidence that both the United States and world population already exceed sustainable levels.

The logic seems airtight: if there are too many people, then one of these days we need to have fewer people. War, famine, and pestilence have historically excelled at reducing human numbers, but wouldn’t we all prefer a future where we purposely reduce our population while maintaining a high quality of life—a future of sane, peaceable shrinkage?

The shrinkage may already have begun. In a recent article, University of Chicago historian William H. McNeill observed that, despite advances in sanitation, cities remain “demographic sinkholes.” Rural or agricultural settings favor big families; cities make them a liability. McNeill noted that urban living remains a primary indicator of low fecundity—and that, for the first time in history, more than half of all humans live in cities. That fraction is growing. No matter what leaders do or what ideology we hold, urbanization alone may trigger population decline.

For whatever reason, birthrates are already plunging. Japan marked a record low in 2005—1.26 lifetime births per woman (2.1 is replacement level)—and has the largest cohort of residents age 60+ in the world. European birth­rates hover around 1.5; the lowest is Spain’s, at just 1.37 in 2006. Germany’s population declined by 130,000 in 2006 alone. The U.S. situation is more complex. Native-born Americans reproduce be­low replacement level, but immigration—and immigrants’ higher average fecundity—sustain rapid population growth. That’s why the United States is the only industrialized nation with a population growth rate equivalent to some countries in the developing world. Still, factors like globalization have damaged the U.S. manufacturing sector, reducing the pool of high-earning workers in much the same way a population decline would. Despite local differences in mechanism, then, the United States, Europe, and Japan face a common crisis: the coming generation of breadwinners may for the first time be smaller than the generation of elders it must pay to support. A United Nations report predicted that, worldwide, people over age sixty would outnumber people under fifty in 2047.

If the need to reduce human numbers is real, we should welcome these developments. They may signify a triumph of market factors or some other demographic intangible. In effect, the invisible hand may be pulling us back from calamity. There’s just one little problem: nobody knows how to make a shrinking polity run smoothly. The large political, economic, and social establishments we’re familiar with are Ponzic to the core.

Ponzic establishments may be the principal obstacle to any broad voluntary reduction in human numbers. The more immediate danger is that they might prompt politicians to sabotage prospects for a downturn in human numbers by resisting, rather than welcoming, the great demographic freebie that is the current “baby bust.”

Instead, panicky governments perpetuate overpopulation so the wheels won’t fall off of their growt
h-dependent eco­nomies. Faced with the prospect of population decline several years ago, Australia started paying bounties, now $3,000 per child, tragically sparking a new baby boom. European countries that had offered tax incentives for larger families are experimenting with bounties too. Spain plans to offer $3,400 per child and Germany $2,530. The Euro­pean Parlia­ment has called for measures to expand immigration throughout the EU. If overpopulation activists are right, such policies are shortsighted and de­struc­tive. But you can’t really blame to­day’s political leaders, who know they lack the tools to manage shrinking societies in ways that discourage social dislocation and unrest.

In my view, we desperately need to re­­place today’s outmoded, growth-de­pend­ent economic and political structures with shrinkage-friendly, non-Ponzic successors. Yet, I’ve seen little evidence that the social sciences are rising to this challenge. Can we develop alternative structures that don’t de­mand the lubrication of continual growth but can flourish even while contracting? Can we create them in time? Is anybody working on this?

If anyone knows why those aren’t the questions of the century, please clue me in so I can stop worrying.

Notes

* I once was billed as a folklorist, but that’s an issue for another column.

Further Reading

  • Cohen, Joel E. How Many People Can the Earth Support? New York: Norton, 1995.
  • McNeill, William H. “Cities and Their Con­sequences.” The American Interest, March-April 2007.
  • Richard, Gigi. “Human Carrying Capacity of Earth.” ILEA (Institute for Lifecycle Environmental Assessment) Leaf, Win­ter 2002. Available online at http://www.ilea.org/leaf/richard2002.html.
  • Weisman, Alan. The World Without Us. New York: Thomas Dunne Books/St. Martins Press, 2007.

Tom Flynn

Tom Flynn is editor of Free Inquiry, executive director of the Council for Secular Humanism, director of the Robert Green Ingersoll Birthplace Museum, and editor of The New Encyclopedia of Unbelief (2007).


I’m not an economist, and I’ve never played a political scientist on TV.* But I peruse their literatures, and I’m puzzled by how seldom their discussions seem to focus on a problem that I consider desperately important. If I’m wrong—either because the problem is being tackled or because it’s less important than I think—I hope …

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