This morning while listening to the radio I heard two
economics specialists discussing the different economic programs being proposed
by the Right and the Left.
Putting the arguments of ‘Trickle Down’ and ‘Wealth Sharing’
aside, they raised a fundamental point of economics, the question of whether
economic success must be based on market growth.
Economics are impacted by many, often overlooked, elements
that influence the production and growth of a market. Among these is declining
population which, as it goes down, shrinks the pool of available labor. The
United States, still considered the place to be for life satisfaction and
economic success, has not yet felt the impact of slowing and declining
populations. Some of this is due to the continued desire of many to immigrate
to the USA, which has continued to increase our population. Many of our global
trading partners, however, have been impacted by reduced population which has
resulted in reduced productivity.
It is projected that the reduction in available labor over
the next 50 years will reduce by 40% the rate of growth in global economic
output for the world’s 20 largest economies compared to the growth experienced
in the past 50 years. The McKinsey Global Institute* projects that in order to
prevent gross domestic product from slowing productivity will need to
accelerate by 80% from historic rates.
If we look at our Candidates for answers we find that they
are moving toward programs that will impact our overall population as they try
to address the question of undocumented immigrants. Both deportation or
absorption of these workers will directly effect this economic question.
The Republican view supports releasing restraints on
dollars, through large tax reductions, and reducing the restrictions imposed on
business that prevents them from performing, like EPA requirements to protect
the environment. These thoughts are aligned with more of the same, and would propose that we rebuild past industries
and promote current industries by reducing social barriers that call for
corrective actions today, in order to ensure a sustainable envelope for the future.
The Republican model does not include maintaining the 12 million undocumented
immigrants, they would be deported thus reducing our workforce…and our market.
The Democratic view is that tax reductions are not the
answer. Considering that today’s corporate profits and income for the upper
echelon are at all-time highs, they seem to have a point. After all, if Trickle
Down was going to work it should have kicked in by now. They would promote
increased taxes on the 1% of our population that controls an inordinate amount
of national wealth, and correct programs that allow major corporations to pay
little or no tax on their profits. They would also establish programs that
would allow the undocumented immigrants in our workforce to stay and achieve
citizenship.
On reviewing economic history, it is obvious that population
growth has spurred economic growth. Looking at the past century we can clearly
see that market expansion has been key to economic success, and companies with
global presence are often the most successful. Exxon Mobile, Toyota, Proctor
and Gamble, and Apple are but a few of these success stories.
But what of markets where populations are in decline? Can an established company,
offering good products and services, doing business within markets with
shrinking populations succeed? And when product lines are OBE… Overcome by
Events…are there ways for companies to change in order to continue their path
to success?
There are, and in that lies the difference between loss and
gain. Sustainability is about maintaining an effective mix of economics, environment, and equity or social sharing. If we build our new businesses or refine our old ones to deliver good products that have clear value, and that maintain our 'market' growth for growing demand of products (globally, not just locally) then a smaller population may not have as devastating an impact as might be thought. The key is that companies must recognize the importance of selling new, innovative products that attract the attention of their target markets, are sold at a proper price, and that cross physical and cultural borders.
The economic equation isn't just looking at the target market for who could purchase your product, but it also looks at your skilled and available workforce. After all, if your workforce declines then your ability to produce may decline along with it. If you eliminate 10-million workers from an initial worker base of 180-million you will have eliminated more than 5% of your workforce.
By doing that your ability to maintain production will be dramatically cut, and the economy will be negatively impacted.
Sustainability calls for strong economics to drive the success of the social and environmental elements within its structure. Fair now, and fair in the future. We need to solve the immigration issue without deporting workers who contribute to our productivity and our tax base.
