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The Forum > Article Comments > Cost of living just the symptom > Comments

Cost of living just the symptom : Comments

By John Coulter, published 12/4/2012

Living costs are rising faster than inflation because of a failure to deal with the underlying causes.

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Populate or perish used to be the catch cry of many politicians, who thought that ever greater populations would result in demand created economic growth. Well it did. Moreover, our population was decimated by 2 world wars. But there is a very finite limit to how many people our narrow green coastal belt will support. Or the equally modest water supplies. Why, the Fly river in Papua, has a greater annual flow than the totality of all Australia's rivers.
The only economy in Europe still doing okay is Germany's, and then because they had the practical common sense to retain their manufacturing supported economy. We currently cannot compete with highly populated countries like India and China. However, if we are to retain or rescue a manufacturing economy, it can only ever be one where high tech and quite massive automation replaces most human hands. This means we need to reduce electricity prices not endlessly raise them. The only jobs growth will be in highly paid technical/knowledge based ones.
We need to transition to rapid rail and roll on roll off ferries to move freight and commerce given that combination produces the least carbon for tons moved. We as an Island nation, need to once again become a self sufficient maritime power. We all but lead the world in computer assisted high tech ship building and need to tap into that expertise to build large new ships. New pebble reactors, will allow us, with our huge uranium resources, to become the most successful and prosperous freight forwarders in the world. Even more so as oil supplies dry up.
Bulk freight forwarding is and has nearly always been one of the most lucrative enterprises. I see a future where submersibles will ply most of our marine trade. Submersibles can access favourable undersea currents, sail under ice, the worst storms and or would by pirates, with virtual impunity and an armchair ride. Rhrosty.
Posted by Rhrosty, Thursday, 12 April 2012 11:10:52 PM
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I think it's good that young men such as the anti-pops have a hobby/ a club or society. But what are you going to do now with population rates slowing all over the world, except Africa? Australia only barely passes replacement because of immigration and even that has fallen.

I'm touched that a Dr of Genetics aka Michael in Adders, is concerned about my health but I won't be touching his socio-biologic/eugenic medicine.

Fester, poverty is India has been falling for the last 20 years, in main due to the incredible success of the Indian education system and trades. You should have been there 40 years ago if you wanted to really have a crack at our brown skinned brothers and sisters.

Did you know that in the 50s the Indian Government under the guidance of the UN, implemented your and Coulter's abortion remedy in Kerala which created ZPG but the program failed because the locals didn't want people from Australia and America telling them what to do.

Population is so par se. It had its day in the 60s. Even so, I'm sure people such as Robert Mugabe would be interested in your anti-people ideas. He has form.
Posted by Cheryl, Friday, 13 April 2012 8:07:11 AM
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Cheryl - "Australia only barely passes replacement because of immigration and even that has fallen." Despite Julia Gillard's reassurances that we "won't be hurdling to a Big Australia", we are!! Our population is heading to be at least 36 million by mid century, and with no population cap, there is no end in sight. The environmental, financial and social problems we have now will all be compounded.

Population growth is determined by the number of births over death, plus immigration. Australia does not have high fertility levels, and without immigration our numbers would continue to rise (ABS) but then gently decline.

Traditional, and politically-decided and driven, economic immigration levels were beneficial in the past but now we are over saturation point. Jobs are going, housing is too expensive, and future generations will forget "lucky Australia" that used to be. Australia is at some important tipping points, and who we vote for in future elections must be scrutinized for their population policies.
Posted by VivKay, Friday, 13 April 2012 8:34:03 AM
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Wow, popnperish, this is pure gold.

>>Pericles You wonder why economies of scale don't work with more people and electricity prices. Because of the need to build more power stations and power lines to cater for the ever-growing population, that's why. It's really not that hard. Just every now and again you have to give up some old economic theories that don't work in the real world.<<

Try thinking that through again.

For a start, just to get your brain working, take a piece of paper and work out how the cost of electricity would change, if the population decreased.

(I'll give you a hint: the cost of supply would be spread over a smaller group of people. The cost to each of those people would... increase. Got that? Good.)

Now do the same calculation, given a stable population, where the infrastructure needs renewal, refurbishment, updating etc. Because it is also a fact of life that power stations become more expensive to maintain as they get older.

(Another clue, just in case you are still confused. The additional costs incurred would be divided between the customer base, with the result that prices would... increase. With me so far? Excellent)

Now - and you can use a new envelope if necessary - calculate what the cost of supply, in either of the above scenarios, would be to the individual consumer, given an increase in the consumer base.

I'm afraid that some old economic theories stand the test of time, over and over again. This is one of them.
Posted by Pericles, Friday, 13 April 2012 8:41:40 AM
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Kerala is a case in point of seeing things differently, Cheryl. Far from rejecting family planning as a genocidal plot of western countries, Kerala has used family planning along with education as a development strategy. It is now the economic success story of India, with high literacy and education levels. There little poverty, and it is the only state in India with more women than men, presumably because there is not the infanticide of baby girls as occurs in other states.

http://en.wikipedia.org/wiki/Economy_of_Kerala

And this article written just before Kerala's economy started to take off.

http://www.ashanet.org/library/articles/kerala.199803.html
Posted by Fester, Friday, 13 April 2012 9:34:39 AM
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Pericles,

The economist Lester Thurow has estimated that 1% population growth requires 12.5% of GNP to be spent on infrastructure to accommodate that growth. Assuming an average 50 year lifetime for infrastructure, this would imply that a country with a stable population would need to spend 25% of GNP on repairs and replacement of public and private infrastructure. With 2% population growth, such as we had 2 years ago, this amount will double. Kelvin Thomson, the Labor MP, has estimated the infrastructure costs per additional person at $200,000 to $400,000, mostly from the public purse. See this article by Jane O'Sullivan

http://www.onlineopinion.com.au/view.asp?article=10137&page=0

Link to her scholarly paper on the same subject published in Economic Affairs (behind a paywall unfortunately)

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1999200

This is a huge amount of money, given our current growth rates. Migrants and new residents are not expected to (and usually couldn't) pay upfront, so the government is left with the choices of squeezing the existing residents harder with taxes and charges or letting the infrastructure and public services deteriorate. Both strategies make the voters angry.

This paper by Ralph Musgrave estimates that it will be more than 20 years before the average migrant to the UK has contributed enough to pay for his share of the costs. Some never will.

http://mpra.ub.uni-muenchen.de/6869/1/MPRA_paper_6869.pdf

You are also ignoring diseconomies of scale. For example, a city outgrows its natural water supply and has to build a desalination plant supplying water at 4-6 times the cost per unit volume.

From the 2006 Productivity Commission report, the benefits of the population growth are trivial in per capita terms, even if you ignore the effects on the environment and amenity, and concentrate on a narrow economic perspective. This is affirmed in their 2010 annual report where they say that evidence for per capita benefit or alleviation of our age structure issues is "poor or mixed". So why put up with the crumbing infrastructure and public services if there is to be no ultimate benefit, except to the folk at the top, who can take advantage of the distributional effects and the bigger total GNP?
Posted by Divergence, Friday, 13 April 2012 2:56:08 PM
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