The Economist: Let the Dollar Fall

[Ben Kenobi]

Most of the global population growth is in the developing nations especially in Africa. That's why the 'First World' nations need to get their act together and focus on developing the 'Third World' countries in order to encourage their population growth rates to drop.

Why?

Population estimates for 2050 show the total world population dropping. And that's a moderate projection, not the low one.

We do not have a population explosion to contend with, very soon, we will have just the opposite problem, economies desperate for more workers.

As for problems of overconsumption, there are two ways of dealing with this.

1. Have everybody reduce consumption,

2. Try to expand the pie.

I think 2 would be a much more palatable option, to expand the pie, so that there will be enough for everyone.

[Giancarlo]

Originally posted by Ben Kenobi


Why?

Population estimates for 2050 show the total world population dropping. And that's a moderate projection, not the low one.

Yeah I would think. With the one child policy in China, that has caused a disproportional amount of men as compared to women, the birth rate would fall. With the lower birth rates in Europe and the US, this would eventually happen. However, the US and Europe in particular are getting more productive with current workers and also having machines do the work so less people are needed to be hired so a decline would be welcomed. And Africa will eventually feel a collapse in population because of the AIDS epidemic.

So th at is a wise projection to make.

[Bosh]

Originally posted by Drake Tungsten

Yay! All this falling dollar stuff has given me an $80/month pay hike and upped the value of my bank account. It feels strange making money off of currency speculation.

Me too! Let that yen strengthen, baby!

Yeah, and you've got it better than me in that category too. But with Korea having a widening surplus and burning through a whole lot of money trying to keep their currency weak its only a matter of time before my bank account jumps a good bit in dollar terms

[Whoha]

Originally posted by Kidicious


Everyones economy seems to be on the edge of colapse. No one can afford our goods, because it costs more than dollars to imports goods. It costs jobs, as we well know here in the US. It appears that globalization isn't working. Protectionism isn't the answer either. We are probably just screwed.

so 600 billion a year is just disappearing?

They have to buy from us or we have to close our markets, thats the answer.

[Whoha]

Originally posted by yavoon


if the choice is between less ppl and us all living in 150 story apartment buildings like rats scared to consume things because the earth will collapse.

I vote less ppl.

Its not, there is more then enough space, and as mentioned in the last thread on this subject, China has surpassed the US's consumption of minerals like Iron and Copper.

[Drake Tungsten]

Yeah, and you've got it better than me in that category too. But with Korea having a widening surplus and burning through a whole lot of money trying to keep their currency weak its only a matter of time before my bank account jumps a good bit in dollar terms

I'm just waiting to see how low the dollar can go. Want to get the most possible for my yen when I send my money home.

[Az]

Sorry, but prosperity to me seems an issue of individual wealth, not the ability of the capitalist system to constantly expand and feed itself.

In capitalism, average individual wealth depends on the wealth of the system. If it won't feed, it won't be wealthy, and thus, individual wealth will go down, as well.

[Kidlicious]

In the long run smaller populations will have higher prosperity because of the higher capital/labor ratio.

Azazel is right about the need for demand to continually increase in capitalism though. As the demand for goods and services decreases greater prosperity will not naturally be achieved in the free market. Even with intervention in the market there is likely to be problems getting a balance. It is very likey to have high levels of unemployment while the world population is growing slower and then decreasing.

[Kidlicious]

Originally posted by Oerdin


Eventually they will have no choice but until they hit the economic wall they will continue to buy dollars in an attempt to devalue their own currencies thus improving their own exports to the US.

They will probably devalue more, and buy more dollars, after they hit the wall.

[el freako]

Originally posted by Fez
And capitalism is doing quite well in Spain where the population growth is near nil.

Capitalism is indeed doing well in Spain, but your population growth has picked up markedly since the mid 1990's.
During 1987-92 popualtion growth in Spain averaged 0.20%, this fell to 0.17% during 1992-97 but jumped to 0.60% in 1997-02.

Spain has also been spectacular at creating new jobs (48% of the working age population was employed in 1992-94, in 2002-04 it's likely to be 61%), however this was from a very low base (The comprable figures for Germany are 68% and 69%) and has come at the cost of falling productivity (since 1985 GDP per civilian worker has risen by 11% in Germany but it has fallen by 3% in Spain).

Source: OECD for, Population, Employment and Output

[Kuciwalker]

Originally posted by Tripledoc
A democracy is when you have an election for the parliament and the executive. That is how the US defines it. Spain has only parliamentary elections. Spain might have to change that or be invaded.

the US doesn't define democracy as having an elected legislature and executive, it IMPLEMENTS democracy with an elected legislature and executive. Our particular implementation of democracy has those characteristics; they do not define democracy in general.

[Giancarlo]

Originally posted by el freako


Capitalism is indeed doing well in Spain, but your population growth has picked up markedly since the mid 1990's.
During 1987-92 popualtion growth in Spain averaged 0.20%, this fell to 0.17% during 1992-97 but jumped to 0.60% in 1997-02.

Thank goodness.. now that I DID NOT KNOW.. I thought Spain was gonna experience a decline in population. We actually had a pick up? Wow... maybe we can expand our country's borders. Lets pick on the French. I think we actually need a population pick up so we can take other European countries that have a bigger population but negative population growth. Of course wealth growth will keep up with the population growth considering the current level of economic growth.

Spain has also been spectacular at creating new jobs (48% of the working age population was employed in 1992-94, in 2002-04 it's likely to be 61%), however this was from a very low base (The comprable figures for Germany are 68% and 69%) and has come at the cost of falling productivity (since 1985 GDP per civilian worker has risen by 11% in Germany but it has fallen by 3% in Spain).

Source: OECD for, Population, Employment and Output

We had to come from a very high unemployment of somewhere around 25% with some underemployment. We have still nonetheless managed to lower a 25% unemployment rate in 1996, to around 10-11% in 2004. We still have work to do.. but do you think we have done well?

[el freako]

Originally posted by Fez

Thank goodness.. now that I DID NOT KNOW.. I thought Spain was gonna experience a decline in population.

Well it's probably still going to over the next half century, just nowhere near as much.
The increase in population is due to immigration, not changes in the birthrate - indeed it seems that Spain (and Portugal and Greece which also saw unexpected gains in population during the 90's) is undergoing a 'snowbird' effect much like Florida as northern europeans move there when they retire.

Originally posted by Fez
We had to come from a very high unemployment of somewhere around 25% with some underemployment. We have still nonetheless managed to lower a 25% unemployment rate in 1996, to around 10-11% in 2004.

Actually the fall in unemployment was not as great as that, as there was a change in the definiation of unemployment - the peak (using the new definition) was around 20% in 1994 not 25% in 1996.

Originally posted by Fez
We still have work to do.. but do you think we have done well?

Yes, after an abysmal decade in 1974-85 and just an average one in 1986-95, Spain has performed very well.
The only real cloud on the horizion is the aforementioned falling productivity.
If productivity does not pick up then Spain has around a decade of superior growth ahead of it as it's employment levels rise to Anglosaxon/Scandinavian levels but then it will start to rapidly fall behind.
However I am expecting that this stagnant productivity is due to the large increase in employment (as 'marginal' workers are hired so lowering the average productivity of the workforce as a whole), consequently once the one-off rise in the employment rate has run it's course then productivity growth will pick up again.
If this is indeed the case then the outlook for Spain is bright, although it would still take at least half a century for Spain to surpass Italy as the fourth largest european economy (even including Spains large black economy), it will take around half that time for Spains average income to reach western european levels (I.E. France, Benelux, Germany, Italy, etc)

[Giancarlo]

Originally posted by el freako
Actually the fall in unemployment was not as great as that, as there was a change in the definiation of unemployment - the peak (using the new definition) was around 20% in 1994 not 25% in 1996.

Not correct.

Source

"Spain still has the highest unemployment rate in the EU at just under 12% (1996: 22.9%)." I was pretty close.

If productivity does not pick up then Spain has around a decade of superior growth ahead of it as it's employment levels rise to Anglosaxon/Scandinavian levels but then it will start to rapidly fall behind.

I do think productivity will pick up in fact in the following years. I think any notion that our productivity levels will continue to fall is not inline with current indicators.

If this is indeed the case then the outlook for Spain is bright, although it would still take at least half a century for Spain to surpass Italy as the fourth largest european economy (even including Spains large black economy), it will take around half that time for Spains average income to reach western european levels (I.E. France, Benelux, Germany, Italy, etc)

I also disagree with this statement. I think Spain will catch up much faster than you think because all the indicators point in that direction.

[el freako]

Originally posted by Fez

Not correct.

Source

"Spain still has the highest unemployment rate in the EU at just under 12% (1996: 22.9%)." I was pretty close.

Actually that site is making the same mistake as you were, i.e. not taking the change in definition into account.

Here is the data from the OECD

Originally posted by Fez
I also disagree with this statement. I think Spain will catch up much faster than you think because all the indicators point in that direction.

I would like to see such indicators, Spain's economy is around 60% the size of Italy's - if the gap in the underlying growth rate is maintained (1.3% during 1994-03) then it will be in the late 2040's that Spain passes Italy.
Spain's GDP per head is 88% of Italy's, at the current difference in underlying growth rates per head (2.3% for Spain, 1.4% for Italy) it will take until the mid 2020's for Spain to catch up.