The End of Growth: Adapting to Our New Economic Reality (36 page)

Yet despite the country’s gargantuan expenditures on high-tech weaponry, its armed forces appear to be stretched to their limits, fielding around 200,000 troops and even larger numbers of support personnel in Iraq and Afghanistan, where supply chains are both vulnerable and expensive to maintain.

In short, the United States remains an enormously powerful nation militarily, with thousands of nuclear weapons in addition to its unparalleled conventional forces, yet it suffers from declining strategic flexibility.

The European Union, traditionally allied with the US, is increasingly mapping its priorities independently — partly because of increased energy dependence on Russia, and partly because of economic rivalries and currency conflicts with America. Germany’s economy is one of the few to have emerged from the 2008 crisis relatively unscathed, but the country is faced with the problem of having to bail out more and more of its neighbors. The ongoing European serial sovereign debt crisis could eventually undermine the German economy and throw into doubt the long-term soundness of the euro and the EU itself.
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The UK is a mere shadow of its former imperial self, with unsustainable levels of debt, declining military budgets, and falling oil production. Its foreign policy is still largely dictated in Washington, though many Britons are increasingly unhappy with this state of affairs.

China is the rising power of the 21st century, according to many geopolitical pundits, with a surging military and lots of cash with which to buy access to resources (oil, coal, minerals, and farmland) around the planet. Yet while it is building an imperial-class navy that could eventually threaten America’s, Beijing suffers (as we have already seen) from domestic political and economic weaknesses that could make its turn at the center of the world stage a brief one.

Japan, with the world’s third-largest national economy, is wary of China and increasingly uncertain of its protector, the US. The country is tentatively rebuilding its military so as to be able to defend its interests independently. Disputes with China over oil and gas deposits in the East China Sea are likely to worsen, as Japan has almost no domestic fossil fuel resources and needs secure access to supplies.

Russia is a resource powerhouse but is also politically corrupt and remains economically crippled. With a residual military force at the ready, it vies with China and the US for control of Caspian and Central Asian energy and mineral wealth through alliances with former Soviet states. It tends to strike tentative deals with China to counter American interests, but ultimately Beijing may be as much of a rival as Washington. Moscow uses its gas exports as a bargaining chip for influence in Europe. Meanwhile, little of the income from the country’s resource riches benefits the populace. The Russian people’s advantage in all this may be that they have recently been through one political-economic collapse and will therefore be relatively well-prepared to navigate another.

Even as countries like Venezuela, Bolivia, Ecuador, and Nicaragua reject American foreign policy, the US continues to exert enormous influence on resource-rich Latin America via North American-based corporations, which in some cases wield overwhelming influence over entire national economies. However, China is now actively contracting for access to energy and mineral resources throughout this region, which is resulting in a gradual shift in economic spheres of interest.

Africa is a site of fast-growing US investment in oil and other mineral extraction projects (as evidenced by the establishment in 2009 of Afri-com, a military strategic command center on par with Centcom, Eucom, Northcom, Pacom, and Southcom), but is also a target of Chinese and European resource acquisition efforts. Proxy conflicts there between and among these powers may intensify in the years ahead — in most instances, to the sad detriment of African peoples.29 The Middle East maintains vast oil wealth (though reserves have been substantially overestimated due to rivalries inside OPEC), but is characterized by extreme economic inequality, high population growth rates, political instability, and the need for importation of non-energy resources (including food and water). The revolutions and protests in Tunisia, Egypt, Libya, Bahrain, and Yemen in early 2011 were interpreted by many observers as indicating the inability of the common people in Middle Eastern regimes to tolerate sharply rising food, water, and energy prices in the context of autocratic political regimes.
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As economic conditions worsen, many more nations — including ones outside the Middle East — could become destabilized; the ultimate consequences are unknowable at this point, but could well be enormous.

Like China, Saudi Arabia is buying farmland in Australia, New Zealand, and the US. Nations like Iraq and Iran need advanced technology with which to maintain an oil industry that is moving from easy plays to oilfields that are smaller, harder to access, and more expensive to produce, and both Chinese and US companies stand ready to supply it.

The deep oceans and the Arctic will be areas of growing resource interest, as long as the world’s wealthier nations are still capable of mounting increasingly expensive efforts to compete for and extract strategic materials in these extreme environments.
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However, both military maneuvering and engineering-mining efforts will see diminishing returns as costs rise and payoffs diminish.

Unfortunately, rising costs and flagging returns from resource conflicts will not guarantee world peace. History suggests that as nations become more desperate to maintain their relative positions of strength and advantage, they may lash out in ways that serve no rational purpose.

Again, no crisis is imminent as long as cool heads prevail. But the world system is losing stability. Current economic and geopolitical conditions would appear to support a forecast not for increasing economic growth, democracy, and peace, but for more political volatility, and for greater government military mobilization justified under the banner of security.

Population Stress: Old vs. Young on a Full Planet

Throughout the past two centuries economic growth has translated to an increased capability to support more humans with Earth’s available resources. More energy, more raw materials, more jobs, more trade, better sanitation, and key medical advances have all contributed to higher infant survival rates and longer life expectancy in general. Human population growth can be seen as an indication of our success as a species.
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But now, as economic growth ends, higher population levels pose an enormous vulnerability. Declining energy, declining minerals and fresh water, and reduced global trade will challenge our ability to maintain existing food and public health systems, perhaps even in currently wealthy countries.

August Comte, the 19th-century French sociologist, famously declared that, “demography is destiny.” During the coming post-growth decades, the nations of the world will face somewhat differing challenges depending on their size of population, rates of population growth, median age, and degree of urbanization.

Countries with large, youthful, and growing urban populations will be hardest hit. Young people will face lack of economic opportunity as trade contracts. Also, countries with young populations will see continuing population growth even if efforts are undertaken now to rein in fertility, simply because the bulk of the population will be in the child-bearing age range for the next two or three decades.

Countries with stable or declining populations (this includes most western European nations) will see aging populations, and thus a declining proportion of the population will consist of youthful workers (as we saw in the case of China). Some economists see this as a serious problem, and as a result Germany is offering cash financial incentives for couples to reproduce. However, this merely puts off inevitable process of adjustment to the end of population growth.

The end of economic growth will pose demographic challenges to all societies. But having more people will result in a bigger challenge than having fewer.

In a low-income society, when people have many children they tend to spend whatever money they have on keeping those children fed, so there is little left over to invest in future economic productivity (including education for children). This is a situation that tends to lead to continuing poverty. If there is no surplus income, there is nothing for the government to tax, so governments don’t expand infrastructure: they don’t build roads to rural areas so farmers can get their product to market — or water treatment facilities, or electricity grids, or schools. If farmers can’t get their products to market, they may eventually give up and move to the cities where they strain whatever support infrastructure does exist. One of the best hopes for a society in this kind of bind is to reduce fertility.

Since World War II, eight countries (Tunisia, Japan, South Korea, Singapore, Taiwan, Barbados, Hong Kong, and Bahamas) have achieved the shift from being listed as “developing” to “developed” by first bringing fertility down through strong family planning programs. Once fewer children were being born, families found that they had money left over after paying for basic necessities, and this led to capital formation through personal savings. Demographers call this the “demographic dividend.”

The continent of Africa will probably encounter the worst demographic challenges of any region in the decades ahead. Its population is expected to double its numbers by 2050, according to the UN. By then, Africa’s urban population may have tripled, with 1.3 billion living in cities. These trends of rapid population growth and rapid urbanization cannot be sustained in a world of declining energy, scarce water, and changing climate, and will soon become enormous liabilities as today’s quickly growing slums turn into centers of even greater human misery.

South Asia will also encounter enormous problems. Especially vulnerable is Pakistan, whose rapid population growth is already undermining access to education and medical facilities while posing serious health problems for women.
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The US has the fastest growing population of any industrialized country — mostly due to immigration (though immigration rates have declined in the last couple of years, probably due to the economic crisis). Already a hot-button issue, immigration could become even more of one as the economy contracts. But further waves of immigrants are possible if Mexico’s economy fails due to declining revenues from oil production.

Further declines in the US economy will shift public opinion toward wanting to restrict immigration and population growth. Every survey since the 1940s has shown that a majority of Americans favors reducing immigration, yet during that time legal immigration has quadrupled (it doubled during Bush I and again during Bush II). Much of the support for liberalizing immigration policy has come from the Democratic party (in its calculus, more immigrants mean more Democrats), as well as from the construction industry (more immigrants equal more housing starts), the food industry (which depends on low-paid seasonal farm workers), and the US Chamber of Commerce (immigrants reduce labor costs).

Sadly, the debate has failed to take account of one key question: What is the population level the US can sustain? By most accounts, the country is already overdrawing resources, so that future generations will have restricted access to fresh water, fertile soil, and useful minerals. Adding more people through immigration simply steals further from our grandchildren. Gains in the efficiency with which resources are used may help temporarily, but population growth erases those gains over the long run.

For all nations, immigration laws need to be based on reasonable targets based in turn on estimates of human carrying capacity. Those laws must deal humanely with extreme circumstances, including provisions for refugees — such as climate refugees, whose numbers will likely multiply dramatically in the years ahead.

Meanwhile, declining economic growth will probably lead to increased demographic competition between the old (who will be seen by the young to have used up the world’s resources) and the young (who will be seen by the old as a threat to savings and economic stability).

In the US, this competition may already be taking political form through the Tea Party movement, whose main agenda is to end government borrowing, bailouts, and stimulus packages, and to cap the national debt. These priorities are attractive to older, wealthier citizens who are concerned about protecting their savings from inflation — which would tend to benefit younger people saddled with debt.
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Meanwhile, younger citizens are unhappy looking toward a future in which college and home ownership are no longer affordable and few jobs are available.

The population problem is solvable by making family planning and contraception freely available, changing cultural norms (as is being done by Population Media Center), and advancing women’s rights.35 But consider a best-case scenario: In a dozen years, given proper funding, virtually all countries could achieve a replacement level of fertility. Still, even after that monumental accomplishment, it would be another 70 years before the world as a whole would achieve zero population growth or begin a controlled decline.

The population issue has been highly politicized, and those who argue for controls on population growth are often demonized as elitist, racist, or misogynist. This is tragic, because the ongoing debate has caused humanity to put off dealing with the problem for far too long. And it is the poor, and especially poor women and children, who will pay the price for this delay.