Sunday, May 4, 2008

Five Short Blasts, by Pete Murphy

Five Short Blasts (Open Window Publishing, Clarkston, MI (2007)) is a very interesting economic book from a non-economist. Mr. Murphy is actually a former engineer who was laid off and began studying economics on his own. His book is well-researched and uses his technical background to analyze charts and statistics from several government websites. His major points are these:

1. We need to reduce population and immigration, even legal and family-based immigration, to have a better quality of life.

2. Reducing population would allow us to preserve more of the environment and bring us closer to nature.

3. We should have higher tariffs on products from densely-populated countries.

4. The more densely populated we become, the less we are able to afford and buy larger products; larger products such as cars and boats include major commodities, such as timber, steel, and other items that require more processing or more refining; the nature of the materials put into heavier and larger consumer items requires more people and therefore more jobs; thus, as we become densely populated and live in smaller spaces, our ability to buy larger items diminishes, causing a loss of jobs, especially in manufacturing. [This is his unique point--not too many economists have explored the relationship between consumption of heavier, larger items and a reduction in available land.]

5. When less densely populated countries trade with densely populated countries, the less populated country always loses, because the higher population in the other country creates more competition and therefore lower wages, thereby bringing down the standards of the less dense nation. [In other words, Murphy doesn't believe in Ricardo's "comparative advantage" principle.]

6. On page 189, Murphy comes up with a great idea to preserve our food supply--he says that rather than rely on imports or an unstable supply of immigrant workers, we should establish a "Farm Corps," like the Peace Corps, "for high school and college students to earn decent wages working the fields during the summer." I think this might actually work, assuming the wages were high enough to attract at least high school students. I'm not so sure college students would be involved, unless there was some loan forgiveness included. I am also skeptical of yet another farm subsidy program, but this one seems more innocuous than paying farmers not to grow food.

Having summarized Murphy's ideas, his book suffers from a fatal flaw: he doesn't account for poorer nations ever becoming affluent or getting a middle class. If only 10% of the Chinese population enters the ranks of the middle class, that's 120 million people who can buy our products and who might appreciate the higher value and safety that they provide in a more regulated environment. Murphy seems to think that even as these countries get more dollars to spend, they will all somehow continue to remain permanently poor. His thinking is that because there is a much higher supply of labor in more densely populated countries, there will always be more people willing to work for meager wages, so a country like the U.S. can never really be an equal trading partner with a country like China or India. But again, the entire country doesn't have to get rich in order to balance the trade deficit--if only 20% become middle class, that's enough to create a population that will hopefully want to buy iPhones and Dell laptops and Brooks Brothers suits.

That's another flaw in Murphy's thinking--even if larger items become less attractive as available land decreases, there are plenty of high margin products that are in demand, such as iPhones. The real problem is the regulatory environment in less developed countries, which hurt U.S. revenue by not protecting IP rights. That issue has nothing to do with population.

Also, the U.S. isn't anywhere near optimal population yet--almost the entire Midwest needs more population, not less, and is projected to lose even more population in coming years. With the Medicare deficit, we need more immigrants, not fewer, to help support these entitlement programs. The key issue is what kind of immigrants we want, and how to get immigrants who are law-abiding and who will pay taxes. So far, the family-based and company-based programs have seemed to work just fine in attracting hard-working immigrants. Yet, Murphy wants to reduce almost all immigration, even legal immigration.

Overall, Murphy has a unique perspective by including demographics with an economic analysis. If you want to read a Malthusian who laments the good old days, when lines were short and people could drive easily on sparsely populated roads on cheaper gas, you'll love Murphy's book. If, however, you believe that this country needs more people to cover the entitlement programs and debt we've run up, and that we're not densely populated yet, you might not be converted to his ideas. Yet, his overall point is correct--the smaller the population, the more you can control growth in a steady progression that leaves fewer people behind. But if that's the main goal, there are other ways of achieving it.

I'm not sure if job displacement and income inequality can be solved by changing immigration or population rather than analyzing how to further women's rights. If you really want to reduce population and reduce the trade deficits between countries, you have to give women jobs and contraception in more densely populated countries. Countries that promote a woman's right to work provide more options for women, who then have access to more money and more power, and usually choose to have fewer children. This creates two benefits: one, the brains of about half of the population get utilized more in such countries, leading to more stability; and two, by having fewer kids and another income, families can invest more in their children, which makes society more stable. To his credit, Murphy makes the same point I do about limiting births by talking about contraception and education at the end of his book, where he also talks about his Catholic faith. But he continues to stick to his idea that if we want to have a better quality of life, we need to take affirmative steps to reduce population by limiting immigration. See page 198: "[Y]ou only have three choices when addressing immigration: a) balance it with emigration, b) tell U.S. citizens they can have fewer children in order to make room for immigrants, or c) drive the death rate higher. The first of these is the only logical choice." In that context, Murphy is clearly anti-immigrant, but in true engineer form: "I know that the things I've proposed may sound like the rantings of a xenophobic madman.. [But] [i]t's a simple matter of math and the need to stabilize our population." That's probably not the right path to take in an era of massive public debt. Providing more jobs and funds to women in all countries, especially less developed countries, would reduce population more effectively. Still, you have to give Murphy credit for trying to sound five warning blasts about what he feels is the denigration of the way of life he used to know, when this country was smaller, more manageable, and seemingly less harsh to its citizens.

1 comment:

5sbauthor said...

Thanks for the review, K_Yew. It seems you're not convinced by the theory I've proposed in "Five Short Blasts" and that's OK. I appreciate any and all reasonable discussion, including dissenting opinions.

There are a couple of points you've made though where I apparently didn't make my point very well, so I'd like to clarify.

You said, "In other words, Murphy doesn't believe in Ricardo's "comparative advantage" principle." Actually, the point I tried to make was that, while comparative advantage may work when applied to nations of roughly equal population density, it fails when applied to trade with a much more densely populated nation because Ricardo never took this population density / per capita consumption relationship into account.

"... he doesn't account for poorer nations ever becoming affluent or getting a middle class." Actually, the point I tried to make in Chapters 7 and 8 was that it really didn't matter if nations like China become more wealthy. (And they clearly are growing more wealthy, thanks to our trade policy.) It won't make any difference in our trade deficit because the root cause of the deficit - the gross disparity in population density (and, consequently, per capita consumption) will remain. They will continue to have free access to our healthy market while all we get in return is access to a market emaciated by over-crowding and low per capita consumption. This is why we continue to experience a large trade deficit (larger than China's in per capita terms) with wealthy nations like Japan, Germany and many others.

"Also, the U.S. isn't anywhere near optimal population yet--almost the entire Midwest needs more population, not less, and is projected to lose even more population in coming years. With the Medicare deficit, we need more immigrants, not fewer, to help support these entitlement programs." We'll just have to disagree on this one. Since our population has to level off at some point, we will eventually be left with facing the prospect of supporting growing numbers of retirees from a stagnant work force. Better to face up to this transient issue now than to throw fuel on the fire and make it that much worse in the future.

Again, thanks for the review and keep up the good work on a great blog!

Pete Murphy
Author, Five Short Blasts