Chinese Economics Thread

[Franklin]

The otherside of the coin is how do you think China will sustain a higher population growth while issue's like arable land and water is already becoming serious issue's in China. Where are the jobs, the food, the resources going to come from to sustain them ? How do you think that China and the rest of the world can sustain ever growing numbers of human beings demanding ever more resources from the planet ?

[Geographer]

The other side of the coin is how do you think China will sustain a higher population growth while issue's like arable land and water is already becoming serious issue's in China. Where are the jobs, the food, the resources going to come from to sustain them ? How do you think that China and the rest of the world can sustain ever growing numbers of human beings demanding ever more resources from the planet ?

I'm glad you raised this point because it's a common misconception. Food production around the world has been rising non-stop since the beginning of human civilization. Food production in the last century has growth faster than population. Let me say that again: food production has increased faster than population around the world. It is no surprise then that per capita income around the world has also increased more or less non-stop for the last fifty years. The empirical record has directly refuted Thomas Malthus and the other neo-Malthusians like Paul Ehrlich who brainwashed the UN and many governments including India and China.

This was all achieved by improved technology and economic systems that more efficiently allocated resources. Huge increases in per-acre yield and per-capita yield have come from widespread use of fertilizers, modern irrigation systems, pesticides, tractors, crop rotation, and genetically-modified crops.

Where are the resources for future global population growth? Everywhere! World trade has enabled China and India to buy what they cannot produce locally. When you consider how inefficient agriculture is practiced in India, Africa, and Latin America, you realize how much room for growth there is in simply modernizing existing farms and ranches. If global warming opens up vast expanses of Canada and Russia to agriculture, that is another way to provide for population growth.

Where are the jobs going to come from? From a dynamic market economy! A market economy expands and contracts according supply and demand pressures. Labor is a commodity, and if there is a surplus of labor that will push down wages and increase of the number companies willing to hire. I can predict the neo-Malthusians' response: So population growth will depress global wages? In the medium and long-run, absolutely not. The empirical record is very clear that global wages and standards of living have increased around the world simultaneously with rapid population growth.

But what about the Earth running out of resources? This is the last card neo-Malthusians play. The fact is, commodity prices world wide have decreased with adjusted for inflation over the last fifty years. If there was an imminent shortage of commodities, then current prices would be driven sky high by speculators. But other than short spikes due to geopolitical risks, there is not long-term hoarding of commodities.

Let's suppose there is an imminent shortage of commodities. In that case, speculators would hoard commodities and drive the price up. When the price rises, it encourages conservation and exploration. Such was the case for oil in the 1970s. Oil prices rose when Arab producers embargoed oil. Americans responded by purchasing more fuel-efficient cars while oil companies got busy exploring for oil in the North Sea and other places. A commodity shortage would be rectified by market forces.

[Geographer]

I started a new thread in the Members' Club Room for discussions on China's demography and the One Child Policy. I hope you all join the discussion!

[Franklin]

Geographer

I'm glad you raised this point because it's a common misconception. Food production around the world has been rising non-stop since the beginning of human civilization. Food production in the last century has growth faster than population. Let me say that again: food production has increased faster than population around the world. It is no surprise then that per capita income around the world has also increased more or less non-stop for the last fifty years. The empirical record has directly refuted Thomas Malthus and the other neo-Malthusians like Paul Ehrlich who brainwashed the UN and many governments including India and China.

This was all achieved by improved technology and economic systems that more efficiently allocated resources. Huge increases in per-acre yield and per-capita yield have come from widespread use of fertilizers, modern irrigation systems, pesticides, tractors, crop rotation, and genetically-modified crops.

The problem is that the arable land around the world is not equally distributed. China has about 6% of the world's arable land but 19% of the worlds population. And you can't forget the political element of food if you have a large population that is depended on imported food you become vulnerable politically. Just look at Iraq in 1990 before the invasion of Kuwait the Iraqi's had no concerns about food after the invasion the UN imposed sanctions on Iraq that cut off their food imports and malnutricion sky rocketed that in large part has helped to cause the death of more than 500,000 iraqi's under the UN sanctions regime.

Where are the resources for future global population growth? Everywhere! World trade has enabled China and India to buy what they cannot produce locally. When you consider how inefficient agriculture is practiced in India, Africa, and Latin America, you realize how much room for growth there is in simply modernizing existing farms and ranches. If global warming opens up vast expanses of Canada and Russia to agriculture, that is another way to provide for population growth.

Yes, but global warming will also destroy a lot of the arable land that exist around the world today so there will be no aggregate gain on arable land from global warming. In fact i believe that global warming will lead to a net loss of arable land around the world.

Where are the jobs going to come from? From a dynamic market economy! A market economy expands and contracts according supply and demand pressures. Labor is a commodity, and if there is a surplus of labor that will push down wages and increase of the number companies willing to hire. I can predict the neo-Malthusians' response: So population growth will depress global wages? In the medium and long-run, absolutely not. The empirical record is very clear that global wages and standards of living have increased around the world simultaneously with rapid population growth.

Wages in the developed world has been suppressed in America the income of the average worker has dropped 32% adjusted to inflation from 1980 and in Europe things are not that much better. This is the result of the western economies opening up their economies for competition with what used to be called the third world and today known as the developing countries.

But what about the Earth running out of resources? This is the last card neo-Malthusians play. The fact is, commodity prices world wide have decreased with adjusted for inflation over the last fifty years. If there was an imminent shortage of commodities, then current prices would be driven sky high by speculators. But other than short spikes due to geopolitical risks, there is not long-term hoarding of commodities.

Let's suppose there is an imminent shortage of commodities. In that case, speculators would hoard commodities and drive the price up. When the price rises, it encourages conservation and exploration. Such was the case for oil in the 1970s. Oil prices rose when Arab producers embargoed oil. Americans responded by purchasing more fuel-efficient cars while oil companies got busy exploring for oil in the North Sea and other places. A commodity shortage would be rectified by market forces.

The world only has finite resources we don't have infinite resources on this planet and one day we will run out of them. And no market mechanisme is going to change that. Unless we are going to start mining the moon and beyond.

[Geographer]

The problem is that the arable land around the world is not equally distributed. China has about 6% of the world's arable land but 19% of the worlds population. And you can't forget the political element of food if you have a large population that is depended on imported food you become vulnerable politically. Just look at Iraq in 1990 before the invasion of Kuwait Iraqi's have no concerns about food after the invasion there where UN sanctions imposed on Iraq and malnutricion sky rocketed and helps in large part to the deaths of more than 500,000 iraqi's under the UN sanctions regime.

Hong Kong has 0% of the world's arable land and 6 million prosperous people. Singapore has 0% of the world's arable land and 4.5 million prosperous people. How can those city-states be so wealthy and successful with no arable land? They trade for it! Their economies are so productive in other industries like financial services that they can exchange financial services for food from food-exporting countries like Thailand, Vietnam, Brazil, and the United States.

Wages in the developed world has been suppressed in America the income of the average worker has dropped 32% adjusted to inflation from 1980 and in Europe things are not that much better. This is the result of the western economies opening up their economies for competition with what used to be called the third world today known as the developing countries.

I'm skeptical of that statistic, but if true, I would guess that is from decline of blue collar union industries like mining and manufacturing. Ultimately, people of virtually every nationality are better off in 2012 than 1980, and will be in 2022 than 2012, and will be as long as we see population growth and a commitment to market economies. When I say better off, I mean they live longer, have greater access to food, information, and consumer goods. The quality of consumer goods has hugely increased across the board. If you're trying to make an argument that population growth in the United States has lowered the standard of living, and that we'd be better off rolling back the clock to some point in the past, that is an extremely tough argument to win.

Meanwhile, wages and standards of living for people in the developing world have increased a lot.

The world only has finite resources we don't have infinite resources on this planet and one day we will run out of them and no market mechanisme is going to change that. Unless we are going to start mining the moon and beyond.

How many resources are on this planet? Do you have any idea? The mass of the Earth is enormous per capita. I think it's safe to say that this doomsday scenario is way, way in the future, if at all. And if it comes, the laws of supply, demand, and market pricing have a solution just as I described. Before the Earth runs out of resources, resource companies and speculators will increase the price as resources become scare. Scarcity causes higher prices which causes conservation, innovation, and future exploration.

There's an easy way for all the neo-Malthusians who predict ecological doom to put their money where their mouth is: buy futures in commodities. If the Earth really is running out of commodities in the near-future, you can expect the prices to rise. Futures would enable the holder to purchase those commodities at a set, presumably lower, price and make easy profit.

[montyp165]

If population grows faster than technology can compensate for it coterminous with changing environmental stresses, that can cause massive disruption to environmental systems and population sustainability before a technologically sustainable balance can be built. This also doesn't take into consideration percentage of productive labor in a population, so it isn't just a simple either/or type of situation.

[lostsoul]

Exposing-chinas-shadow-banking-system

Read the detailed pdf.

[jackliu]

I posted this in the military forum, but I think this is where it is headed now.

Population is only one of the factor, it is by far not the only "key"

A large population that is uneducated and poor have absolutely no positive effect for the nation, in fact it is more of a burden than anything else.

Only when you have a population that is combined with many other factor means adding strength to the nation. China's one child policy when first put into effect was a very wise one, they effectively halt population growth while increasing the GDP, that means more money for less people and everyone's standing of living goes up. This also means only one child per family means that child will receive the best resource possible, such as education, nourishment etc...which will play a big role in developing the nation.

An college grad is more useful than 6 children who never finish primary school, and getting drafted by their parents to work as free child labor.

And yes, right now it is a good time for China to stop the one child policy because the single child themselves have grow up and having children, most of them have reached middle class which means when they bring up their own children, they will know how to raise them to be effective part of society. And we already seeing the one child rule is relaxing already. For example, if you are a single child, you can now have 2 children, but they must be 5 years apart. Correct me if I am wrong.

So in the end what I am trying to say is, population growth for the sake of growth only leads to disaster, in fact there are more than a few country on earth that is showing the effect from this, I am not going to name names, but it does not take a genius to figure it out.

[jackliu]

As for Geographer's claim that earth can support unlimited amount of people is a myth. I do acknowledged what he is saying that there has been some major technological advancement which allow the earth to supported unprecedented amount of people than before, such as the revolution in agriculture which make crops to produce as much as 20 times more yield, or the fact that we have discovered this extremely cheap and efficient energy source such as petro oil.

But the fact is, if you really want to take a closer look, all of this revolution in technology is not sustainable, for example agriculture business today is almost sole depends on petro. Fertilizer is largely made of petro product, US's large agriculture mechanization solely depends on fissile fuel, so is transportation and distribution of food. If oil were to ruin out tomorrow, the world will suffer a large scale of famine which have never seem before.

In fact, this is not the first time in human history that that excessive productivity have lead to concentration of cities, and it is not the first time that when the energy that is being used disappears, the city disappears too as a result. For example there has been archaeological discovery that in Ancient American the Maya civilization had a city as large as half million people 1000 years age. This is absolutely amazing in the age of low technology, when you think of city, you should know just how much extra food that is needed to sustain them, when crop yield was very low in the ancient times, in order to sustain that much people into city which produces no food to sustain themselves is an incredible accomplishment. What drove this city growth is the excessive productivity of agriculture in the country side, and in order to feed the ever growing city, they have to cut down more tree which unbalanced the ecosystem, and in the end it all crash down, the farm land are not long producing anything due to soil erosion and environmental degradation, they can no longer sustain the city, so the city disappeared.

Now compare to modern day society, Maya's unsuitable resource is the enlivenment, and ours is fossil fuel and others. Maya's side effect of unchecked growth is the depletion of the rain forest, our side effect is the ever rising CO2 in the atmosphere, depletion of ground water, the ever polluting of soil with petro by products, the genetic modification of agriculture into fewer and fewer variety which make it highly likely to disease outbreak etc.. anyone one them if left unchecked can single handily have serious consequence on the life as we know it today, and a combination of them outbreaking at same time will certainly destroy modern human civilization as we know it today.

Now, the argument for the other side of this is technological growth, for example, what if Mayan discovered industry and oil, would they have kept going on building their cities? Answer is of course they can. When you look at human progress, the only determine factor in all of this is one thing, technology, not government, not religion, but teleology is the only thing that is really driving the growth of human race. And yes, in theory as long as you can keep up with technology one step ahead before the side effect of unsustainable growth happens, then yes, human society can grow forever, but history have shown that over and over again, that the side effect always catch up faster than technology (why didn't the Mayan stop cutting down the forest? Why do we still pollute like there is no tomorrow?), which will result in a big collapse, and in the collapse we are reborn over and over again with new technology. One thing have not change for us, is human nature, we are essentially no different than our ancestor of 2000 years ago, We are just as short sighted as our ancestors, our moviation, our desires are unchanged etc... so the fact they did't stop it, what make you think we will do better? To think that today we can grow our technology faster than our consequences is wishful thinking, because if we only have one side effect, we can deal with it, but the past 200 years, we have grow to the point of today's modern world is based on more unsustainable resources than ever before in past human history, we don't just have one or two unsuitable energy resources, we now have dozens of them, and to overcome them all at the same time, is going to be impossible.

Nothing in this earth is free, you cant grow the populations forever without suffering the consequences, to think that you can is pure human hubris. Just because base on the past 200 years of earth trend you think can last forever is nothing sort of wishful pride.

[Equation]

In Jackliu's arguments to Delf, I have to say Yes and NO. Yes human population can grow forever on Earth when the number of population are divided equally among each other according to the resources on Earth, it's almost infinite. NO, because humans are humans, there's always will be inequality of used of resources by one group of people over the other. If humans can live without internet and under the lowest acceptable carbon per people, then it's possible for the Earth to support a large population. If you gather all the people in the world together shoulder to shoulder for a giant group picture, the total land area will be the size of LA County. Now there's plenty of room for everybody to spread out even along the warm climate areas. It's not just the results of technology but the thirst for empire building that out of some divine intervention that's made it impossible to share the Earth's resources more efficiently. That's my theory.

[jackliu]

In Jackliu's arguments to Delf, I have to say Yes and NO. Yes human population can grow forever on Earth when the number of population are divided equally among each other according to the resources on Earth, it's almost infinite. NO, because humans are humans, there's always will be inequality of used of resources by one group of people over the other. If humans can live without internet and under the lowest acceptable carbon per people, then it's possible for the Earth to support a large population. If you gather all the people in the world together shoulder to shoulder for a giant group picture, the total land area will be the size of LA County. Now there's plenty of room for everybody to spread out even along the warm climate areas. It's not just the results of technology but the thirst for empire building that out of some divine intervention that's made it impossible to share the Earth's resources more efficiently. That's my theory.

Few month back I read an Yahoo article, there was a woman who had like 16 children already and still planning to have more, and many people were questioning her "judgement", so obviously one of the question is earth overpopulation, which she responded by saying if everyone one of earth's people were to stand by shoulder by shoulder, they would fit in the county where she live in.

But that is obviously a misdirection, just because I can fit 30 dudes in my apartment, dose not mean I want to live with 30 people. You have to calculate just how much resources each person is requiring from earth to survive. And are those resources being consumed sustainable, and what effect they have on environment and it is feedback effect as caused by it is side effect etc...

And yes, if humans were perfect machine that calculate optimum resources needed for each individual then yes, in theory we can have a sustainable large population, but that is not going to happen, simply because we human are humans, we all have our individual selfish goals and desires, that is what make us unique from other animals in the first place. That is why ideology such as communism fails.

But this does not mean it is no possible for us to come up with a better arrangement in which we take each other and earth's environment into consideration, but that is for our children's children generation to figure it out... if they ever figure it out before they messes up earth once and for all.

[Geographer]

A large population that is uneducated and poor have absolutely no positive effect for the nation, in fact it is more of a burden than anything else.

Not true, a large population benefits a country by providing immense potential for growth. Potential attracts foreign investment. Potential is why China was able to negotiate extremely favorable deals from foreign companies who wanted to sell to the China market. Foreign companies in the high-speed rail sector for instance were willing to transfer a lot of technology to Chinese companies in exchange for a foot in the door of the Chinese market. Foreign companies investing in China in the 1980s and 90s usually had to establish joint ventures with Chinese companies. Foreign companies would have preferred not to do this but did because of China's vast potential.

China's one child policy when first put into effect was a very wise one, they effectively halt population growth while increasing the GDP, that means more money for less people and everyone's standing of living goes up. This also means only one child per family means that child will receive the best resource possible, such as education, nourishment etc...which will play a big role in developing the nation.

An college grad is more useful than 6 children who never finish primary school, and getting drafted by their parents to work as free child labor.

China's economic boom after 1978 came from market reforms and foreign investment, not having fewer children. China's post-1970s economic boom was only possible because of decades of high population growth that yielded a large, young population. The One Child Policy started in 1978. China's economic boom started in 1979 with the creation of the Special Economic Zones in Guangdong, and continues because of large foreign and public sector investment.

Jackliu and others keep thinking of children as burdens but actually children are an investment. A couple that has a child invests time and money into the child for 18-22 years, then the child grows and gets a job. The child produces more for society, as measured by their income, throughout their life than the parents invested in the child.

Investments create temporary declines in standards of living. When someone invests in night classes to get an MBA, they are sacrificing their nights and weekends to increase their future earning potential. When a government invests in a new port, they have to raise taxes which means less money in the pocket of citizens. The citizens accept it because it will increase their earning potential in the long-run.

Reducing the youngest demographic cohort, children, is equivalent to reducing investment in infrastructure or education. It creates a medium-term boom of 20-30 years because the government does not have to spend as much on education, and parents don't have to take time off from work to take care of children. But what happens when the parents get old and need someone to take care of them? The government must borrow or increase taxes. And what happens when the parents die and only one child replaces them? GDP will start to fall. This is the situation Japan finds itself in.

One argument against the One Child Policy that hasn't been given enough attention is the moral issue: what right does the Chinese government have to limit family size? If a couple want to have more babies the government is wrong to harass them, shame them, and practically force them to have an abortion. The methods by which the Chinese government enforces its One Child Policy are despicable. I don't know how any of those Family Planning officials sleep at night.

[Geographer]

I use a separate post to address the issue of global "overpopulation".

But that is obviously a misdirection, just because I can fit 30 dudes in my apartment, dose not mean I want to live with 30 people. You have to calculate just how much resources each person is requiring from earth to survive. And are those resources being consumed sustainable, and what effect they have on environment and it is feedback effect as caused by it is side effect etc...

No one has any idea how many mineral or agricultural resources the Earth has. Estimates of oil reserves, for example, keep rising every 10 years. Neo-Malthusians have been predicting world wide famine and collapse for a long-time and they've always been wrong. I would not trust anyone who claims to have an accurate and precise account of the world's oil reserves, or any mineral reserves for that matter. Running out of mineral resources is a threat so remote, so far out, that it's not even worth worrying about.

The oceans are one exception because nobody owns the oceans and the oceans suffer the "tragedy of the commons". When nobody owns something, people tend to misuse it because if one fisherman does a good thing and conserves the fish, someone else will over-fish and the result is the same. But that's not a problem with farmland or minerals because someone or some government own that.

Mineral and agricultural resources can, for all intents and purposes, be treated as unlimited when making estimates of how many people the Earth can support. This is especially true for China which can buy food and minerals from anywhere in the world to support its growing population. As the population grows and incomes increase, demand for food will grow. As demand grows, prices will rise to establish an equilibrium between supply and demand. As prices rise farmers will expand the areas of cultivation, use more technology to improve yields, and invest more in R&D. Production will rise and prices will fall to a new equilibrium.

No one has mentioned the benefits of population growth. Higher population creates more opportunities for specialization and trade. If the population of Earth was 2, then those two people would have to do everything themselves: plow the field, hunt animals, fish, build their house, sew their clothes, etc. There would be no time for technological progress and intellectual pursuits.

Now imagine there are 1000 people in a village on Earth. That village can now have some specialization of labor. Specialization of labor increases productivity because a worker practices and improves themselves doing the same thing. A surplus of food allows for new jobs: surveyors, researchers, astronomers to track the seasons and tell the farmers when to plant, etc.

Now imagine there are 1 million people a country. Most people are still farmers or fishermen but there is a large class of administrators, engineers, and writers building up civilization and improving standards of living. Population growth leads to technological and intellectual progress. In other words, Thomas Malthus, Paul Ehrlich, and other Malthusians are perfectly wrong in their analysis of population growth. Population growth improves technological progress and living standards in the long-run (over 30+ years), it does not harm them.

[Equation]

One argument against the One Child Policy that hasn't been given enough attention is the moral issue: what right does the Chinese government have to limit family size? If a couple want to have more babies the government is wrong to harass them, shame them, and practically force them to have an abortion. The methods by which the Chinese government enforces its One Child Policy are despicable. I don't know how any of those Family Planning officials sleep at night.

What about the people that are against abortion at all, and who will try everything stop women from having abortion through moral cry of shame, trying to get government to make it illegal, and sometimes in a rare case of violence against doctors who performs them?

As for China's One Child Policy, it has some positive and negative affects on society as a whole. It did prevent a growth population of 400 million extra people that China has a burden stress to feed, clothe, and house them. On the flip side, there are less young people around and an imbalance of boys to girls ratio. In my opinion there is a need to be a limit on human population or some kind of control, because not everyone can afford an army of "Octuplet mom" running around not working, meanwhile the rest of us has produce goods and means for her family alone.

[Geographer]

What about the people that are against abortion at all, and who will try everything stop women from having abortion through moral cry of shame, trying to get government to make it illegal, and sometimes in a rare case of violence against doctors who performs them?

Those people are despicable too because the only person who should make a decision on having an abortion is the woman herself. I do not think abortion should be illegal.

As for China's One Child Policy, it has some positive and negative affects on society as a whole. It did prevent a growth population of 400 million extra people that China has a burden stress to feed, clothe, and house them. On the flip side, there are less young people around and an imbalance of boys to girls ratio. In my opinion there is a need to be a limit on human population or some kind of control, because not everyone can afford an army of "Octuplet mom" running around not working, meanwhile the rest of us has produce goods and means for her family alone.

Children are an investment. With any investment, there is a period of time in which living standards decrease before the investment pays off. Take the example I give of a working adult investing in an MBA. That person takes night and weekend classes, hurting their social life and creating a huge burden on them. But when that person gets the MBA it increases their earning power and the investment pays off in a few years.

The same is true for children. Parents and the government invest a lot of money in children between the ages of 0-22, but then afterwards they get a job and produce for another 40-50 years. All that money pays off in the long-run.

Have you ever realized that those octuplet children, so scorned and bemoaned by many, will grow up to pay taxes the government needs to take care of us all in old age? If those children grow up to become doctors, nurses, and teachers, will you still consider them a burden on society? If those children grow up to work for your business and help make you money, will you still consider them a burden on society? If the children grow up to be awesome people, or even just normal citizen taxpayers like most of us, we owe the mother a debt of gratitude for contributing to much to society.