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Issue #63

Last Update April 30, 2009

Business Planning for Stability by Sten Grynir April 20, 2007 Ever since the Renaissance, and especially since the beginning of the Industrial Age, economic growth has been predicated on three factors, expanding population, improved technology and opening up new lands for exploitation. We are now seeing the end of the era in which two of these three factors play a part. World population is predicted to peak in 2070, and those land areas not yet urbanized, agriculturalized or industrialized are increasingly recognized as important ecological resources whose destruction would have enormous negative consequences. This coming era of population and geographic stability has short term negative consequences, but enormous long-term benefits. These positive benefits, however, will not be realized unless technology continues to play a significant part.

Along with the economic benefits of an expanding population, we have suffered from the drawbacks. An ever increasing burden on natural resources (petroleum, minerals, timber, etc.), increasing devastation of the environment (sewage, air pollution, reduction in natural ecologies on land and in the water), and demands on governmental and private sector social services (pensions, health care) are some of the penalties paid for a population-fueled expanding economy. To some extent, international conflict has been exacerbated by enlarging populations as well.

The short term effects of the peaking of populations around the world will be unpleasant, and will last for about fifty years. Economies will stall or begin to decline, and transfer payments such as social security, where younger workers pay part of the cost of benefits accruing to the previous generation, will become more burdensome. With proper planning, however, these short term problems can be managed, and long term benefits ushered in. The planning window, though, is only about ten years in length. If proper actions are not taken within that period, the downside will be steeper and the upside delayed.

What are the long term benefits that will accrue if the short term is handled correctly? A lighter environmental footprint, lower demand on infrastructure and higher standards of living are but three of the most likely advantages. Progress and economic growth will not come to a halt just because populations stop growing, since the effects of technological advance and social peace and security will ensure that these will continue.

What planning must be done to get us through the hard times and bring us to the good times on the other side? At a minimum, at least seven things are needed:

-Social policies to relieve the economic stress caused by an aging population. For wealthy nations such as the US, this may include encouraging, rather than discouraging immigration, to maintain a flow of young workers whose taxes support Social Security and medicare, whose labor keeps the economy flowing, and whose economic demands keeps industry, construction and other economic sectors perking.
-Educational policies to maintain an educated populace capable of making the technological advances needed to compete in the world economy and provide economic growth without the population stimulus. Education is also needed to prepare our citizens for the changes they will face as part of a stagnant or declining population.
-Infrastructure changes, in the short term to provide transportation, housing, medical care and other services to a population that is simultaneously aging and immigrant, and in the long term to take advantage of the land, resources and infrastructure no longer needed once the population declines in order to raise the general standard of living.
-Economic changes to reflect a society in which individual labor is less required to provide goods (and, to some extent, services), while individual ingenuity, talent and inventiveness are as necessary as ever.
-Governmental changes, to reflect the global economy and the lack of national boundaries for information and communication, and the growing equalization of economic status and opportunity across the world.
-Aspirational changes to prevent stagnation of thought and deed. The world of steady-state or declining population must have a frontier to aspire to cross. National or geographic frontiers will no longer provide this important motivation. We must have an "outside" to push against, whether that outside is physical, as in the exploration and settlement of the moon and other planets, or philosophical, or some combination of the two.
-Environmental changes, taking advantage of reduced population to heal some of the damage we have done. Whether we follow the Jewish precept that our purpose on Earth is to heal the universe, or the Christian concept of stewardship, or the Buddhist idea of the unity of all things, or the rationalist/scientific implications of global warming and ecological degradation, or the principals of any of the other major religions, we will be impelled and empowered at this time to benefit our planet and its inhabitants.

If we don't begin thinking about these issues now, the short run difficulties will become short run disasters, and the long run benefits may never materialize..

New York Stringer is published by NYStringer.com. For all communications, contact David Katz, Editor and Publisher, at david@nystringer.com