Canadian Cincinnatus

Ambrose Evans-Pritchard’s optimism an antidote to Mark Steyn’s pessimism

I have just finished reading Mark Steyn’s latest doom-and-gloom tome, After America, whose thesis is that America is as finished, or almost as finished, as Europe. Therefore, Ambrose Evans-Prichard’s article in the Telegraph is most reassuring:

"’The US was the single largest contributor to global oil supply growth last year, with a net 395,000 barrels per day (b/d),’ said Francisco Blanch from Bank of America, comparing the Dakota fields to a new North Sea.

Total US shale output is ‘set to expand dramatically’ as fresh sources come on stream, possibly reaching 5.5m b/d by mid-decade. This is a tenfold rise since 2009.

The US already meets 72pc of its own oil needs, up from around 50pc a decade ago.”

"’Made in America, Again’ - a report this month by Boston Consulting Group - said Chinese wage inflation running at 16pc a year for a decade has closed much of the cost gap. China is no longer the "default location" for cheap plants supplying the US.

A ‘tipping point’ is near in computers, electrical equipment, machinery, autos and motor parts, plastics and rubber, fabricated metals, and even furniture.

‘A surprising amount of work that rushed to China over the past decade could soon start to come back,’ said BCG's Harold Sirkin.

The gap in ‘productivity-adjusted wages’ will narrow from 22pc of US levels in 2005 to 43pc (61pc for the US South) by 2015. Add in shipping costs, reliability woes, technology piracy, and the advantage shifts back to the US.

The list of ‘repatriates’ is growing. Farouk Systems is bringing back assembly of hair dryers to Texas after counterfeiting problems; ET Water Systems has switched its irrigation products to California; Master Lock is returning to Milwaukee, and NCR is bringing back its ATM output to Georgia. NatLabs is coming home to Florida.

Boston Consulting expects up to 800,000 manufacturing jobs to return to the US by mid-decade, with a multiplier effect creating 3.2m in total. This would take some sting out of the Long Slump.”

This alternate viewpoint illustrates a serious problem that every forecaster faces. What determines the future is not one particular set of physical tendencies but the vector sum of all of them. While Mark Steyn listed many trends in his book, he did not mention the increased competetiveness of American manufacturing or the US’s increasing energy self-sufficiency. These are important factors that should not have been left out.

The problem I have with Steyn is not in any of his particular concerns. In fact, most of them are my concerns. I also agree with most of the solutions he suggests. The problem I have is that his examples are biased almost entirely towards the negative. Few positive developments (such as the ones cited by Evans-Pritchard) are ever mentioned. The cumulative effect is a very distorted picture of reality. What’s worse, Steyn dresses his book up as a prediction of America’s fate.

Let me tell you something as somebody whose profession life for a long time involved making accurate and specific predictions about the future: it’s hard to do. Developing a forecast requires one to take into account every physical trend in existence, not just those that are occupying your thoughts or the headlines at the moment, but all the little things that have the potential to grow into world-shaping trends, like the proverbial butterfly in India that creates a hurricane two weeks down the road in the Carribean by flapping its wings. For instance, take Deng Xiaoping’s economic liberalization in China. In the late 1970’s, he allowed Chinese peasants to sell their own wares at local markets. Who at the time would have though that 30 years on, a process designed to relieve the hunger of Chinese peasants would accumulate enough economic power to bankroll America’s deficit? This example illustrates that our ability to predict the future is very limited and degrades very quickly as the forecast date recedes. This means that any forecast of human affairs 20 years out is likely almost totally worthless, except in very general terms. Mark Steyn seems unaware of any such limits on human reasoning.

Which is a pity, because After America is an otherwise a good book that shines a light on many of today’s problems and offers constructive solutions. It’s just not a credible prophesy.

 

Illegal immigration from Mexico declining rapidly: a lesson for Mark Steyn

This from esteemed commentator, Michael Barone:

“From 1980 to 2008, more than 5 million Mexicans legally entered the United States. And Mexicans account for about 60 percent of the estimated 11 million illegal immigrants in the U.S. today.

Immigration policymakers have assumed that the flow of Mexican immigrants would continue indefinitely at this high level. But now evidence is accumulating that this vast surge of migration is ending. 

The Pew Hispanic Center, analyzing Census statistics, has estimated that illegal Mexican entrants have been reduced from 525,000 annually in the 2000-04 years to 100,000 in 2010.

‘The flow has already stopped,’ Douglas Massey of the Mexican Migration Project at Princeton recently told The New York Times. ‘The net traffic has gone to zero and is probably a little bit negative.’"

“The Pew Hispanic Center estimates the 2010 illegal population at 11.2 million, down from the 2007 peak of 12.0 million and just about the same level as in 2005. It's probably lower today.

Even more important, things have changed in Mexico. Its birth rate has fallen from 7 children per woman in 1971 to 3.2 in 1990 and 2 in 2010, barely enough to prevent population loss.”

“Mexico has finally become a majority middle-class country, former Foreign Minister Jorge Castaneda argues in his recent book ‘Manana Forever?’ Mexico has more cars and television sets than households now, most Mexicans have credit cards, and there are almost as many cell phones as people.”

“The historic experience has been that countries cease generating large numbers of immigrants when they reach a certain economic level, as Germany did in the 1880s. Mass migration from Puerto Rico, whose residents are U.S. citizens, ended in the early 1960s, when income levels reached one-third of those on the mainland.”

I bring this up for two reasons:

First, this is a complete surprise to me. Everything else I have read led to believe that illegal aliens were overrunning the US from Mexico. Apparently those writers who are predicting that America will be run over by Mexicans are still stuck in 2007.

Second, and more importantly, this is a good cautionary tale for apocalyptic demographers like Mark Steyn, who take exponential trends (all demographic trends are exponential), extrapolate them into the future several decades and predict the end of the world as we know it.

As economist Thomas Sowell once noted, if you take a physical trend – any physical trend, no matter what it is – and extrapolate it linearly into the future, the result will be catastrophe. Sowell’s point, of course, is not that the world is bound to end but that linear extrapolation of physical trends beyond the very near future (i.e. nowcasting) is invalid. The world just doesn’t work like that. Sowell made this point to counter the predictions by environmentalists of widespread famine and oil shortages by the mid 1980’s.

It strikes me that when Mark Steyn predicted the Eupocalypse in America Alone, he made the same mistake that Paul Ehrlich did in his book, The Population Bomb, only in reverse. If extrapolating linearly into the future is an inaccurate technique, then extrapolating exponentially into the future is doubly bad.

I know these criticisms of Mark Steyn will get some pushback from Steyniacs in the comments section so I want to head some of this criticism off at the pass. Do not think I am a pro-immigration type. I am not. I would like to see illegal immigration eliminated and legal immigration significantly reduced (both here and in the US) in order for the melting pot to have a chance to integrate everybody into the body politic. Rather, what I am is anti-doom-mongering.  

I actually enjoyed America Alone and think it serves as a good cautionary tale. My only point is that it is not a forecast. I look at it like those Congressional Budget Office projections that predict that the US federal debt will exceed the world's GDP by 2050 (or whenever). These projections are good to demonstrate the absurdity and, oh what's the word for it - oh yes, sustainability of the current trends, but most assuredly they are not accurate forecasts, mostly because the very trends they highlight will create countervailing forces that will decisively change the course of the US.

To put it another way, consider a cohort of 100 people in one generation. If those 100 people produce 99 children, we are in a demographic death spiral, and if those 100 people produce 101 children, we are in a population explosion. If we follow the extrapolation logic of both Ehrlich and Steyn, our thinking must oscillate wildly between a Steynian apocalypse and a Club of Rome apocalypse. Only if those 100 people produce 100.0 children is there no cause for panic.

The collapse of the housing bubble and the rise of affordable family formation

An interesting angle on America’s housing crisis:

“But housing's troubles may have a silver lining. If you're a homeowner, the steep fall in prices is calamitous. But if you're a future buyer, it's a godsend. What we're seeing is a massive wealth transfer from today's older homeowners to tomorrow's younger homeowners.”

“The National Association of Realtors routinely publishes a housing "affordability" index, which judges the ability of median families to buy the median-price home at prevailing interest rates. By this measure, existing homes are the most affordable since the index started in 1970.

Young buyers "will be able to enter the housing market at bargain prices," argues NAR economist Lawrence Yun. When home prices again rise, increases will parallel income gains, meaning that the relative burden of housing costs will remain roughly stable, Yun says.”

One of the most important but underrated factors of a successful, sustainable society is affordable family formation. It is so underrated that it is actively rooted against. For instance, rising home prices are always hailed as a good thing. Well, who are expensive houses a good thing for? Not young couples starting to build a family. And I say this as an existing homeowner with no mortgage.

The fact remains, a society is sustainable (to borrow the environmentalists’ favourite phrase) only if it provides a friendly environment to young couples who want to have children – i.e. create the next generation. This is why anti-sprawl regulations such as Ontario’s Greenbelt (where much of the land around Toronto has been declared off-limits to development) are so harmful.

This is also why the urban boosters - who think a great city must have a ‘vibrant’ downtown core to attract high-end knowledge workers such as venture capitalists, celebrity chefs and IT gurus – are so off the mark. What a functioning – as opposed to great - city needs is a large, stable, engaged middle class; in other words, men and women with families. And how do you attract them? With affordable houses that have backyards for their children to play in; safe, child-friendly neighbourhoods; good schools; and lots of mid-level jobs.

Those smart and sexy knowledge workers the urban planners are infatuated with are too footloose to be really engaged in any community they live in. It is the middle class families who plant their flag where they live and proclaim, this is my home! It is their bourgeois values that imbibe the city with the kind of civic virtues that make it a great place for ordinary people to live in.

Cities that don’t care for affordable family formation and court high-end yuppies instead, end up with a bifurcated population: the very rich (who can afford the land and the taxes) and the very poor (who don’t have to). Manhattan is the prime example with its juxtaposition of the Upper West Side and Harlem. San Francisco is a classic example of a town that has made the journey from a middle-class-friendly city (which it actually was in the 1950’s) to the overpriced yuppie paradise it is today. As a result, there is a growing dearth of children, much to the consternation of the local teachers’ union. Young families of modest and even not-so-modest means can’t afford to live there, and increasingly don’t.

In a generation, San Francisco will have an entirely different population...and character.

What If Only Liberals Want to Be Multicultural?

The prefered assumption of liberals and the left is that all new Canadians want to embrace multiculturalism and only aging, racist white men are standing in the way of utopian harmony.  I've always been suspicious of this assumption, mostly because I've met racists all over the world, from Pakistan to Romania, from Japan to St. Petersberg, so I find it hard to believe that everyone who immigrates to Canada is ready to embrace everyone else's culture with tolerance and respect.

But this article in the Toronto Sun about Muslims protesting on Remebrance Day raised even my eyebrows.  I have no argument with them protesting the war in Afghanistan, although I'd like to remind them of who helped them during the decade the Soviets occupied the country, and while burning a poppy is culturally insensitive and shows they have no knowledge of Canadian history or where that symbol came from, that kind of drama is the stock and trade of protests, an art perfected by the left.

What struck me dumb was their chant: "Islam will dominate!" and "Our dead are in paradise.  Your dead are in hell."

Now I traveled briefy with the mujahideen in Afghanistan in 1988, just as the Soviets were getting ready to make their escape from that disasterous war, so it doesn't surprise me that they believe we're going to hell or that Islam (and by extension the protesters) will "dominate" in the end.  What amazed me was that they were utterly shameles and open about it.

White males who chant similar intolerant rubbish publicly usually belong to neo-Nazi skinhead clubs, and the thought-police of human rights tribunals would be all over them in seconds for such an outburst.  Stiffer hate crime legislation would be dusted off and enacted, and existing hate crime laws would be prosecuted with extreme prejudice.

With Muslims, of course, the human rights groups fear to tread.  These Islamists are serious, and if you try and charge one of them with a hate crime then you'd better have the RCMP open your mail with a bomb squad robot, let alone brace yourself for a barrage of bad press from the MSM.

The Irish, the Chinese, the Italians, all the Europeans after WWII, the Vietnamese, the Hindu Indians--all these ethic groups and many others came to Canada and for the most part lived and let lived.  They may have felt superior to established Canadians, and some may have even thought they had superior religions or morals, but they were relatively quiet about it.  In the long run, they became Canadians.

But there is a branch of radical Islam that wants to conquer and convert Canada. They shout "Islam wil dominiate!"  Dominate.  Rule.

Jack Layton thinks he can win these people over to the NDP cause by sending them Ramadan greetings, but he'd better be ready to toss away the NDP stand on equal rights for women, homosexuals and anyone whose religion isn't Islam.  There has already been a rise in anti-semetic attacks on everything from synagoges to grave yards, and no one is pointing the finger at skin heads anymore.  Sadly, no one is brave enough to point a finger at all.

If multiculturalism dies in Canada, it won't be white males who killed it.  Indeed, it was Pierre Trudeau and his cronies who pushed the idea in the first place.  It just didn't occur to them that some people would come here and not agree with them that we should all live shoulder to shoulder and respect one another's culture.

It was a nice idea.  So is banning war.  Try that and see how long you last as a country when things go bad.  These ideas fail because there are always some radical groups out there like fundamentalist Muslims who will see it as weakness and exploit it to the max.

Get ready Canada.  The wolves are in the sheep pen.

Mike Downtown

The growing political viability of solutions to the West’s demographics death spiral

In a couple of posts (here and here), I pondered the pro’s and con’s of Mark Steyn’s thesis that the West is dying a not-so-slow death because of a lack of babies and is threatened to be overrun by hoard of more fecund barbarians.

In my article against the Steyn hypothesis, I stated that he is making the same mistake that Paul Erlich made in his book The Population Bomb. That is, that both are extrapolating existing exponential trends (all demographic trends are exponential) into the future and you can’t do this for very long because real physical trends inspire counteractions that soon swamp the dominant forces of the day. In this article, I posited one such policy counterforce:

Today’s demographic declines are a direct result of government policy – the welfare state. In the past, everybody had an incentive to reproduce. Your kids were your pension. It is still the same way in the third world where childless couples are pitied. Who will look after them when they are old? As a result, fertility rates there remain high (though they are slowly declining as the globalization decried by Naomi Klein spreads prosperity throughout the world). The contrast with the first world couldn’t be greater, where having children is an act of economic madness. It costs an average of $250,000 raise a child, to say nothing of the loss of personal freedom. To see the flaw in our arrangement, one only needs to ask, who is the state? The answer - when you are old - is all the people who are children today. So, from the perspective of society, it does make economic sense to have children. The difference between yesterday and today is that in the past, personal and societal aims were aligned. Today, thanks to the welfare state, they aren’t.

How does the government fix that? By ending social security as we know it. Replace guaranteed pension plans for all with a system that rewards people who have lots of children with pensions and penalizes those who don’t. 

Changing the pension system so that people with lots of children retire earlier and with more generous pensions while DINKs (Dual Income No Kids) toil away into their old age because they failed to create their replacements – doesn’t sound too politically doable does it?

Think again.

My homeland, Estonia, like most European countries is suffering from demographic decline. But because Estonia is a former Soviet country, the people there were immunized against political correctness by the overbearing Soviet super-political correctness (which must have rubbed off on me). For years, the country has had an open and uninhibited public discussion on the demographic state of the Estonian people. But in spite of that, I was still surprised to see this online poll in one of Estonia’s top newspapers, The Postman, two weeks ago:

 
 

This is a screen capture of the poll (which has long since expired). For those who don’t read Estonian, the translation of the Gallup poll question is, “Should the size of a person’s pension from now on depend on the number the children that person had?” The public’s answer was 54.5% yes. This is in a country where big families have always been rare. The article beside it reads, “Children would save Esonia from its pension problems.” 

What is happening here is that the sheer force of an exponential trend is inspiring an equally forceful counter. This is why the population bomb of the sixties turned into a bust. Take another failed prognostication. In the 1960’s, the famous (and justly great) economist Friedrich von Hayek looked at the relative size of Catholic and Protestant families and predicted that within two generation Catholics would swamp Protestants. Never happened. Why? Because when the West entered its post-Christian phase, Catholic atheist had even fewer children than Protestant atheists.

None of this is to say that Mark Steyn has not shed light on a very serious world-historical force (demographics) freighted with Big Consequences (i.e. civil war in France). He has, no question about it. It is just that there are countervailing forces that he hasn’t mentioned because, for now, they are almost imperceptible.

Mark Steyn is too pessimistic about the fate of the West

When Steyn says that no nation has ever pulled itself out of a demographic decline as steep as that faced by Europe and Japan today, he is wrong. Demographic declines of a similar magnitude have occurred throughout history. The Great Plague of 1350 consumed 1/3 of the population of Eurasia - from India to Ireland - in two years. How’s that for a decline! To give another example - one closer to home - take my homeland Estonia. Historically its population has hovered around a million. However in the early 18^th century, the disastrous Northern War between Sweden and Peter the Great’s Russia combined with a plague to reduce Estonia’s population to 100,000. And yet, the country concerned recovered, just as Eurasia recovered after the Great Plague. It could be argued by Steyn that today’s demographic trends are unique because they are caused by a voluntary refusal to breed, which certainly wasn’t the case with in my examples. This is true, but it only highlights the far more desperate straights those people faced. The decision to not have children is voluntary and therefore can be reversed by an act of will. This is a far better situation than the one my ancestors were in, dropping like flies from forces beyond their control.

It has been remarked by demographic pessimists that countries have failed to increase the birthrate of their citizens with government policies like monetary incentives. From this they conclude that demographic trends are insensitive to government programs. Perhaps, but perhaps the reason the government is failing is because the policies tried so far aren’t attacking the root cause of the problem.

Today’s demographic declines are a direct result of government policy – the welfare state. In the past, everybody had an incentive to reproduce. Your kids were your pension. It is still the same way in the third world where childless couples are pitied. Who will look after them when they are old? As a result, fertility rates there remain high (though they are slowly declining as the globalization decried by Naomi Klein spreads prosperity throughout the world). The contrast with the first world couldn’t be greater, where having children is an act of economic madness. It costs an average of $250,000 raise a child, to say nothing of the loss of personal freedom. To see the flaw in our arrangement, one only needs to ask, who is the state? The answer - when you are old - is all the people who are children today. So, from the perspective of society, it does make economic sense to have children. The difference between yesterday and today is that in the past, personal and societal aims were aligned. Today, thanks to the welfare state, they aren’t.

How does the government fix that? By ending social security as we know it. Replace guaranteed pension plans for all with a system that rewards people who have lots of children with pensions and penalizes those who don’t.

Mark Steyn’s pessimism is most appropriate in his take on Western European countries like France, Spain and the Netherlands where the low birth rate of the natives is matched by a high birthrate of the Muslim minority. This is indeed a frightening situation and one that might only be resolvable through civil war – civil wars where the West could permanently lose many fine countries to the barbarians. Fortunately, in Japan, South Korea and Eastern Europe this dangerous dichotomy doesn’t exist, giving those people the luxury of time in solving their demographic problems. Another thing going in their favour is that it is becoming plainly obvious to everybody that mass immigration from Muslim countries is a bad idea.

Nevertheless, it is always a mistake to ignore your enemy’s weaknesses and automatically assume they are united in lock-step unison. I believe Steyn does this and so ignores the strategic opportunities these present. Look at the abortive Green Revolution in Iran. Though Iran is the premier Islamofascist power in the world today, it is also rotten from within, hated by its people who now openly yearn for a return to Westernism. The West must exploit these rifts and it will do so as the crisis gathers steam.

Many Muslims are our natural allies but they must be supported morally, ideologically and with material resources. Of course, when Western leaders like President Obama openly grovel before their oppressors, these people hunker down.

Another factor favouring the West that is ignored by Steyn is that the idea of the West is itself spreading. India, China and South America are slowly becoming first world Western nations. The importance of this factor should not be discounted. There are many examples in history where the center of gravity of a good idea has leaped from one geographic area to another. Take Christianity. It started in the Middle East. Before being crushed there, it spread to Europe, which remained Christianity’s center of gravity for a long time. However, now that Europe has become post-Christian, Christianity’s center has shifted to the Americas as it simultaneously spreads to China and Africa. Perhaps Western Civilization itself is beginning to make this same trek. Maybe two hundred years from now, the leading Western nations will be India, China and Brazil (and perhaps even Iran! – don’t laugh, Eastern Europe is the most anti-communist place in the world today).

No, I am entirely confident the West will meet the challenge if Islamism and triumph in the end. Of course, the West might look a lot different after the struggle is over. One thing for sure is that the decadence and lack of cultural confidence currently infecting Western elites will be entirely purged from the body politic. All will be for God and country! 

To understand the fundamental weakness of Steyn’s thesis, consider something the great economist Thomas Sowell said (I’m paraphrasing here), “any physical trend extrapolated linearly into the future, no matter what it is, will result in the end of all human life” What Sowell meant by that isn’t that we are all going to die but, rather, that reality isn’t linear. When forces and trends happen, they in turn cause reactions that grow with the trend they oppose until they eventually swamp it. Another way of saying this is that if something can’t continue the way it’s going, it won’t. 

The problem with drawing conclusions from extrapolated demographics is that you are not even extrapolating linearly any more, but exponentially. Whatever prediction you come up with will be even more off base because the countervailing forces will be that much more violent and develop that much quicker. 

UPDATE: Thanks for the Steynalanche, Mark!