SP 864 Managing Risk Topic: Population & Migration

1. SP 864 Managing RiskTopic: Population & Migration Spring 2007 Professor Jim Post March 6, 2007

2. Population and Migration • Population is both cause and effect • Migration is both an effect, and a cause • Population is shaping and driving three major social, economic, political issues in U.S.A. • Aging of the population • Immigration – economics and politics • Social Security, Medicare, pensions J. Post 2007

3. Carrying Capacity • Population and resource use are related • Since Thomas Malthus, there is a fear that there are limits to growth (Donella Meadows) • TM: food supply grows arithmetically, while population grows geometrically; hence, crisis. • The Earth has finite resources – therefore, limits to the number of inhabitants it can support. This is the idea of “Carrying Capacity.” J. Post 2007

4. Grains rise but no respite for hungry In 2004, global grain production broke 2 billion tons for the first time in history, marking a 9-percent increase from the 2003 level. Also in 2004, according to the U.N. Food and Agriculture Organization, the number of hungry people around the world increased for the first time since 1970. Starvation now kills more than 5 million children each year. The biggest factor behind this record grain production in 2004 was an increase in average yields: with the same amount of hectares for planting, farmers were able to harvest more crops. However, most people go hungry not because of a global food shortage but because they are too poor to buy food or to obtain the land, water, and other resources needed to produce it. J. Post 2007

5. National Wealth Rank Order … Australia Austria Brazil Canada Denmark Luxembourg Maldives Russia Sweden United States Zambia GDP per capita J. Post 2007

6. Population is the denominator • GDP divided by number of people in a nation • Per capita GDP is the best gross indicator of prosperity and well-being • High GDP / high population = ? • Medium GDP /small population = ? • Low GDP / high population = ? J. Post 2007

7. The American Exception – Eberstadt’s thesis • UNDP points to four major trends to 2050 • Global aging … • Decline of the West • The eclipse of Russia • American exceptionalism J. Post 2007

8. The Economics of Aging – According toThe Economist Young Population Old Australia USA New Zealand Ireland Japan Germany Rich Poor Wealth China Russia Eastern Europe Developing Nations J. Post 2007

9. Population Issues – US 2007 • Aging • health care costs • Males v. females • Pensions – social welfare • Who pays • How much • When do benefits begin? • Think of US auto industry today • … GM, Ford’s health care and pension costs • Three variables: contributions … benefits … timing J. Post 2007

10. Some responses • Organized elders … “The Grey Panthers” • Divisive politics … haves, have nots • Pressures on employers • New markets … new methods • “Older people are an industry here.” (Florida) • New kinds of jobs --“bridge jobs,” part time, etc. • Structural facts: Ratio 5:1 versus 3:1 • “The contract between the generations needs renegotiating, not ditching.” (The Economist) • The Swedish model … (next slide) J. Post 2007

11. The Swedish Model • WSJ 3-5-07 • Sweden’s incentive system is working … • Pension payouts are tied to salaries, life expectancy, and health of the economy • Swedes are retiring later … formula averts some political friction J. Post 2007

12. Year Population 000 2005 6 464 750 2010 6 842 923 2015 7 219 431 2020 7 577 889 2025 7 905 239 2030 8 199 104 2035 8 463 265 2040 8 701 319 2045 8 907 417 2050 9 075 903 World Population Growth MBA Peak Retire Source: Population Division of the Department of Economic and Social Affairs of the United Nations Secretariat, World Population Prospects: The 2004 Revision and World Urbanization Prospects: The 2003 Revision, http://esa.un.org/unpp, Your birth J. Post 2007

13. World Population -Density Birth MBA Peak Your birth Retire J. Post 2007

14. Migration (a natural phenomenon) • USA: A Nation of Immigrants? • David Kennedy’s Thesis: • Why did people migrate to US in the past? • Why do they do so today? • What are the consequences for them, and for the nation? • The absorption thesis: small numbers, diversity, and economic vitality. J. Post 2007

15. Migration … • Greatest migration is rural to urban…true from China to Europe to the U.S. • Migration is a “push-pull” dynamic – • attract and connect • Melting pot myth • Skilled v. unskilled labor • Kennedy’s call for tolerance etc. • “Chicano Quebec” in SW USA J. Post 2007

16. Borjas article • “It’s about distribution stupid!” • Who wins, who loses? J. Post 2007

17. Malthus lives • Does population growth drive poverty? or • Does poverty drive population growth? • “High birth rates are as much an effect of poverty as they are a cause.” The Economist “A Populous Planet” (1994) • TM: food supply grows arithmetically, while population grows geometrically; hence, crisis. J. Post 2007

18. Grains rise but no respite for hungry In 2004, global grain production broke 2 billion tons for the first time in history, marking a 9-percent increase from the 2003 level. Also in 2004, according to the U.N. Food and Agriculture Organization, the number of hungry people around the world increased for the first time since 1970. Starvation now kills more than 5 million children each year. The biggest factor behind this record grain production in 2004 was an increase in average yields: with the same amount of hectares for planting, farmers were able to harvest more crops. However, most people go hungry not because of a global food shortage but because they are too poor to buy food or to obtain the land, water, and other resources needed to produce it. J. Post 2007

19. Coal use leads to health costs The rapid growth in coal use in China and India, where pollution controls are minimal, is adding to local and long-distance pollution. More than 80 percent of Chinese cities in a recent World Bank survey had sulfur dioxide or nitrogen dioxide emissions above the World Health Organization's threshold. Scientists have concluded that growing up in a city with polluted air is about as harmful to a person's health as growing up with a parent who smokes. Although air pollution is concentrated in cities, it can move well beyond them: for example, acidic lakes in Scandinavia have been linked to pollution from factories in the United States. The World Bank projected that on average 1.8 million people would die prematurely each year between 2001 and 2020 because of air pollution. J. Post 2007

20. Population and health J. Post 2007

21. HIV/AIDS spreads The number of people living with HIV/AIDS rose to 42 million at the end of 2002. Five million people became infected with HIV in 2002, and another 3.1 million died of AIDS-related causes.For the first time, women account for half the people living with HIV/AIDS. Heterosexual transmission, particularly in Africa and the Caribbean, is the primary cause of infection among women, who are two to four times more likely than men to become infected during unprotected sex. Source: HIV/AIDS Pandemic Spreads Further , Vital Signs 2003, pp. 68-69. J. Post 2007

22. AIDs Nearly 90 percent of AIDS-related fatalities occur among people of working age, making it the leading cause of death worldwide for people ages 15-49. The seven most seriously AIDS-affected countries, all in sub-Saharan Africa, now lose as much as 10-18 percent of their working-age adults ever five years, mainly to this disease. (Industrial countries, in comparison, typically lose about 1 percent of this age group to all death in five years.) Largely because of this rising pandemic, death rates have actually reversed their decline in more than 30 countries. The International Labour Organization predicts that in the absence of treatment, as many as 74 million workers worldwide could die from AIDS-related causes by 2015. Between 1992 and 2002, the economy of South Africa, home to the largest infected population, lost an estimated $7 billion annually due to declines in its labor force. J. Post 2007

23. Millenium goals According to the World Bank, less than one-fifth of all countries are currently on target to reduce child and maternal mortality and provide access to water and sanitation, while even fewer are on course to contain HIV, malaria, and other major diseases slated for reduction under the United Nations' Millennium Development Goals (MDGs). While some countries and regions have made significant gains in poverty reduction and the world as a whole is generally believed to be on track for meeting the MDG targets set for poverty reduction and clean drinking water, the situation is less hopeful for the other goals and targets, including those on hunger, primary education, child mortality, and access to sanitation. The World Health Organization estimates that to sustain a public health system, a minimum of $30-40 per person is necessary, but in the world's poorest countries, where GPD per capita is typically in the low hundreds, even this rather modest level of spending will be impossible without outside investment. In 2003, donor countries gave $68 billion in official development assistance, or just 0.25 percent of their gross national incomes, far short of the 0.7 percent of national income goal that was initially adopted at the 1970 U.N. and broadly reaffirmed in 2002 at major international conferences. Only five countries have met the 0.7 percent target soGeneral Assembly far: Denmark, Luxembourg, the Netherlands, Norway, and Sweden. J. Post 2007

24. Millenium goals - progress J. Post 2007

25. Rich-poor gap still rising The global economy has grown sevenfold since 1950. Meanwhile, the disparity in per capita gross domestic product between the 20 richest and 20 poorest nations more than doubled between 1960 and 1995.Of all high-income nations, the United States has the most unequal distribution of income, with over 30 percent of income in the hands of the richest 10 percent and only 1.8 percent going to the poorest 10 percent. Source: Rich-Poor Gap Growing, Vital Signs 2003, pp. 88-89. J. Post 2007

26. Wrap Up • Facts • Values • Biases • Is there an optimal number for a nation, a region, the globe? (carrying capacity) • Does education change the relationship between poverty and population? • More is less; less is more. J. Post 2007