Next Stop: Recession!

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We've enjoyed years of "recovery" since the Great Financial Crisis by literally papering over our problems with newly-printed money, instead of addressing their root causes.

But we've now arrived at the awkward part of the story; when all of our prior mistakes finally catch up with us, and the plot heads in a much darker direction.

Despite more than a decade of an "all-hands-on-deck" propping up of the financial markets, all the central bankers have to show for it is the widest wealth gap in history coupled with stagnant wages.

That, and a skyrocketing cost of living.

B.S. From The BLS

Depending on which OECD country you live in, you can take your 'official' inflation measure and multiply it by either a 2x or a 3x to get the true rate.

For example, in the US we’ve been told that inflation is running at just under 2% for years. In reality, it’s been trucking along at closer to 4% to 6% (for rural and urban dwellers, respectively).

To summarize the situation simply: the central banks have been printing up new money and then handing most of it to the wealthy (via QE, which boosts the prices of the assets the rich own). Then they put on a good show of "worrying about inflation being too low" when the government issues its laughably doctored numbers.

Anybody living in the real world (especially those trying to live on a fixed income) already knows that their actual inflation is much higher than 2%. Ditto for anybody that has bought a car, is paying for college tuition, depends on prescription medication, or has recently been to a hospital.

Here are two examples of how ridiculous the situation is now:

Average New-Car Prices Up More Than 4 Percent Year-Over-Year for January 2019 on Tesla, Full-Size Trucks

Feb 1, 2019

IRVINE, Calif., Feb. 1, 2019 /PRNewswire/ -- The analysts at Kelley Blue Book today reported the estimated average transaction price for a light vehicle in the United States was $37,149 in January 2019. New-vehicle prices increased $1,481 (up 4.2 percent) from January 2018.

(Source)

4.2% yr/yr is a pretty hefty increase. But it’s right in line with annual increases stretching back over the past decade:

(Source)

From 2007 to 2017 that’s a +20.4% increase in new car prices. Combining the data from the above article and chart, between 2007 and January 2019 new vehicles experienced a whopping +29% increase in their average selling price.

As a real-world shopper, that's how much more cash you have to spend to buy a car today vs a decade ago.

However, according to the BLS, new car prices have only increased by 6.6% over the same time frame(!). In fact, in the BLS' eyes, prices today are exactly the same as they were 5 years ago (2013 vs 2018):

(Source)

To compare apples-to-apples: the BLS says that new cars are the exact same price, with zero inflation, between 2013 and mid-2018. Yet the real-world data says that new cars went up by +17% in price.

So which is it? Is it a 0% increase or a +17% increase?

Well, the answer lies in all of the mumbo-jumbo 'adjustments' that the BLS uses, such as hedonics, in attempt to convince us that our pockets are not being picked in broad daylight. (For a refresher in the many tricks used by the BLS, watch Chapter 18 of the Crash Course: Fuzzy Numbers)

The BLS has a lot of fancy explanations for their "math', but the simple fact remains that a new car will cost you +17% more real cash dollars than it did 5 years ago.

The government says $0 extra. The dealership says +$3,000 more. The former is a fake number. The $3,000 coming out of your wallet is a real number.

I could go through example after example of where the BLS undercounts inflation. They do it with health care especially wildly, telling us that health care is increasing by ~3%-4% per year when everyone’s health insurance premiums are rising by 15% to 25% per year (or more!).

Beyond the direct financial harm that results as Social Security recipients get very low or even 0% Cost-Of-Living-Adjustments (COLA) -- which are based on the BLS' reported inflation numbers -- there’s an even more subtle and corrosive effect that results from being lied to by those in authority.

With each fib, the populace loses more and more trust. And at some tipping point – bang! – they're suddenly protesting the streets wearing yellow vests. It may take a while, but eventually folks catch on to the idea that "fairness" and "justice" are merely fantasies of the middle class.

Both the rich and the poor already know better. But once the middle-class loses its faith in the dream, then it becomes a lot harder to convince them that another massive tax break for corporations is really in their best interest.

The Unease Grows…

As increasing concern spreads across the social landscape, for reasons well beyond the financial fibs outlined above, it's becoming increasingly difficult to follow the competing narratives in play.

For example: the economy is either doing great, or it's busy imploding. Technology promises an amazing future, or it's ruining our minds. The world is awash with cheap fossil fuels, or peak oil is in play and our standard of living is at risk. Either man-made global warming is an imminent existential threat, or there's nothing to worry about.

Making sense of all these -- and many other -- competing narratives is a full-time job. Almost nobody’s got the time for that.

Lurking beneath every one of these dueling plot lines is this nasty, inescapable realization: Our entire way of life is unsustainable.

It’s simply not possible to extract exponentially more raw materials year over year, forever. We all know that. It’s not a difficult concept to grasp.

But the entirety of our political system, the mainstream media, and our economy are all predicated on the opposite being true, that endless exponential growth lies ahead.

Like all delusions, this false belief will have a terminal encounter with the limits of reality at some point.

There will come a time when attempts at further growth are counterproductive and cause more harm than benefit. In fact, we've already entered that period.

We know that growth is killing the planet. Yet each day we are bombarded with messages imploring us all to invest in and hope for more growth.

Those who have been paying attention know, quantitatively as well as morally, that more growth is not the answer. Yet it's the only path forward offered by those in power.

Stuck between an impossible idea and the strident repetition of its opposite, the populace grows ever more anxious. We can all see and feel that the end of the growth narrative is near -- yet not even the barest glimmer of that inevitability is debated in the news or in any halls of power.

(At least not publicly. Who knows what they're saying to each other privately? Perhaps something very different, as evidenced by the rise in doomsday prep by the super-rich).

As the social anxiety grows over facing a dimming future, our feckless Western press exploits that emotional tension to sell more consumer products and push political agendas, committing sins of commission and omission in the process. Outright lies are published. Key issues are left entirely out of the conversation (just look at the dearth of coverage on Europe's Yellow Vest protests). And alternative information sources are denounced as peddlers of 'fake news' or Russian agents.

Often it seems as if what’s truly important is intentionally avoided, while that which is absolutely unimportant is minutely examined with excruciating repetition.

As I recently chronicled, the very bottom of the terrestrial and oceanic food pyramids are being knocked out. This is an existential threat to our species, but it's hardly addressed in the mainstream media. It should front page news in a sustained and complete call for action. But it never is.

This terrifying information should be commanding a large share of our attention. But it takes a very distant back seat to utterly meaningless political and social trivia that comes and goes like waves of petit mal epileptic seizures upon the national body.

Next Stop: Recession!

Huge signals of collapse that everybody needs to know about are breaking out with greater frequency and ever-larger and more worrying amplitude. It’s only a matter of time before something truly systemic snaps and we're all forced to contend with terrible ramifications, ones entirely of our own making.

Maybe it will be a nightmare collapse of key ecosystems within the planet's web of life. After all, we're carelessly and swiftly disrupting the interconnected relationships that species took hundreds of millions of years to develop.

Or maybe it will be a political flashpoint resulting in war. A conflict resulting in even a temporary blockade of the free flow of global trade so critical for keeping all of our just-in-time production and distribution systems running smoothly could cause store shelves to go empty in just a matter of days.

More likely in the near term, we'll see an economic/financial meltdown. The third credit bubble of the new century is breaking down just like its predecessors did. Except this one is the and largest and most universal in history.

A recession lies dead ahead. An even though recessions are an inevitable part of the economic cycle, and it's been uncharacteristically long since the last one, we've been operating as if the current "recovery" will last forever. We're woefully unprepared for what's coming.

And this next recession promises to be a doozy. The world is fraught with political and social tensions that were absent in 2008. And it's saddled with many $trillions more debt than existed back then.

But worst of all? The public has lost faith in our institutions and political bodies after having been so obviously, comprehensively and repeatedly lied to over the years.

It’s kind of hard to ask people to embrace shared sacrifice during tough times after the political and financial elites greedily lined their own pockets at the expense of everyone else during the good days.

In Part 2: You vs The Recession we scour the multiplying data exposing just how advanced the global recessional already is, how we expect its impact will manifest in the financial markets, and what steps you can take now to dramatically improve your odds of making it through the coming crisis.

The central banking cartel, despite its increasingly desperate attempts, has not and cannot tame the business cycle. Our major concern is that this current credit cycle will burst far more viciously than the prior two -- and those were painful enough. Because its effects are likely to be so damaging, we can't overemphasize the need to prepare prudently now.

Click here to read Part 2 of this report (free executive summary, enrollment required for full access).

This is a companion discussion topic for the original entry at https://peakprosperity.com/next-stop-recession/

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“As I recently chronicled, the very bottom of the terrestrial and oceanic food pyramids are being knocked out. This is an existential threat to our species, but it’s hardly addressed in the mainstream media. It should front page news in a sustained and complete call for action.”

Everyone needs to watch this Special Report from Skynews and pass it on. This is how we are slowy killing our oceans and future generations will have to deal with this, if the oceans don’t die first. Besides plastics, we are dumping toxic chemicals and radioactive waste into our oceans courtesy of Fukushima.

“More than eight million tonnes of plastic is thrown away each year and washed out to sea. It takes centuries to break down. It’s eaten by marine creatures. And it’s in our food chain. Your seafood supper may have a synthetic garnish. Scientists just don’t know what effects it has on our health.”

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Great article. The most useful things I’ve found on the internet over the past year are the crash course, and shadowstats.com. When I introduce someone to the crash course, the first video i show them isn’t the first video (sorry Chris), it’s Fuzzy Numbers. It connects on a visceral, immediate level with everyday experience. If they want more data, I show them shadowstats. Light bulbs generally result.
Everyone plans. Every plan is based on assumptions. Most people’s plans are pretty good, it’s the underlying assumptions that will get you in trouble. Instead of arguing with people on why they need to change their plans, I try to change their assumptions.

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For some reason, I forgot to check my favorite pre-recession indicator after the January Nonfarm Payrolls number was reported last Friday: “Working part time/economic reasons.”
See the chart below. its a “quarterly” chart, so the moves stand out a bit more, but Q1 is not looking very good at all right now. At the moment, it totally agrees with the “impending recession” prediction, and/or that we’re already in one.
This one is really pretty reliable over the years - as a slightly predictive and/or coincident indicator.
If I had been paying attention, I could have posted this last Friday!!

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Can’t say I’ve been looking forward to the end of life as I know it.
Rodster, I can’t bring myself to watch the video you linked.
My wife and I are certified rescue divers, with logged dives in the Caribbean totaling more than two weeks under water. We saw the plastic problem, up close and personal, 15 years ago, off the coast of Belize. Where we were, you couldn’t walk on beach sand. It was completely covered with plastic.

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In reference to the inflation rate, I think it would be much higher but for a mechanism not fully understood that comes into play. As a certain commentator likes to say, " the money has remained in the canyons of wall street".
A major mechanism for goosing consumer spending has been via cheap money that induces borrowing. That mechanism is not functioning well as in aggregate consumers are carrying all the debt they can.
What I am referring to however is the drag on consumer spending that results from this heinous level of debt. So not only are consumers having difficulty taking on more debt, but the existing debt is exacting debt service requirements, even with the artificially low interest rates, that is emaciating consumer spending capacity. The outlandish spending in the past was spending borrowed from the future and the future is now here with the added cumulative interest burden.
This presently represents a huge drag on spending and hence has prevented inflation in the consumer price index from being even more. I doubt the central bankers considered this in their calculations.
This hasn’t stopped inflation in stock and bond prices.

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Another extremely deleterious effect of all the money printing is the massive waste in resources that it encourages. In an honest money regime resources would be used much more prudently.
The shale oil boom in the US is a good example. It has been financed with ultra-cheap bank loans and stock issuences based on cheap money being available. Even so, it is a mirage as with the rapid decline rates in the wells the sunk capital costs will never be fully recovered. The up-front cash-flow from newly drilled wells is putting the wool over people’s eyes. Ultimately there will be large losses. This would not have been possible with honest money and honest interest rates.
Without the abundant freshly created money, as scarcity in resources develops, prices would rise accordingly and work their way into products, thereby discouraging flippant spending and wasteful use of resources. They would be utilized much more prudently and alternatives sought-out.

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Many people would agree that the Federal Reserve is making a mess of things. I often come across the notion that this is by design for nefarious purposes. I disagree! To me, the simple explanation is that they really are captive to muddled and wrongheaded thinking. Econometrics is what is taught in all of the major universities and the people at the Fed are steeped in it and genuinely believe in the mathematical equations and the models that incorporate them. And they really think that their equations and modeling allow them to apprehend economic dynamics in a way that gives them a window of understanding not available to the uninitiated. This view also infuses them with the confidence that they have the ability to centrally control the economy through enlightened manipulations; pushing, nudging, touching the gas pedal or the brakes, determining interest rates, buying or selling bonds, etc.
To one who subscribes to the Austrian economic understanding, the problem is that the people at the Fed lack even a basic understanding of economic fundamentals. Even worse, some of their tenets are the opposite of reality. One of the most misguided underpinnings directing their actions is the belief that spending drives economic growth and prosperity, and savings hinder it. The exact opposite is true.
These guys don’t even understand what money is.There is a thing called “Say’s Law” which is fundamental to economic understanding, and a critical failing in modern economic policy is the denial of Say’s Law. Keynes and the neo-Keynesians pooh-pooh it because it gets in the way or their theories and inclinations. So they phrase it as “production creates its own demand”. This can be ridiculed because it sounds like a claim that there will be demand for whatever anyone wants to produce in whatever amount. What Say’s Law actually says is that commodities trade against commodities. So if you imagine a barter economy, a farmer who grows corn now has the means to purchase a pair of shoes by using his corn in trade and the shoemaker derives his purchasing power for the corn from the shoes he makes.
But this is clumsy with inherent problems. A pair of shoes is worth more than a bushel of corn but you can’t cut the shoes in half to equal the amount of corn wanted. That’s where money comes in. Real money that exists in limited amount takes on a value relative to the various commodities in an economy. As the commodities increase relative to a fixed money supply the purchasing power of each unit of the money increases and it decreases if total commodities decrease. The value of a unit of money also changes up or down against individual products as well according to supply. So purchasing power derives from commodities and a person’s production of a product creates that person’s purchasing power either directly via barter or indirectly by first exchanging the product for money. Thus production does create demand.
In this process you get honest price signals as money is received in exchange for commodities that can then be use to purchase other commodities. So honest money represents something real. A real commodity was produced and exchanged for the money. Money is just a medium of exchange and represents something real that has been produced. Honest money means honest price signals and results in rational organic growth in an economy.
When a Central Bank prints money nothing has been produced. It is fake. But participants in the economy can’t distinguish between this money and honest money. This creates a false impression of demand and the robustness of the overall economy. It gives false price signals, temporary profits where there shouldn’t be any, excited “animal spirits”; a bubble has been engendered.
The longer this goes on with ever increasing money printing, the more distorted the economy becomes with mal- investments everywhere and multiplying fragilities that can potentially lead to a cascading unraveling. Also, when the money is injected into the system via debt mechanisms, the huge accumulated debt monster itself becomes the greatest danger.
This same focus on inducing spending prompts another mistake by the central banks and their economists. Ideally, interest rates should be allowed to find their own natural level and not arbitrarily and artificially determined, but rates below the natural level are actually more destructive over time than rates a couple of points above. Interest rates are a hurdle business projects have to overcome to be successful. Rates that are too low allow otherwise marginal or non-profitable projects to be undertaken. The result is overuse and misuse of resources, and misdirected energy and capital. Conversely, if rates were somewhat above the natural rate only the most productive enterprises could be successful and resources would be used very efficiently. On the one hand you end-up with a sluggish and wasteful zombie economy and on the other a vibrant efficient one. Of course with the present monstrous debt situation created by the central banks, even a move to natural interest rates would now blow the whole thing up.
The Federal Reserve fancies itself a savior that rescues the capitalist economy from itself by stopping a downward spiral into depression. In reality the extreme highs and lows are always caused by the central banks and or governments. Without the antics of the bankers the natural undulations in a market economy would be very gentle as honest price signals within an honest money regime would allow for self- correction of minor distortions in almost real- time. Any bubbles would happen only in isolated corners of the overall economy and be self-limiting and quickly corrected.

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I think you may have used the wrong approach, Chris:

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old guy wrote:
Another extremely deleterious effect of all the money printing is the massive waste in resources that it encourages. In an honest money regime resources would be used much more prudently. The shale oil boom in the US is a good example. It has been financed with ultra-cheap bank loans and stock issuences based on cheap money being available. Even so, it is a mirage as with the rapid decline rates in the wells the sunk capital costs will never be fully recovered. The up-front cash-flow from newly drilled wells is putting the wool over people's eyes. Ultimately there will be large losses. This would not have been possible with honest money and honest interest rates. Without the abundant freshly created money, as scarcity in resources develops, prices would rise accordingly and work their way into products, thereby discouraging flippant spending and wasteful use of resources. They would be utilized much more prudently and alternatives sought-out.
The problem with ending money printing so as to discourage flippant spending and wasteful use of resources is that unemployment would rise to 70% because most jobs these days are in the service sector (to sell stuff to people to consume via cheap debt), in construction of new homes, in construction of the new infrastructure to support the homes, and in the financial services sector administering all this easy money from thin air. Furthermore, technological automation would remain after the easy money regime ends so the manual labour jobs that have been displaced over the last 50 years would not return. 70% unemployment would result in riots. The elites know this and they know that without this easy money driving everything we'd be there. It scares them. The only way to avoid this would be to completely overhaul the taxation and wealth system and give the wealth back to the middle class, so that they don't have to work 8-5 M-F to pay their mortgage. The eiltes are not going to do this, for two reasons: 1) they aren't smart enough to understand how to do this (possibly, but unlikely), or 2) they know that the way to do this would be to dramatically lower taxes to the middle class and increase taxes to the elites via a wealth tax to claw back the trillions they have stolen from the middle classs over the previous few decades and could never be repatriated via some clumsy income tax. The elites will not voluntarily do this since their whole focus over the last 100 years has been to get us where we are now, a world of debt serfs. Therefore, when the monetary system shifts over and easy money ends, expect 70%+ unemployment and riots.
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Mark,
I think you are right. The central planners have manipulated themselves into the proverbial “between a rock and a hard place”. The problem is that if they keep doing as they have been, the underlying rot in the economy will metastasize until something breaks and triggers an unraveling. An alternative scenario is that there is an ongoing deterioration in economic vitality and the continual erosion of the greater standard of living, slowly grinding the majority into poverty. I think the first scenario is more likely.

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The BLS can be a frustration, but car pricing is not a good example of poor tracking of reported inflation. It clearly doesn’t show a 4.3% inflation rate as the post implies. If you’re going to attack someone else’s statistics, it helps to start with some solid examples, which I do believe are out there.
The example of a car going from $28.8K to $37.149 over 12 years! is very much in line with the reported US CPI. Or use an inflation calculator from one of the other central banks, and you’ll find the increase would be below the reported rate of inflation in the UK for example. Car pricing does not make the case for following shadowstats.
Then there is hedonic adjustment. I greatly dislike the lack of transparency around this. In general there is some merit to the idea that you’re getting more for your money. Even a garden variety auto these days would come with features such as automatic windows and doorlocks, air bag, more sophisticated electronics, that would have been considered luxury or add-ons at an earlier time. And yet, for this thinking to work, for this customer, you’d need to still make a stripped down model of the auto available, which would track the original vehicle, and therefore the flat cost. The purchaser would have the choice of crank windows - lower cost, or add-ons - higher cost. It doesn’t work that way.
Nor do you get the option of buying a lower cost computer with a 500 MB hard drive, and it wouldn’t run today’s software even if you did. But it is indeed true that the price of hard drives has declined hugely, along with other components. Tell that to the teenager going off to school with a laptop and an iphone.
It is indeed a complicated issue.

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derelict wrote:
The BLS can be a frustration, but car pricing is not a good example of poor tracking of reported inflation. It clearly doesn't show a 4.3% inflation rate as the post implies. If you're going to attack someone else's statistics, it helps to start with some solid examples, which I do believe are out there. The example of a car going from $28.8K to $37.149 over 12 years! is very much in line with the reported US CPI.
You are missing how the CPI is constructed and used. It is made up of subcomponents, of which vehicles is one. What I show above is that while the CPI new vehicle subcomponent sported a 0% increase between 2013 and 2018 the real world experience of people was that new vehicles went up 17% in price. That's not "in line with the CPI" that is a part of the CPI. One that showed a 0% increase thereby dragging or holding down the reported CPI. Meanwhile, what sorts fo valuable new hedonic adjustments can we point to over that 5 year period that were "worth" slightly more than $3,000 per vehicle? Airbags? Nope. Those were both government required and standard the entire time. Automatic windows? Nope, standard as well. Seat belts? Sound systems? Nope, and nope. Better engines? Wipers? Windows? I'm stumped. It must have been something subjective like "a smoother ride" or a "more pleasing color palette" or something, because the features on my 2011 vehicle are the same ones listed on its exact same 2019 model but for a lot more money. I'd call that inflation, wouldn't you? Fortunately, using hedonics, the BLS tells us we can all just walk into a store and walk out again with a TV for free, or better! [Just kidding. Nothing can fall in price by more than 100%. The above chart is from the WSJ and it shows the relative change of components to the overall change in CPI. Everything below the 0% mark has subtracted from CPI, those above have added since the baseline year. From memory I think that was 2005, but I could be wrong.]
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or you can dig into the statistics. You clearly state vehicle costs have been increasing at a rate of 4.2%.
“4.2% yr/yr is a pretty hefty increase. But it’s right in line with annual increases stretching back over the past decade:”
But we both know that a $28,800 car in 2007 would cost $47,185 in 2019 if that were true. So I think you’ve made a mistake there, or engaged in a bit of hyperbole. According to your own numbers, new vehicles have been increasing at a rate of 2% over this extended time period.
So on to the kvetching about what goes into the hedonics on autos. Is it the ride or the color palette, you ask? Why speculate? The BLS publishes the exact composition of the new vehicle adjustments each and every year. I don’t agree with them, and I don’t agree with the whole regime, so I don’t have a dog in this hunt. But it is not a mystery.
I drive a Honda CRV with air bags and automatic windows. The newer version has all that and a lot more, including in dash display, back up camera, and on and on with a long list of stuff I don’t want. Like Siri. I couldn’t care less. I really don’t even care if I have automatic windows. A few of the adjustments are a stretch and more in line with your suspicions. One example: to put down the back seat in my CRV, I have to go to both back seats, take off the headrests, fold the seat forward, fold down the back. Both sides It is time consuming - a minute or two! In the new CRV you just pull a lever at the tailgate and the whole thing just happens. It’s brilliant. But what would I pay for the new system, if anything? And worse still, I don’t have the choice whether I want some of these features. They become part of the base model, are therefore included in the BLS pricing model, and you get a corresponding adjustment.
I suspect that most people are like me - what does it take to buy a car? Period. Don’t adjust anything! But if I want to be honest about what is picking my pocket it’s insurance, property tax, and education, not cars.

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I think this article accurately mirrors the mindset of people on this site. I am posting it as a description and not as a criticism. When Paul Ehrlich’s book came out in the late 60’s I was taken by it and wrote a college paper based on it. I have since reshaped my thinking.
by Pierre Desrochers and Joanna Szurmak
[Note: The following text is adapted from the authors’ recently published book Population Bombed! Exploding the Link Between Overpopulation and Climate Change in which the validity of the belief in the inherent unsustainability of economic growth is challenged more thoroughly.]
Numerous population control advocates have linked anthropogenic climate change to population growth, or tried to revive interest in invoking anthropogenic climate change as the key negative outcome of continued economic growth linked to, foremost among causes, an increasing population. One pioneer of establishing and cultivating population growth – anthropogenic climate change linkage was the “Population Bomber” himself, Paul Ehrlich, who during a conference in 1968 identified anthropogenic carbon dioxide emissions as a “serious limiting factor” to economic growth.[1] By the 1970s, Ehrlich, his wife Anne and his collaborator John Holdren raised fears that carbon dioxide “produced by combustion of fossil fuels in quantities too large to contain” may “already be influencing climate” and, as such, constituted one of the “gravest threats to human well-being. . . [i.e.] the loss of natural services now provided by biogeochemical processes.”
What motivated the Ehrlichs and Holdren to worry about a looming disaster threatening humanity just twenty years after the end of the Second World War (1939-1945)? After all, the war had brought with it wholesale destruction of infrastructure and loss of life throughout the world on a previously unparalleled scale. Was it the tension of the Cold War? Was it a specific epidemic or a natural event? We argue that no specific trigger events were necessary to spark the anxieties of these activists as they already espoused a neo-Malthusian eco-catastrophist mindset that is part of a wider pessimist perspective.
Among others, the ecological economics theorist John S. Dryzek recognized at least two distinctive perspectives on the understanding of the nature, role, and future of humanity – the pessimist, and the Promethean or optimist – each possessing a distinct set of assumptions, narratives, values and ultimate goals.[2] The pessimists, like the Ehrlichs and Holdren, apply a limit-driven narrative to define the place and goals of humanity on earth. According to the pessimist view, the earth’s resources are severely limited while the balance between planetary health and disrepair is exceedingly tenuous. The pessimists model people as bacteria that, in their Malthusian exponential growth, tend to quickly outstrip the resources of their “test-tube earth,” swiftly destroying both themselves and their environment. Only – perhaps – the timely intervention of top-down expert planning may avert this preordained debacle. The optimists see resources as limited primarily by human ingenuity and ability to utilize them, and humanity itself as a gathering of creative individuals, each capable of being much more than a mouth to feed. Optimist individuals may be driven by seemingly local needs, such as the replacement of a scarce resource or the improvement of the efficiency of a process, but the outcomes of their individual efforts benefit others in a spontaneous diffusion process.
Thus, the Ehrlichs’ and Holdren’s preoccupation with human population numbers and their impact on global development or resource use did not need a specific cause or trigger. Population and resource use anxiety were part of their pessimist perspective that had them always on the lookout for humanity’s confrontation with the inflexible natural limits of the finite earth. The late 1960s and early 1970s belonged to an era when other pessimist scientists like the climatologist Stephen Schneider, a Stanford colleague of Ehrlich, were theorizing about impending glaciation caused by anthropogenic atmospheric pollution reflecting sunlight. The Ehrlichs – who, truth be told, were also worried about every possible (and always negative) impact of increasing human population numbers, including, for a time, the effects of population growth on global cooling – were casting about for a development-related scourge of humanity that would be, perhaps, less easy to redress with fundamentally optimist fixes than global cooling was thanks to technologies such as smokestack scrubbers. For this reason, anthropogenic carbon dioxide emissions were the ideal villain – or, pun intended, windmill to tilt at – as their neutralization does require a fundamental reworking and re-thinking of humanity’s key stable technologies – including its electrical power grid – on a scale that, thanks to the quickly mounting “scientific consensus” and political pressure, poses a significant challenge to human innovation.
While admitting he was not a climate specialist – thus just as “qualified” as Ehrlich, a biologist specializing in entomology, to theorize about climate – the economist Julian Simon suspected over two decades ago that global warming was a dubious pessimist scare mostly rooted in older neo-Malthusian concerns about population growth. He observed then that the “latest environmental justification for slowing or halting population growth is supposed global warming.” Simon cited a World Bank paper on the new “global negative externality” represented by greenhouse gas emissions, which he summarized as follows: “[The] old rationales for World Bank population control programs – economic growth, resource conservation, and the like – having been discredited, a new ‘rationale’ has been developed on the basis of speculative assumptions about global warming’s economic effects derived from controversial climatological science.”
Simon then summarized the position of most environmentalists as follows: “But isn’t obvious. . . that additional people and additional economic growth will cause us to use more energy and hence emit more greenhouse gases? Therefore, even if we can’t be sure of the greenhouse effect, wouldn’t it be prudent to cut back on growth?” The economist Jacqueline Kasun similarly believed at the time that “by the 1990s the doomsayers had shifted their attack” as they could no longer invoke resource depletion as the key growth-limiting issue. As she wrote, “the alarmists didn’t miss a step. The problem, they now said, was that people were using too much energy and were causing Global Warming.”[3] Both Kasun and Simon thus identified pessimist limits-based thinking as the chief impetus behind the elevation of anthropogenic CO2-caused climate change to the status of a global catastrophe.
Closer in time to us, retired Canadian academic Michael Hart has commented that “for alarmists, climate mitigation policy is as much a means of achieving their larger goals as it is a matter of addressing a possibly serious issue.”[4] As another retired Canadian academic, historical climatologist Tim Ball, has long argued, the climate change policy agenda is based on certain assumptions ultimately related to a fear of reaching another terrestrial set of limits through overpopulation. Indeed, Dr. Ball goes so far as to argue that while global warming is a “contrived problem,” most of those “who know it is contrived still believe overpopulation is a problem.” It is indeed remarkably easy to find influential climate bureaucrats and scientists who will either admit this much or else acknowledge their neo-Malthusian pessimist stance rooted in enforcing limits to human (population) growth.
Maurice Strong (1929–2015), who was described by business journalist Peter Foster as “[m]ore than any other individual. . . responsible for promoting the [UN] climate agenda,” is the most obvious case in point. Strong first achieved some degree of notoriety in Canada as young deputy minister – a high-ranking civil servant – when he ended up on the record by stating that “with a growing global population, we will have to recognise that having children is not just a personal issue but a societal issue and at a certain point we may be faced with a need to have a permit to have a child.” He also referred to the need for “national population policies” in his opening speech at the 1972 Stockholm Conference. Strong reportedly stated the following Malthusian prediction at the 1992 Earth Summit: “Either we reduce the world’s population voluntarily or nature will do this for us, but brutally.”
Having started with the idea of limits to population growth, Strong eventually connected it to the limits of economic growth problem as defined by climate change. At the 2009 Copenhagen Summit, Strong declared: “The climate change issue and the economic issue come from the same roots. And that is the gross inequity and the inadequacy of our economic model. We now know that we have to change that model. We cannot do all of this in one stroke. But we have to design a process that would produce agreement at a much more radical level.” In one of his last extended interviews, Strong said that “growth in the world population has increased the pressures on the Earth’s resources and life-support systems.” He added that “China’s one-child policy is not a perfect policy by any means, but, on the other hand, how do you control growth in your population?” Strong viewed widespread aspirations for a better life as problematic, for if everyone “enjoyed the same patterns of consumption that we in the West do, then we would have an unsustainable situation, and we’re actually on the way to that now. We are in a situation that is unsustainable.” Thus, for Strong, the issue of population growth was clearly part of the pessimist narrative and a clear an issue of limits to growth.
The first chairman of the IPCC (1988-1997), Bert Bolin, was not only an early convert to the alleged catastrophic impact of CO2 emissions,[5] but also a pessimist on population and resources issues, as evidenced in his stance on the controversy surrounding the 2001 publication of The Skeptical Environmentalist by the Danish political scientist Bjorn Lomborg. Bolin later wrote he “largely share[d] the gist of the . . . analyses” of Lomborg’s critics John Holdren and John Bongaarts.[6] Bongaarts, a demographer long associated with the Population Council and a former chair of the Panel on Population Projections of the National Academy of Sciences, had then opined: “Population is not the main cause of the world’s social, economic and environmental problems, but it contributes substantially to many of them. If population had grown less rapidly in the past, we would be better off now. And if future growth can be slowed, future generations will be better off.”[7] For his part, John Holdren contradicted many of his earlier warnings of imminent resource depletion by arguing that while the word was not “running out of energy,” it was “running out of environment,” by which he meant “running out of the capacity of air, water, soil and biota to absorb, without intolerable consequences for human well-being, the effects of energy extraction, transport, transformation and use.”[8]
The second chairman of the IPCC (1997–2002), Robert Watson, would later go on the record with the following line of reasoning: “The more people we have on the Earth and the richer they are, the more they can demand resources. There’s more demand for food, more demand for water, more demand for energy. . . So, there’s no question the threats on the Earth today are far more than, say, 50 years ago and in 50 years’ time, there will even be more threats.”
The third chairman of the IPCC (2002-2015), Rajendra K. Pachauri, was even more explicit when he stated in 2007 that humanity has “been so drunk with this desire to produce and consume more and more whatever the cost to the environment that we’re on a totally unsustainable path.” He was “not going to rest easy until [he has] articulated in every possible forum the need to bring about major structural changes in economic growth and development. That’s the real issue. Climate change is just a part of it” (our italics). When asked why Indians shouldn’t aspire to the same standard of living as westerners, Pachauri answered: “Gandhi was asked if he wanted India to reach the same level of prosperity as the United Kingdom. He replied: “It took Britain half the resources of the planet to reach its level of prosperity. How many planets would India require?” In his IPCC resignation letter (apparently no longer available on the IPCC website) Pachauri admitted that, for him, “the protection of Planet Earth, the survival of all species and sustainability of our ecosystems is more than a mission. It is my religion and my dharma.”
In Pachauri’s statements, and in others we have quoted so far, there is ample evidence of a passionate commitment towards the protection of the planet,but there is no sign of recognition that humanity can do, and has done, more than simply consume resources. At no point do neo-Malthusians like Pachauri admit the possibility that technological innovations and human creativity have a place among the things that deserve a place on Earth. What pessimist activists desire is a consensus on the classification of humanity as out of control and inherently driven by destructive greed, thus in need of top-down regulation by the few remaining clear-thinking and benign autocrats – that is, functionaries – of the global government.
Another important figure in the anthropogenic climate change institutional apparatus is former American senator Timothy E. Wirth, one of the main organizers of the 1988 James Hansen hearing on climate change, and from 1998 to 2013 president of the (hardcore Malthusian) Ted Turner-funded United Nations Foundation. While no longer in the news or on the frontlines of the US government, Wirth is still actively promoting a population control agenda. He is on the record as stating in 1993: “We’ve got to ride this global warming issue. Even if the theory of global warming is wrong, we will be doing the right thing in terms of economic and environmental policy.”[9]
Needless to say, many other influential politicians and bureaucrats share a similar outlook. In 1998 Christine Stewart, then Canadian Minister of the Environment, when speaking before editors and reporters of the Calgary Herald said: “No matter if the science is all phony, there are collateral environmental benefits… Climate change [provides] the greatest chance to bring about justice and equality in the world.”[10] More recently, Connie Hedegaard, European Commissioner for Climate Action (2010–2014), argued that the European Union policy on climate change was right even if the science was not. As she put it:
Say that 30 years from now, science came back and said, “wow, we were mistaken then; now we have some new information so we think it is something else”. In a world with nine billion people, even 10 billion at the middle of this century, where literally billions of global citizens will still have to get out of poverty and enter the consuming middle classes, don’t you think that anyway it makes a lot of sense to get more energy and resource efficient… Let’s say that science, some decades from now, said “we were wrong, it was not about climate,” would it not in any case have been good to do many of things you have to do in order to combat climate change? I believe that in a world with still more people, wanting still more growth for good reasons, the demand for energy, raw materials and resources will increase and so, over time, will the prices… I think we have to realise that in the world of the 21st century for us to have the cheapest possible energy is not the answer.
Executive Secretary of the United Nations Framework Convention on Climate Change, Christiana Figueres, said “We should make every effort to change the numbers… obviously less [sic] people would exert less pressure on the natural resources,” and humanity is “already exceeding the planet’s planetary carrying capacity, today.” She also added that population control was not enough and that fundamental changes need to be made to our current economic system. Figueres, like Strong, Wirth, Bongaarts, Stewart and Hedegaard, was speaking from the depths of the neo-Malthusian pessimist limit-based perspective.
Professor Hans Joachim Schellnhuber, the director of the Potsdam Institute for Climate Impact Research and an adviser to the encyclical Laudato Si, has long been on the record as estimating the carrying capacity of the planet at “below 1 billion people.” More recently, researchers associated with the Population Reference Bureau and the Worldwatch Institute stated: “Human population influences and is influenced by climate change and deserves consideration in climate compatible development strategies. Achieving universal access to family planning throughout the world would result in fewer unintended pregnancies, improve the health and well-being of women and their families, and slow population growth – all benefits to climate compatible development.”
Since leaving his academic appointment, prominent Canadian climate scientist Andrew Weaver has become the leader of the British Columbia Green Party. As could be expected from a pessimist activist, Weaver is on the record as stating: “Technology itself will not solve global warming. Individual behavior and consumption patterns will need to change as well. For too long we have lived by the axiom that growth is great. We strive for economic growth year after year. We drive it by increasing population. But infinite growth cannot occur in a finite system. Collapse is inevitable.”[11]
The late climatologist Stephen Schneider was a leading advocate for major reductions of greenhouse gas emissions. Schneider was sometimes derided by his critics for having switched, almost overnight, from being a major proponent of global cooling, as we mentioned earlier, to becoming one of the most prominent supporters of global warming. Less well known about him, however, is the fact that he never changed his Ehrlich-inspired belief in the existence of a “wide consensus that exponential growth, for both economies and human populations, cannot continue indefinitely,” and that “population growth must ultimately be controlled.”
Thus, Schneider was a classic neo-Malthusian pessimist thinker. As he wrote in a 1977 popular book mainly devoted to describing the perils of global cooling, the “obvious point about population growth [that] must be stated and restated” is that “population increases will only dilute the effectiveness” of achieving “rapid improvements in per capita living standards for the present 4 billion people on earth.”[12] Twenty years later, having become a major proponent of global warming, he still believed that “control of population growth has the potential to make a major contribution to raising living standards and to easing environmental problems like greenhouse warming.” Not surprisingly, he urged the United States government to “resume full participation in international programs to slow population growth” and to “contribute its share to their financial and other support.”[13]
Whether its goal was curbing anthropogenic global cooling or global warming, the pessimist narrative’s endgame was always to institute top-down expert controls over population and centrally limit the human impetus to grow, create and aspire to change. In effect, the pessimist goal was to combat and control the optimist narrative through fear and discrediting its foundational impulses.

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Thanks, Old guy for the tumescent narrative on the Ehrlich-ian predicament facing this world. I’m curious to what end all this meanderous documentary is to my day to day existenence. Unfortunately, each one of us is limited to one’s ability to influence the actions of others on the betterment of society and the world in general. So, it seems that the only hope we have to direct the actions of ourselves for betterment. This concept is woven throughout the PP doctrine with its emphasis on resilence. IMHO, our focus must be more local. What are you willing to sacrifice for the greater good? What has that got to do with your relationship with others

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old guy wrote:
I think this article accurately mirrors the mindset of people on this site. I am posting it as a description and not as a criticism. SNIP Whether its goal was curbing anthropogenic global cooling or global warming, the pessimist narrative’s endgame was always to institute top-down expert controls over population and centrally limit the human impetus to grow, create and aspire to change. In effect, the pessimist goal was to combat and control the optimist narrative through fear and discrediting its foundational impulses.
Old Guy
First, I have to disagree that cut and pasting this long winded article on the inherent "neo-Malthusian pessimist limit-based perspective" of foes of exponential growth and their misguided and interventionist history and 'observationaly stating it : "accurately mirrors the mindset of people on this site" is "not a critique" is disingenuous at best. It's clearly a criticism which is fine, you're free to criticize, assuming you can defend your position. I suspect your broad brush aspersion more accurately reflects an unfamiliarity with the site and it's denizens. It is true that If there is one unifying precept that there is general agreement on here, it is that unlimited growth in a finite world is not only impossible it is a bad idea. If believing that precept makes me (us) a "neo-malthusian pessimist with a limit based perspective, that I will gladly own that label. Hell, I would wear it on a t-shirt. Beyond that there are a whole range of viewpoints and socio /political persuasions represented here from the from diehard statists who think that voting for this or that establishment politician within the current system can effect change, to a full range of ideological beliefs from libertarian to socialism and points in between. However I suspect there is a larger constituency of open minded individuals capable of thinking outside the bounds of linear ideologies, aware of the holistic predicaments inherent in Industrialized civilizational model predicated on continuous growth and who don't think there are any top down solutions, but remain interested in personalized and localized strategies and in the potential for bottom up mitigation to the consequences of our emergent predicaments. Leaving aside the argument presented in this paper that climate change activism of both the global cooling and warming varieties was always a stalking horse for top down social control by hand wringing Malthusians pessimists terrified of population growth and it's environmental impacts, ignores the the more salient issue of the validity of the the underlying premise. If I were to extrapolate your position as being in agreement with the "Optimists" underlying counter thesis of the authors, i.e. that: economic growth (exponential by definition) on a finite planet is inherently sustainable because of " technological innovations and human creativity" Would that be correct? i.e. in a perfect Ayn Randian world of libertarian free market forces would we innovate and 'substitute' our way to unchecked populations living in a first world techno utopia? ...Would we not have to pay the butchers bill of ecological overshoot?
For what it's worth I am sympathetic to much of libertarian viewpoint as it resonates with my inherent desire for individual freedom and principles of non aggression. And in many ways it mimics natural and necessary feedback loops found in Nature's own balancing act, as I view our collective predicaments including the 'symptom' of overpopulation from a Natural systems or fundamentally ecological perspective. However like all constrained ideologies it falls down on critical points. It does not recognize that their is a public commons or good, a 'social' right to clean air or water for example or to the extent that it recognizes it, erroneously assumes that right is served by market feed back loops of unfettered individual benefit seeking behavior. mm
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I seems to me that there is a kind of person who is psychologically predisposed to readily latch on to the notion that humans are despoilers of a perfect nature and indeed a disease vector upon the earth. The Malthusian theory of population growth outstripping resources has been around for 220 years now and is also enthusiastically embraced by some. There is a significant overlap between these folks and they take up the belief with a passion that exhibits itself as a religious fervor in various calls to action. I have seen some evidence of what I have just said in some postings here but apologize for the broad brush insinuation.
Certainly, I accept the concept of the public good and the right to clean water and air and the necessity of agreed upon rational regulations. To the extent that people here are concerned with developing resiliency and bottom-up solutions from within their small groups, that is laudable. But be that as it may, and at the risk of sounding the pessimist, that represents no greater solution as humans, being as they are, and natural momentum will carry things forward the way we’ve been going. Unless you think that you can educate and persuade the great majority to your point of view you will just be crying in your beer. Things will go on until they can’t and then reality will impose itself and force change.
Now, some people will immediately think that last sentence is callous and glib. But what worries me is the calls to action via government and laws.The changes people want would mean expanding the power of governments well beyond what already exists. That’s a real problem! When people favor strong government action they always imagine that their wishes will be the guiding light of the gov. action. But not so! Even if you formed a government only from people from this site and other like- minded people, within a short time there would be disagreements on action quickly leading to internecine warfare. When the Bolshevics took over Russia it didn’t take long before policy disagreements and power struggles led to people who had been in the forefront of the movement being sent to the gulag or receiving a bullet in the back of the head-committed communists all.
Governments almost never do things right and as they become powerful they attract sociopaths and ambitious power hungry people and become utterly corrupt to go along with the usual incompetence and wastefulness. Governments throughout history have destroyed countries , empires, and societies, whether through warfare, inflation, debt, or economic interference. Today will be no different.
I consider Alexandria Occasio- Cortez’s “new green deal” a good example. Apart from the fact that the core of her plan is directed at what I consider a non-problem, her solution would be disastrous beyond belief. It would require government control and intrusion into society and the economy to a totalitarian level. The massive building and rebuilding she proposes over ten years would require more resources than normally used in a hundred years. The despoilation of the environment with her “green” infrastructure would be massive, the economy would be destroyed and people would be lucky to escape the situation in which people today find themselves in Venezuela. The lady has a religious zeal to transform society into her imagined utopia via government power. It’s an old story that never ends well.
So yes I think that not only is the free-market approach the best, it is the only one that could possibly work. If it doesn’t then there will be no greater solution. Today we have only weak facsimiles of free markets with massive government and central bank intrusions. That doesn’t mean an absence of environmental protection. It also requires discussion and education within that context as well as honest ideology free science.
By the way, I’m not sure that the notion of a very limited government societal structure is not itself a utopian vision that can never actually endure for reason that is as a law of nature. I consider it a great unsolvable human dilemma and maybe we are just doomed to repeated cycles of the rise and fall of civilizations. But that’s another discussion.

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and not quantity. Malthus was right if you consider all life from a quality standpoint. If you are a quantity sort, you can’t even see the lack of quality and therefore think that Malthus was a loony tune. There are billions of folks around the world that have an extremely low quality of life as the result of folks who make policies and personal decisions based on thinking (feeling?) that Malthus was wrong.
Note: This applies to other comments that have appeared at PP in the last few hours.