23 March 2009
The greatest threat facing states in the world today is not invasion by other states — although that may happen from time to time — but, as Bill Lind suggests, a crisis in the legitimacy of the state itself. This does not imply, however, that the focus should be placed on non-state actors such as narco-gangs, ethnic militias or ‘terrorists’.
Consider: if a person dies, their body will be consumed by maggots. However, healthy people cannot be infected by maggots. Trying to save lives by declaring war on maggots is a logical fallacy. By the same token, healthy states can easily deal with criminal elements using conventional police procedures. Non-state actors can only threaten a centralized state after the state has already crippled itself. Tactical brilliance in dealing with terrorists is ultimately as useless in maintaining the legitimacy of the state as a nuclear-powered aircraft carrier would be in combating drug gangs in Tijuana.
So how does the state kill itself? By the tried and true method of crushing the people into hopeless poverty so as to enrich the lords and princes at the top. When the average person can, without superhuman effort, live a reasonably decent life and raise a family with some degree of security, then the state has basically won. The people have a stake in the system, they have something important to lose should it fail, and they will, for the most part, play by the rules. But when people are crushed into the dirt, when they have no prospect for any kind of life at all, then the state has for them no legitimacy, and they will turn to gangs or ethnic militias in a quite understandable attempt to survive. Additionally, low-wage societies tend to be capital-starved and poor overall. This means that the security forces are underpaid, poorly equipped, and corrupt. An increasingly desperate and rebellious population coupled with increasingly ineffective and dishonest state forces is the typical death of states.
A state cannot legislate prosperity. A people must become prosperous through their own patient efforts of slowly building up per-capita wealth. A state can help through maintaining a fairly-administered body of law, and arguably through things like maintaining a free public network of roads and providing universal education, but the role of the state in prosperity is primarily negative: to NOT deliberately create poverty. The problem is that one person’s prosperity is another’s high labor costs, and there is nothing so automatically profitable to the rich and powerful as a limitless source of cheap labor.
Avoiding the temptation to push wages down for the benefit of the rich is the heart and soul of the legitimacy of the state. This is where the battle is won or lost. A state whose culture allows of some restraint on the clarion cries of the landed gentry for cheap labor is a state with a core of legitimacy. On the other hand, a state that focuses its efforts on driving labor costs down to (or, indeed, below) the most miserable level of subsistence is a state that is destined for slow rot.
So how do states create poverty? Through two primary mechanisms: one minor and one major.
The minor mechanism by which states create poverty is theft. The rich simply steal from everyone else. I am not talking about a misguided liberalism where productive enterprises are taxed to supply an army of do-gooder government busybodies. I am talking about outright theft: taxing working people and giving the money to the rich, period.
For example, in Mexico’s recent financial crisis, a handful of wealthy rentiers were given tens of billions of dollars, and this was paid for by taxing food and medicine for people making perhaps a dollar an hour. Or consider America’s current financial crisis: the government has already given or promised over ten trillion dollars to Wall Street insiders, and is proposing to pay for this by gutting social security and medicare (already paid for by you and me, thank you very much), and by raising taxes of all kinds on the middle class.
Contrary to popular propaganda to the contrary, Obama is NOT going to tax the rich. Obama is planning to raise the top federal tax rate for upper middle class wage-earners to over 50%, yet the top tax rate for a billionaire making capital gains will be held to 20% or less. This is not ‘socialism’, it is simple piracy.
The major mechanism by which states create poverty is by deliberately maximizing population growth. There is so much disinformation on this topic that it would take volumes for me to rebut, but bear with me for a little while.
Nobody beats the law of supply and demand. Wages are set entirely by the balance of supply and demand for labor. Period. Many factors influence this balance, but the dominant one is the fertility rate. When people all have seven kids each starting at age 14, then there will always be more people than jobs, wages will be driven down to the most miserable subsistence, and the overall society will be capital starved, stagnant and corrupt. However, for the rich as a class nothing is more profitable than an endless supply of cheap labor. However, because government policies favoring rapid population growth are the single biggest factor in wages and profits, they are almost never discussed, because powerful interests find such discussion inconvenient.
Malthus has not been proven wrong. First, it’s not just Malthus but also David Riccardo, John Stuart Mill, John Maynard Keynes, Alan Greenspan, and the editorial staff of the Wall Street Journal who hold the Malthusian position (the latter two might claim to disagree, but when they wax rhapsodic about how rapid increases in population drive down wages, or talk about how the vast excess of workers in China or Mexico makes it impossible for wages to rise, well we know what the story is). Malthus is standard economics.
Malthus never predicted a global catastrophe. Malthus only described what he saw, which is that when everybody has six kids starting at age 14, regardless of circumstance, the resulting exponential population growth quickly absorbs all resources into just keeping people alive. At this point the average person is reduced to subsistence and population stabilizes because of increased mortality. The society becomes capital-starved, incapable of making large investments, and stagnant. Desperation causes widespread corruption, which magnifies the misery and contributes to the stagnation. But because there is no need to pay more than a subsistence wage, the profits and power of the rich are maximized.
It is not the absolute number of people, it is the rate of increase. There is no maximum population. However, when there is no frontier, adding more people requires massive investments in capital and developed resources. These investments must be made BEFORE any new people can contribute to productivity, because without tools or resources, people have precisely zero productive ability. Beyond a moderate rate of population growth a rapidly growing population almost always requires more investments than the real non-speculative physical surplus of the economy can provide.
In the great depression the American fertility rate fell, because people were worried about having children that they could not support. The fertility rate did not increase until after times got better. Every prosperous society has such a history. Unless there are colonies or an open frontier, societies with high sustained fertility rates inevitably remain miserably poor. Prosperity always comes after fertility rates have moderated, it never precedes it.
Consider Mexico. Its recent population explosion was engineered by the Mexican oligarchs who waged a massive propaganda campaign to convince Mexicans to have enormous numbers of children at an early age (see “The Mexicans: a personal portrait of a people”, by Patrick Oster). They actually gave medals to women with large families! Ostensibly to make Mexico “bigger and better”, the only reason I can think of for this policy is to ensure that wages stay low.
It’s working. It’s working so well that Mexico is in danger of becoming a failed state.
Consider Iran, where the ayatollahs encouraged large families so that they could use human wave attacks against Iraq rather than hire competent generals. As usual, after population growth rates picked up the Iranian standard of living began falling, and dealing with the unrest caused by all those unemployed young men became a major problem for the state.
It gets little press that the current massive growth of China’s population was due to Mao’s policy of encouraging the Chinese to have enormous families. The current one-family one-child policy (Official current fertility rate: 2 children/family. Probable real fertility rate: three children/family) slowed but did not stop the demographic momentum of the previous policy of maximizing population, and was only instituted when the communists worried that not even they could keep order in the resultant misery.
It is a lie that the communists caused crop harvests to fail during the cultural revolution: the communists initially engineered substantial gains in food production, just not enough to keep up with an exponentially growing population. But then, nothing ever does.
No society in all of recorded history has industrialized faster than Japan. However, even the best that flesh-and-blood human beings have ever achieved was not enough to keep up with rapid exponential population growth, and by the eve of WWII Japan was on the brink of collapse and chaos. So to all you people who claim that rapid population growth is no problem with the correct economic policies: rubbish!! The Japanese militarists had no illusions about their chances of defeating the United States. It’s just that they had no alternative: without invading and colonizing other lands their own exploding population would soon have destroyed their society (Read John Toland’s wonderful book The Rising Sun).
As you might expect, that exploding population was not the “inevitable” consequence of industrialization, it was the result of a deliberate Japanese government policy to maximize population! Odd, though, how buried this rather important fact is: I only found it in the Eubios Journal of Asian and International Bioethics, and only because I already suspected the existence of such a policy before looking for it (Vol.6, pp158-9, 1996).
The current high Japanese standard of living only started after the post-WWII fall in fertility rates. As usual.
The Ivory Coast used to be one of the more prosperous nations in Africa. This meant that wages were relatively high, because that’s the definition of prosperity. But wages can only be high when employers cannot find workers who must accept low wages. So the rich imported massive numbers of muslim refugees to end a “shortage” of low-wage workers. Of course, no society in all of recorded history has actually run out of workers — the work is always done, the issue is only, at what wage level? The poverty resulting from this engineered population increase has torn the country apart into immigrant and nativist factions, and the state is on life-support.
The elites will always push for ever more people, for ever cheaper wages, unless the mass of poverty threatens the very stability of their society. Then without apology they switch to trying to limit population. They may have some success if they can succeed in dumping their surplus population somewhere else, with the added advantage of gaining political and economic control over new lands.
But because the rich always wait until the last minute, and because demographic momentum means that even if the fertility rate could be instantly lowered to 2 children/family the population would still double or triple before stabilizing, there is no happy balance here, and the net effect is always to maximize population growth to an extent that threatens the survival of the state.
Look for a failing state, and you are more likely than not going to find a rapidly growing population. Look for a rapidly growing population, and if you dig enough, you are likely to find government policies dating a generation or two prior.
This has important implications for evaluating current events. For example, looking at the demographics of Pakistan, we can readily see the reason for the current unrest, and further, it is a virtual certainty that Pakistan will remain chronically unstable. Tactical innovations for the security forces, democracy, or changing the marginal tax rate on capital gains, are simply irrelevant wastes of time.
Timothy Gawne has a degree in electrical engineering from MIT, and worked for a time at Digital Equipment Corporation before getting a
PhD in physiology and entering the field of medical research. He is
currently a university professor whose primary field is neuroscience,
with a particular emphasis on how information is processed and
transmitted in the visual parts of the brain.
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