GDP 5: the first threat – Survival Choke

Continued from GDP 4: The chocolate river: on how the first world is having withdrawal symptoms!

1. Population increase and poverty

1

Figure 13[i]

In all this fighting for world resources and on making money, a critical aspect which went out of control is population explosion. The graph above shows the frequency of procreation after 1950s. A developing economy to sustain the wealth of what it is earning should try to distribute it by employing its population i.e. creating new jobs. As long as there are jobs in the market and people are employed, there would be stability in the society. Simultaneously a control on population growth with focus on education will make it a healthier growth. But in reality, the economies with less income are going on the loose with multiplying. It is just about time, when the population flood should overflow to the developed countries too. It will shake the income distribution on a world scale. Population increase will make the income distribution so hard, that the people who will lose out the competition might even commit suicide and in volumes!

2

Figure 14[ii]

3

Figure 15

As you see in the above graphs, the population growth in the high and middle income economies have reduced and the lower income has remained constant or rather increased a bit. This multiplication year by year has led to the situation that high income economies with 1.3 billion people i.e. 18% of population are holding to about 53% of the world GDP of $ 80 billion. Meanwhile 82% of the rest population has the share of 47% of the income. Despite this harsh share, something positive has happened over the years. The data from UN shows that the situation with extreme poverty has bettered. This is certainly a big success in terms of distribution of wealth. With increase in world income, the extra money at disposal has been put at good use with extreme poverty reducing from 1.8 billion people to 0.7 billion [iii]in 2015.

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Figure 16

5

Figure 17

World Bank defines $ 1.9 as the limit for extreme poverty: it will be interesting to see by how much this extreme poverty situation has bettered. I’m going by the logic that if people were taken out of extreme poverty, they would land in low income or middle income categories. The graph below gives the information on how wealth is distributed in the rest of the sectors. Of the 6 billion people in the non-rich countries, 4.5 billion are in the middle and low income sector. With increasing population, this is going to be a really big challenge on how this distribution can become better. Even if income can set limits for extreme poverty, it is still not an indicator of a sustainable lifestyle. This will be one of the biggest challenges the world governments will face: to ensure income distribution and develop a sustainable lifestyle.

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Figure 18

2. Threat of automation and qualification of labor:

To avoid decrease in productivity[iv] due to labor force, the first world countries are increasingly investing in automation, which will make the countries increasingly independent from human labor. To give you an idea of how much automation can impact the employments in the market, we can compare India, Germany and the United States in the agriculture sector. To work on a 10 hectare land (or 40 acres) all throughout a year, India can employ 211 people[v]. Germany, for the same size of land, utilizes more machines to plough, collect the reap etc. and employs thereby just 11 people[vi]. And our obese guy Mr. America employs just 1[vii] person for the same size of the land! The interesting fact is that the one American guy earns a salary of 34 farmers [viii]in India. The same guy in Germany earns the equivalent of 42[ix] farmers in India! With increasing corporate farming in India, the independent farmers are being displaced. Lack of support structure from the government in times of drought and other natural calamities, the lack of alternative opportunities or training for the farmer to develop alternative skills to have some mean of income, has been killing them. Every year about 15000[x] farmers commit suicide in India, most of it due to credit burden.

The message is very simple and is imminent to spread to the other sectors too. If you are not on the money bandwagon, you are likely to be pushed to commit suicide. Agriculture sector sadly is taking the first hit due to the focus on increase in productivity per person. To survive in a world heading towards automation or productivity increase, basic schooling wouldn’t be enough. Labor force is expected to be highly skilled. They will move away from physical work and will have to engage more in programming work i.e. machines will produce and maintain themselves. The new worker will be needed to just program the machines and having it set up. It is estimated that Automation will dispose up to 800 million[xi] traditional jobs by 2030. Currently the world has a total labor force of about 3.4 billion[xii] i.e. Automation is expected to affect about one in four jobs by 2030. Automation will form new jobs needing new skills, but it is hard to estimate how many of such jobs will be created.  It will certainly not be 800 million else the reduction in labor will be pointless.

Asimov’s three laws on robotics is world known. Probably it’s time to define a set of laws to restrict its usage. I would propose the following.

The three laws for using Robotics in employment sector

  1. Human assist automation or semi automation must be given precedence to full automation, as long as the EHS (Environment, Safety and Health) standards set by the government authorized body are not achievable by the former
  2. Automation may not replace a person as long as the precision needed for an unavoidable product or work function cannot be achieved manually or through semi automation
  3. Regulatory bodies and authorities must focus on increasing employments as long it does not conflict with the first and the second law

3. Quality of living: Population density and air pollution

In Asia, especially the quality of living has started to see the first impact. The India I was living in 10 years before is not the same India today. First thing I noticed when I got out to the city or especially when I rode a motorbike was how heavy and alien the air felt to the lungs: being in an Indian traffic felt as if the exhaust from the vehicle was directly flowing into my mouth. The strain and the irritation on the eye is another sign. Nothing can be more symbolic than seeing people walking on the street with their eyes and mouth covered. That is the quality of living this chapter aims at describing. In Delhi, the smog is apparently felt inside the apartments. The measurement of this is the PM2.5 air pollution. It says that regardless of the pollutant, how many harmful particles of a tiny size of 2.5 μm can be found in a space of one meter cube. The feeling what I had described above is absolutely “Red” and the graph below depicts the alarming levels world over

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Figure 19[xiii]

Secondly what goes hand in hand with air pollution and the deaths connected to it is the population density. Although the west emits as much emissions into the air, the number of deaths was contrarily seen in the east. The major driver behind this cause is not just the increase in population, but also the population density resulting out of it. Especially for cities where the people are most densely accommodated, it will be a big challenge for the governments. As seen in the graph below, the current average density has increased to a bit over 58000 people per sq.km. The higher the density, the higher the impact pollution would have. It’s literally gassing the population. The overall world industrial drive is not showing signs of turning green. The west would eventually have its “red” sooner or later. By that time, their GDP would be skyrocketing as they will be trapping their air in cans and selling to China and India for $10 a bottle!

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Figure 20[xiv]

To be continued: GDP 6: the second threat – Economical Choke

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References:

[i] https://ourworldindata.org/world-population-growth

[ii] https://en.wikipedia.org/wiki/List_of_continents_by_GDP_(nominal)

[iii] https://ourworldindata.org/extreme-poverty

[iv] https://ourworldindata.org/employment-in-agriculture 

[v] https://data.worldbank.org/indicator/SL.AGR.EMPL.ZS

[vi] https://tradingeconomics.com/germany/agricultural-land-percent-of-land-area-wb-data.html

[vii] https://en.wikipedia.org/wiki/Agriculture_in_the_United_States

[viii] https://tradingeconomics.com/united-states/gdp-from-agriculture

[ix] https://en.wikipedia.org/wiki/Economy_of_Germany

[x] https://en.wikipedia.org/wiki/Agriculture_in_India

[xi] http://fortune.com/2017/11/29/robots-automation-replace-jobs-mckinsey-report-800-million/

[xii] https://data.worldbank.org/indicator/SL.TLF.TOTL.IN/

[xiii] https://ourworldindata.org/air-pollution

[xiv] https://data.worldbank.org/indicator/EN.POP.DNST

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