The beginning of the end for the USA?

10 09 2017

America Can’t Afford to Rebuild

By Raul Illargi

A number of people have argued over the past few days that Hurricane Harvey will NOT boost the US housing market. As if any such argument would or should be required. Hurricane Irma will not provide any such boost either. News about the ‘resurrection’ of New Orleans post-Katrina has pretty much dried up, but we know scores of people there never returned, in most cases because they couldn’t afford to.

And Katrina took place 12 years ago, well before the financial crisis. How do you think this will play out today? Houston is a rich city, but that doesn’t mean it’s full of rich people only. Most homeowners in the city and its surroundings have no flood insurance; they can’t afford it. But they still lost everything. So how will they rebuild?

Sure, the US has a National Flood Insurance Program, but who’s covered by it? Besides, the Program was already $24 billion in debt by 2014 largely due to hurricanes Katrina and Sandy. With total costs of Harvey estimated at $200 billion or more, and Irma threating to cause far more damage than that, where’s the money going to come from?

It took an actual fight just to push the first few billion dollars in emergency aid for Houston through Congress, with four Texan representatives voting against of all people. Who then will vote for half a trillion or so in aid? And even if they do, where would it come from?

 

 

Trump’s plans for an infrastructure fund were never going to be an easy sell in Washington, and every single penny he might have gotten for it would now have to go towards repairing existing roads and bridges, not updating them -necessary as that may be-, let alone new construction.

Towns, cities, states, they’re all maxed out as things are, with hugely underfunded pension obligations and crumbling infrastructure of their own. They’re going to come calling on the feds, but Washington is hitting its debt ceiling. All the numbers are stacked against any serious efforts at rebuilding whatever Harvey and Irma have blown to pieces or drowned.

As for individual Americans, two-thirds of them don’t have enough money to pay for a $500 emergency, let alone to rebuild a home. Most will have a very hard time lending from banks as well, because A) they’re already neck-deep in debt, and B) because the banks will get whacked too by Harvey and Irma. For one thing, people won’t pay the mortgage on a home they can’t afford to repair. Companies will go under. You get the picture.

There are thousands of graphs that tell the story of how American debt, government, financial and non-financial, household, has gutted the country. Let’s stick with some recent ones provided by Lance Roberts. Here’s how Americans have maintained the illusion of their standard of living. Lance’s comment:

This is why during the 80’s and 90’s, as the ease of credit permeated its way through the system, the standard of living seemingly rose in America even while economic growth rate slowed along with incomes. Therefore, as the gap between the “desired” living standard and disposable income expanded it led to a decrease in the personal savings rates and increase in leverage. It is a simple function of math. But the following chart shows why this has likely come to the inevitable conclusion, and why tax cuts and reforms are unlikely to spur higher rates of economic growth.

 

 

There’s no meat left on that bone. There isn’t even a bone left. There’s only a debt-ridden mirage of a bone. If you’re looking to define the country in bumper-sticker terms, that’s it. A debt-ridden mirage. Which can only wait until it’s relieved of its suffering. Irma may well do that. A second graph shows the relentless and pitiless consequences of building your society, your lives, your nation, on debt.

 

 

It may not look all that dramatic, but look again. Those are long-term trendlines, and they can’t just simply be reversed. And as debt grows, the economy deteriorates. It’s a double trendline, it’s as self-reinforcing as the way a hurricane forms.

 

Back to Harvey and Irma. Even with so many people uninsured, the insurance industry will still take a major hit on what actually is insured. The re-insurance field, Munich RE, Swiss RE et al, is also in deep trouble. Expect premiums to go through the ceiling. As your roof blows off.

We can go on listing all the reasons why, but fact is America is in no position to rebuild. Which is a direct consequence of the fact that the entire nation has been built on credit for decades now. Which in turn makes it extremely vulnerable and fragile. Please do understand that mechanism. Every single inch of the country is in debt. America has been able to build on debt, but it can’t rebuild on it too, precisely because of that.

There is no resilience and no redundancy left, there is no way to shift sufficient funds from one place to the other (the funds don’t exist). And the grand credit experiment is on its last legs, even with ultra low rates. Washington either can’t or won’t -depending on what affiliation representatives have- add another trillion+ dollars to its tally, state capitals are already reeling from their debt levels, and individuals, since they have much less access to creative accounting than politicians, can just forget about it all.

Not that all of this is necessarily bad: why would people be encouraged to build or buy homes in flood- and hurricane prone areas in the first place? Why is that government policy? Why is it accepted? Yes, developers and banks love it, because it makes them a quick buck, and then some, and the Fed loves it because it keeps adding to the money supply, but it has turned America into a de facto debt colony.

If you want to know what will happen to Houston and whatever part of Florida gets hit worst, think New Orleans/Katrina, but squared or cubed -thanks to the 2007/8 crisis.

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More gnashing of teeth

7 02 2017

The Über-Lie

By Richard Heinberg, Post Carbon Institute

heinbergNevertheless, even as political events spiral toward (perhaps intended) chaos, I wish once again, as I’ve done countless times before, to point to a lie even bigger than the ones being served up by the new administration…It is the lie that human society can continue growing its population and consumption levels indefinitely on our finite planet, and never suffer consequences.

This is an excellent article from Richard Heinberg, the writer who sent me on my current life voyage all those years ago. Hot on the heels of my attempt yesterday of explaining where global politics are heading, Richard (whom I met years ago and even had a meal with…) does a better job than I could ever possibly muster.  Enjoy……

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Our new American president is famous for spinning whoppers. Falsehoods, fabrications, distortions, deceptions—they’re all in a day’s work. The result is an increasingly adversarial relationship between the administration and the press, which may in fact be the point of the exercise: as conservative commentators Scott McKay suggests in The American Spectator, “The hacks covering Trump are as lazy as they are partisan, so feeding them . . . manufactured controversies over [the size of] inaugural crowds is a guaranteed way of keeping them occupied while things of real substance are done.”

But are some matters of real substance (such as last week’s ban on entry by residents of seven Muslim-dominated nations) themselves being used to hide even deeper and more significant shifts in power and governance? Steve “I want to bring everything crashing down” Bannon, who has proclaimed himself an enemy of Washington’s political class, is a member of a small cabal (also including Trump, Stephen Miller, Reince Priebus, and Jared Kushner) that appears to be consolidating nearly complete federal governmental power, drafting executive orders, and formulating political strategy—all without paper trail or oversight of any kind. The more outrage and confusion they create, the more effective is their smokescreen for the dismantling of governmental norms and institutions.

There’s no point downplaying the seriousness of what is up. Some commentators are describing it as a coup d’etat in progress; there is definitely the potential for blood in the streets at some point.

Nevertheless, even as political events spiral toward (perhaps intended) chaos, I wish once again, as I’ve done countless times before, to point to a lie even bigger than the ones being served up by the new administration—one that predates the new presidency, but whose deconstruction is essential for understanding the dawning Trumpocene era. I’m referring to a lie that is leading us toward not just political violence but, potentially, much worse. It is an untruth that’s both durable and bipartisan; one that the business community, nearly all professional economists, and politicians around the globe reiterate ceaselessly. It is the lie that human society can continue growing its population and consumption levels indefinitely on our finite planet, and never suffer consequences.

Yes, this lie has been debunked periodically, starting decades ago. A discussion about planetary limits erupted into prominence in the 1970s and faded, yet has never really gone away. But now those limits are becoming less and less theoretical, more and more real. I would argue that the emergence of the Trump administration is a symptom of that shift from forecast to actuality.

Consider population. There were one billion of us on Planet Earth in 1800. Now there are 7.5 billion, all needing jobs, housing, food, and clothing. From time immemorial there were natural population checks—disease and famine. Bad things. But during the last century or so we defeated those population checks. Famines became rare and lots of diseases can now be cured. Modern agriculture grows food in astounding quantities. That’s all good (for people anyway—for ecosystems, not so much). But the result is that human population has grown with unprecedented speed.

Some say this is not a problem, because the rate of population growth is slowing: that rate was two percent per year in the 1960s; now it’s one percent. Yet because one percent of 7.5 billion is more than two percent of 3 billion (which was the world population in 1960), the actual number of people we’re now adding annually is the highest ever: over eighty million—the equivalent of Tokyo, New York, Mexico City, and London added together. Much of that population growth is occurring in countries that are already having a hard time taking care of their people. The result? Failed states, political unrest, and rivers of refugees.

Per capita consumption of just about everything also grew during past decades, and political and economic systems came to depend upon economic growth to provide returns on investments, expanding tax revenues, and positive poll numbers for politicians. Nearly all of that consumption growth depended on fossil fuels to provide energy for raw materials extraction, manufacturing, and transport. But fossil fuels are finite and by now we’ve used the best of them. We are not making the transition to alternative energy sources fast enough to avert crisis (if it is even possible for alternative energy sources to maintain current levels of production and transport). At the same time, we have depleted other essential resources, including topsoil, forests, minerals, and fish. As we extract and use resources, we create pollution—including greenhouse gasses, which cause climate change.

Depletion and pollution eventually act as a brake on further economic growth even in the wealthiest nations. Then, as the engine of the economy slows, workers find their incomes leveling off and declining—a phenomenon also related to the globalization of production, which elites have pursued in order to maximize profits.

Declining wages have resulted in the upwelling of anti-immigrant and anti-globalization sentiments among a large swath of the American populace, and those sentiments have in turn served up Donald Trump. Here we are. It’s perfectly understandable that people are angry and want change. Why not vote for a vain huckster who promises to “Make America Great Again”? However, unless we deal with deeper biophysical problems (population, consumption, depletion, and pollution), as well as the policies that elites have used to forestall the effects of economic contraction for themselves (globalization, financialization, automation, a massive increase in debt, and a resulting spike in economic inequality), America certainly won’t be “great again”; instead, we’ll just proceed through the five stages of collapse helpfully identified by Dmitry Orlov.

Rather than coming to grips with our society’s fundamental biophysical contradictions, we have clung to the convenient lies that markets will always provide, and that there are plenty of resources for as many humans as we can ever possibly want to crowd onto this little planet. And if people are struggling, that must be the fault of [insert preferred boogeyman or group here]. No doubt many people will continue adhering to these lies even as the evidence around us increasingly shows that modern industrial society has already entered a trajectory of decline.

While Trump is a symptom of both the end of economic growth and of the denial of that new reality, events didn’t have to flow in his direction. Liberals could have taken up the issues of declining wages and globalization (as Bernie Sanders did) and even immigration reform. For example, Colin Hines, former head of Greenpeace’s International Economics Unit and author of Localization: A Global Manifesto, has just released a new book, Progressive Protectionism, in which he argues that “We must make the progressive case for controlling our borders, and restricting not just migration but the free movement of goods, services and capital where it threatens environment, wellbeing and social cohesion.”

But instead of well-thought out policies tackling the extremely complex issues of global trade, immigration, and living wages, we have hastily written executive orders that upend the lives of innocents. Two teams (liberal and conservative) are lined up on the national playing field, with positions on all significant issues divvied up between them. As the heat of tempers rises, our options are narrowed to choosing which team to cheer for; there is no time to question our own team’s issues. That’s just one of the downsides of increasing political polarization—which Trump is exacerbating dramatically.

Just as Team Trump covers its actions with a smokescreen of controversial falsehoods, our society hides its biggest lie of all—the lie of guaranteed, unending economic growth—behind a camouflage of political controversies. Even in relatively calm times, the über-lie was watertight: almost no one questioned it. Like all lies, it served to divert attention from an unwanted truth—the truth of our collective vulnerability to depletion, pollution, and the law of diminishing returns. Now that truth is more hidden than ever.

Our new government shows nothing but contempt for environmentalists and it plans to exit Paris climate agreement. Denial reigns! Chaos threatens! So why bother bringing up the obscured reality of limits to growth now, when immediate crises demand instant action? It’s objectively too late to restrain population and consumption growth so as to avert what ecologists of the 1970s called a “hard landing.” Now we’ve fully embarked on the age of consequences, and there are fires to put out. Yes, the times have moved on, but the truth is still the truth, and I would argue that it’s only by understanding the biophysical wellsprings of change that can we successfully adapt, and recognize whatever opportunities come our way as the pace of contraction accelerates to the point that decline can no longer successfully be hidden by the elite’s strategies.

Perhaps Donald Trump succeeded because his promises spoke to what civilizations in decline tend to want to hear. It could be argued that the pluralistic, secular, cosmopolitan, tolerant, constitutional democratic nation state is a political arrangement appropriate for a growing economy buoyed by pervasive optimism. (On a scale much smaller than contemporary America, ancient Greece and Rome during their early expansionary periods provided examples of this kind of political-social arrangement). As societies contract, people turn fearful, angry, and pessimistic—and fear, anger, and pessimism fairly dripped from Trump’s inaugural address. In periods of decline, strongmen tend to arise promising to restore past glories and to defeat domestic and foreign enemies. Repressive kleptocracies are the rule rather than the exception.

If that’s what we see developing around us and we want something different, we will have to propose economic, political, and social forms that are appropriate to the biophysical realities increasingly confronting us—and that embody or promote cultural values that we wish to promote or preserve. Look for good historic examples. Imagine new strategies. What program will speak to people’s actual needs and concerns at this moment in history? Promising a return to an economy and way of life that characterized a past moment is pointless, and it may propel demagogues to power. But there is always a range of possible responses to the reality of the present. What’s needed is a new hard-nosed sort of optimism (based on an honest acknowledgment of previously denied truths) as an alternative to the lies of divisive bullies who take advantage of the elites’ failures in order to promote their own patently greedy interests. What that actually means in concrete terms I hope to propose in more detail in future essays.





Water in the world we want

26 05 2015

Mark Cochrane

Mark Cochrane

Another guest post by Mark Cochrane……

As everyone who watches the news about California, Lakes Mead and Powell in the American Southwest or the situation in Sao Paulo, Brazil can see, water availability is a big deal for both agriculture and human populations. However, much more of the world faces chronic water stress but those areas simply don’t get the press that the aforementioned areas do. We fool ourselves by thinking that ideology drives conflicts and wars when resource scarcity is generally at the root of matters. Water scarcity fueled the Syrian conflict long before the bullets started flying and it is making the Middle East a powder keg.

The UN defines a region as water stressed if the amount of renewable fresh water available per person per year is below 1,700 cubic metres. Below 1,000, the region is defined as experiencing water scarcity, and below 500 amounts to “absolute water scarcity”.

According to the AWWA study, countries already experiencing water stress or far worse include Egypt, Jordan, Turkey, Iraq, Israel, Syria, Yemen, India, China, and parts of the United States.

Many, though not all, of these countries are experiencing protracted conflicts or civil unrest. (source)

Unrest doesn’t have to be directly related to an apparent lack of water. Egypt’s 2011 uprisings were largely a function of spiking grain prices caused by droughts in grain-exporting countries like Australia. Importing grain is a cheaper and lighter way of effectively importing water to places that don’t have enough water to grow their own crops. Egypt has another tension brewing over water with Ethiopia which is currently working to dam the Nile above where Egypt has already dammed the river.

As Egypt’s population is forecast to double to 150 million by 2050, this could lead to “tremendous tension”

River Nile Dam Site

River Nile Dam Site

between Ethiopia and Egypt over access to the Nile, especially since Ethiopia’s dam would reduce the capacity of Egypt’s hydroelectric plant at Aswan by 40%.

And the problems are not only in Egypt.

Syria, Iraq and Yemen are currently subjected to ongoing US military operations under the rubric of fighting Islamist terrorists, yet the new AWWA study suggests that the rise of Muslim extremist movements has been indirectly fuelled by regional water crises.

————

As US meteorologist Eric Holthaus points out, the rapid rise of the “Islamic State” (IS) last year coincided with a period of unprecedented heat in Iraq, recognised as being the warmest on record to date, from March to May 2014.

In addition to the Middle East, hotspots for water-scarcity-fuelled regional conflicts include the Sahel, Central Asia, and the coastal zones of East, South and Southeast Asia. Within as little as five years, 30 million people could be displaced inside China due to water stress. The American west and Mexico could also get ugly as things get drier.

Map_of_Water_Stress_Regions_by_WatershedThe UN defines a region as water stressed if the amount of renewable fresh water available per person per year is below 1,700 cubic metres. Below 1,000, the region is defined as experiencing water scarcity, and below 500 amounts to “absolute water scarcity”.

According to the AWWA study, countries already experiencing water stress or far worse include Egypt, Jordan, Turkey, Iraq, Israel, Syria, Yemen, India, China, and parts of the United States.

Many, though not all, of these countries are experiencing protracted conflicts or civil unrest.

– See more at: http://www.middleeasteye.net/columns/new-age-water-wars-portends-bleak-f…

The UN recently released a new study “Water in the world we want” that looks at the stark situation we are facing in the near future if we do not get our global act together to invest in decent water supplies and sanitation. While trying to be generally upbeat about the possibilities we have for improving global water infrastructure they don’t say that it will be cheap. It doesn’t help that corruption currently eats up 30% of expenditures in this area.

The estimated global cost to achieve post-2015 sustainable development goals in water and sanitation development, maintenance and replacement is US $1.25 trillion to $2.25 trillion per year for 20 years, a doubling or tripling of current spending translating into 1.8 to 2.5 percent of global GDP.

The resulting benefits would be commensurately large, however – a minimum of $3.11 trillion per year, not counting health care savings and valuable ecosystem service enhancements.

In this age of revolving the world on quarterly profit reports, who can be bothered to invest in the future of clean water? The report states that the current ‘deficit’ in the world’s maintenance and replacement of water and wastewater infrastructure is growing by $200 million a year. In the ‘richest’ country in the world (guess who) we are disgracefully $1 trillion behind on where we should be to have first world water systems! Do you think that might become an issue at some point?

Given accelerating Earth system changes and the growing threat of hydro-climatic disruption, corruption undermining water-related improvements threatens the stability and very existence of some nation states, which in turn affects all other countries, the report says.

Is that a clear enough statement to spur some sort of action or is it still too vague? How about this..

Within 10 years, researchers predict 48 countries – 25% of all nations on Earth with an expected combined population of 2.9 billion – will be classified “water-scarce” (1,000 to 1,700 cubic meters of water per capita per year) or “water-stressed” (1,000 cubic meters or less).

And by 2030, expect overall global demand for freshwater to exceed supply by 40%, with the most acute problems in warmer, low-resource nations with young, fast-growing populations, according to the report.

What is that about the next 20 years being totally unlike the last 20 years? Oil is going to continue to be a major issue in the global economy but water scarcity is what can really move the masses to riot or simply relocate. This is not a surprise to those in the halls of power. They’ve been preparing for years.

In May 2010, the U.S. National Security Strategy included global climate change as a security issue: “The danger from climate change is real, urgent, and severe. The change wrought by a warming planet will lead to new conflicts over refugees and resources, new suffering from drought and famine, catastrophic natural disasters, and the degradation of land across the globe.”

In case you think that this is a ‘future’ problem just look at what the humanitarians in the EU are getting ready to do to stem their human tide of migrants (source).

The European Union has drawn up plans for military attacks in Libya to try to curb the influx of migrants across the Mediterranean by targeting the trafficking networks. It is to launch a bid on Monday to secure a UN mandate for armed action in Libya’s territorial waters.

Britain is drafting the UN security council resolution that would authorise the mission, said senior officials in Brussels. It would come under Italian command, have the participation of around 10 EU countries, including Britain, France, Spain, and Italy, and could also drag in Nato although there are no plans for initial alliance involvement.

And get this:

Following a visit to Beijing last week, Mogherini believes the Chinese will not block the mission at the security council. Her staff are also confident that Russia can be persuaded against wielding its security council veto despite the intense animosity between Moscow and the west over the Ukraine conflict.

What could possibly put the EU, NATO, China and Russia all on the same side other than a problem that they all expect to face? I wonder what chips were traded to get those assurances? The borders are closing fast and it doesn’t sounds like anyone is planning on increasing aid for water infrastructure outside their borders quite yet.

Drink up! It’s only water after all.





“Transition Engineering: the Job of Change”

17 03 2015

Susan Krumdieck spills the beans on our energy and cultural future…..

On July 19th 2014, more than 140 professional engineers and university students attended the fourth annual Engineering Change humanitarian engineering conference at the University of Canterbury. Engineering Change is the national conference for Engineers Without Borders New Zealand.

Prof. Susan Krumdieck (University of Canterbury) presented “Transition Engineering: The job of change, with a Ruapehu district case study”





Meet David Korowicz

29 12 2014

David Korowicz

David Korowicz

David Korowicz was mentioned by Dave Kimble in a recent comment he left below Ugo Bardi’s Seneca cliff post, and I have heard Nicole Foss also mention him as an excellent systems analyst well worth following; so, seeing as I had not yet bothered to take the time to look him up, this morning I found a fascinating youtube film of him giving a lecture at the The New Emergency Conference.

David Korowicz documents the disturbing growth in the complexity of trade and financial networks and in the various types of infrastructure. He sees the collapse process as a system of re-enforcing feedbacks that cut investment in energy and R&D and cause supply chains and IT networks to break down.

David Korowicz is a physicist who studies the interactions between economics, energy, climate change, food security, supply chains, and complexity. He is on the executive of Feasta and an independent consultant. He is former head of research for The Ecology Foundation, and was recently appointed to the council of Comhar, Ireland’s Sustainable Development Partnership.

As an aside, but relevant to this piece, my friend Ted Trainer has had an article published about the simpler life on The Conversation you might all like to read (and support by commenting!)





Pushing up population makes us poorer

30 09 2013

Another guest post from Mark O’Connor…..

Mark O'Connor

Mark O’Connor

Economists still find it hard to focus on the infrastructure costs of population growth. These amount to at least $200,000 per extra person; and as Jane O’Sullivan elegantly shows in her Online Opinion article (http://www.onlineopinion.com.au/view.asp?article=10137&page=0), they make a nonsense of the economic case for population growth. And absolute nonsense of the case for seeing the enticement of overseas students (with the implied offer of citizwenship) as a profitable industry. ( Australian universities seem to make only about $2000 profit per overseas student per year.)

Worse still, the real infrastructure costs per extra Australian may well be more than double Jane O’Sullivan’s conservative figure of $200,000. See Will Bourke’s piece on this (http://www.abc.net.au/unleashed/39930.html).

Yet many economists learnt from teachers and textbooks that refused to believe resources could ever run scarce. (If they did, prices would go up, they were taught, and this would supposedly lead to more resources being found, or else a good substitute. There would never be Peak Oil but always Yet More Oil.)

Hence the only constraints on the world’s expanding wealth were the availability of capital (no shortage of that sloshing around at present!) and of labour. Hence they keep advising governments that population growth is good for the economy, despite evidence that the infrastructure cost is bankrupting some of the fastest growing parts of Australia, like the state of Queensland.

This piece (http://theconversation.com/standing-in-the-shadow-of-debt-in-the-sunshine-state-5820?) in The Conversation today by Mark McGovern, a senior lecturer in business, economics and finance, is particularly interesting.

He describes, graphically, how infrastructure costs have bankrupted Queensland, and left politicians with nowhere to go. The public now demands they make huge investments in infrastructure, yet he argues that Queensland’s only survival strategy is what he calls “a moratorium on infrastructure” — and that would be political suicide in the current elections. Queensland, he says, is now on “the path to penury”. It cannot even get by by selling off its public assets. That irresponsible strategy has already, he says, been pretty much carried out.

All that’s lacking in his analysis is any connection to the two related reasons that Queensland needs so much infrastructure — spiralling population growth, and reckless go-aheads for resource-extraction projects.

In McGovern’s abstract phrasing:
The fundamental problem is that expenditures have not increased returns from production sufficiently. We need to confront the inadequate yields from investments if economic and financial integrity are to be restored in Queensland and across Australia.

Or as I would put it, it’s time both governments and economists woke up that pushing up your population tends to make you poorer, and that letting (largely foreign-owned) companies sell off your non-renewable resources for a song won’t then rescue your finances.





Population growth is bad for business

26 09 2013

A guest post by William Bourke.  He is a businessman and the national convenor of the Stable Population Party of Australia.Photo of William Bourke It is the first party to focus on population and was registered by the Australian Electoral Commission on 23 September 2010. www.populationparty.org.au. Author’s website: Stable Population Party

We are often told that we need population growth for the economy. We are also told that the small business sector is the engine room of Australian business.

But like many small business owners, I find that Australia’s high population growth hurts my business by increasing my costs.

It is not just working families and first home buyers who are suffering in our cities from unaffordable house prices and rents. The small business sector is also a victim of the rising rents that flow from a growing population’s ever-increasing demand for land.

High population growth also places enormous pressure on other critical resources like water and energy. Major price hikes are the direct result.

According to the New South Wales Government, a key factor in the recent massive rises in the price of energy is the need to “keep up with a growing population and increased electricity use”. Starting from July 1 this year, bills for those on standard tariffs rise by a total of up to 64 per cent to 2013.

It’s a similar story with water. We used to have enough water for the population, even in times of drought. But a bigger population needs more water, so we built a desalination plant in NSW. Its $2 billion cost is a big factor behind the predicted 30 per cent increase in water rates by mid-2012.

To add to the population-driven cost pressures, rising property prices have been recognised as a key factor in recent interest rate rises. Urban Taskforce Australia stated that “the Reserve Bank has been using increased interest rates as a weapon against home price inflation”. Don’t forget the impact of higher interest rates on the business sector. Many businesses run on bank credit, and bank interest is a significant part of their overheads.

The red-hot debate over banks moving to increase interest rates outside of the Reserve Bank’s rate movements also has its roots in population growth.

Population growth is creating increased demand for mortgages, which banks have been at pains to state cannot be sourced from inside Australia. They need to source much of the extra credit from offshore, including wholesale credit markets. This offshore lending, which is not only driving our skyrocketing foreign debt towards $1 trillion, is also increasing the cost of borrowing for banks and therefore putting upward pressure on interest rates.

Then there are the costs to business of increasing traffic congestion. They include time costs and higher vehicle running costs. Federal Treasury has estimated these costs to be around $12.9 billion in 2010. This could nearly double by 2020 if we keep up this reckless growth. It is simply not possible to widen Parramatta Road or the Pacific Highway to make way for an ever-increasing number of cars. It’s a similar story across Australia.

All these increasing costs make it hard for businesses to stay afloat. Australian Bureau of Statistics data shows in the two years from June 2007 more than 638,000 Australian businesses shut up shop. This, like our population growth, is at record levels.

Increasing costs also make Australian businesses less internationally competitive and threaten exports. If they manage to survive, businesses must pass on these costs to the customer. We all pay more.

Some, like former politician Maxine McKew on a recent ABC TV program, simplistically argue that the local butcher will have more customers with a bigger population. What this conveniently ignores is the fact that market forces will likely introduce a competing butcher, or two, putting the existing businesses under more pressure. Once you factor in higher water, rent, energy, vehicle and borrowing costs, they will be lucky to survive, let alone increase profits.

Every way you look at it, we lose.

It’s time for governments to abandon ‘bigger is better’ mirage economics, and to implement policies that help, rather than hinder, average Australians and small business.

We don’t really need a twelve month review for Population Minister Tony Burke to “to develop Australia’s first comprehensive population strategy”. Australians can already see their quality of life deteriorating.

We now have a housing affordability crisis, an overloaded health system, water supply problems across Australia and traffic gridlock. Impoverished government budgets are struggling to cope with the massive costs for new and upgraded infrastructure like schools, roads and public transport. We are losing our best farmland and recreational bushland to housing, along with our native wildlife and biodiversity. Local suburbs are experiencing major planning conflict, a reduction in personal security and less open space for our children to play in. That’s just the tip of the iceberg.

We are on a collision course between finite resource depletion and exponential population growth. But Australia has an opportunity to rapidly stabilise – and demonstrate global leadership in sustainable population management.

The only smart and sustainable choice is to stabilise our population so we can properly protect our environment and plan infrastructure requirements. That way we have a chance to get the business conditions, appropriate economic development, services and quality of life we want for us and future generations.

Our natural increase alone, being the surplus of births over deaths, may add up to three million Australians over the next few decades. Based on recent estimates of permanent departures, zero net migration could be achieved with immigration at around 50,000, comfortably including our high per capita intake of 13,750 refugees.

So we have a choice: a stable Australia with around 23-26 million through until 2050 or an overloaded Australia.

Over to you, Mr Burke.

Originally published at http://www.onlineopinion.com.au/author.asp?id=6458

https://i1.wp.com/www.onlineopinion.com.au/images/olo_header.jpg