Morgan Stanley's Head of Emerging Markets Doesn’t Understand Numbers, Reality

Published on September 30th, 2015

The Wall Street Journal just can’t get enough of the ‘birth dearth’
…Or of immigrants…or of denouncing ‘anti-immigrant hysteria’

Last year, in an article for The Social Contract entitled, “More Nonsense on Inexhaustible Resources from The Wall Street Journal,” I wrote this about Corporate America’s and Investment Banking’s omnipresent (thankfully, not omnipotent) newspaper of record, an unabashed booster of open borders:

Over the years — heck, over the decades, even before it was absorbed into the Murdoch Empire — the inimitable Wall Street Journal has been such a reliable source of baloney on the subject of prospects for infinite growth on a finite planet that one might be mistaken for thinking it is a slaughterhouse or butcher shop rather than a high-circulation newspaper read by Important People whose decisions, prejudices, blind spots, and whims affect your life and mine.

To coin a phrase: “There they go again!”

In his Sept. 23 WSJ op-ed, “How the Birth Dearth Saps Economic Growth,” Ruchir Sharma laments what he calls a “plummet” and “collapse” in the rate of global population growth from 2 percent in the decades after World War II to 1 percent at present. “Worries about migrants miss that to avoid decline, Europe and the U.S. need many more people,” frets the subtitle.

It is astonishing that someone with a background in numbers and finance has so little grasp of the mathematics of exponential growth and its ecological implications for the planet.

Ruchir Sharma
Ruchir Sharma
Head of emerging markets and
global macro at Morgan Stanley

A population growing at 2 percent annually doubles in size every 35 years. If the global population of about 6 billion in 2000 were to grow at a continuous 2 percent rate throughout the 21st century, by 2100 there would be more than 40 billion people on Earth. By 2200 there would be more than 320 billion. It quickly reaches absurd proportions.

Does Sharma seriously believe that science and technology can work miracles with the planet’s hard-pressed resources and environment to sustain numbers like these?

Scientists and technologists certainly don’t; magicians might and economists and bankers with no background in science and ecology clearly do. Today’s levels of population and consumption are already plainly unsustainable, and the signs of natural resource drawdown and overshoot of environmental carrying capacity are all around us. Accumulating greenhouse gases in the atmosphere and their destabilization of the climate are but one symptom of this environmental overshoot.

The population of the United States is growing by almost 1 percent annually, mostly because of the highest sustained immigration rates in our history. From 322 million in 2015, demographers project the U.S. population to hit 400 million sometime after 2050 and more than 500 million by 2100. Our resources, environment and quality of life would all take a huge hit if we allow this to occur.

Most European countries face a very different situation than the U.S., because their native fertility rates are so low (in some instances not much more than half of “replacement level”) – I actually agree with Sharma here – that they face destabilizing population decline unless their birth rates are raised a bit. This has been known for decades, but it has yet to happen.

Or Europe could opt for the dicey demographic path that EU bureaucrats and Germany’s Chancellor Angela Merkel have abruptly chosen against the wishes of many rank-and-file Europeans: opening the floodgates to millions, and ultimately tens or hundreds of millions, of refugees from strife-torn regions and economic migrants from Africa, Asia and the Middle East. All of the sending or source regions have undergone explosive population growth in recent decades and are projected to undergo still more explosive growth for the foreseeable future. The U.N. projects Africa to swell from 1 billion at present to 4 billion by the end of the century.

These newcomers have very different, and to some degree incompatible, cultural and religious customs than the liberal, welfare state host populations. The very survival of Europe depends on the outcome of this dubious experiment in social engineering, inspired more by hope and hype (or guilt) than experience. Can these new European residents assimilate socially, culturally, linguistically and economically, or will they even have the chance to given such overwhelming numbers? Recent experience with growing cultural and religious clashes in Europe gives ample room for doubt.

Earth to Economists: Take off the blinders and see the world for what it really is!

Like all globalized, cosmopolitan open-borders elites, Sharma simply dismisses these concerns as obsolete and unseemly.

Ecological economists like Herman Daly (once profiled by G. Pascal Zachary on the pages of The Wall Street Journal) have attempted to adumbrate a sustainable economic future or “prosperity without growth,” and population stabilization is integral to that vision, but they are shunned by mainstream neoclassical economists and business. Also integral to that vision is national sovereignty on demographic matters, and an international community of sovereign nation states, not a globalized world or global commons without borders and unrestricted movement of labor, capital and merchandise.

Sooner or later economists, politicians and the business community will have to accept the “radical” proposition that we live on a three-dimensional, round, finite Planet Earth, not a two-dimensional “plane planet” or Flat Earth extending infinitely in all directions, one that can accommodate unlimited growth in population and consumption of natural resources and energy.

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