Saturday, June 6, 2020

Rules of my DemographicDoom Twitter Account

My DemographicDoom Twitter feed is my labor of love, building a database of references the core topics that interest me, supporting my DemographicDoom project.  The feed consists mainly of a series of article links in the main topic of my project: references on demography, economics and the future of the family. The goal of this project is to build a database of information relating to the long-term demographic survival of humanity. The endpoint, as I see it, is to propose a new family structure that will allow the best of humanity to continue.

I have been data collector all of my life, and I hope you are impressed with the elegance and complexity of this system. Here are some random notes on this Twitter "database" and how it works.
  1. Every article or reference is accompanied by my own unique hashtags, usually beginning "#dd_" The word after the underscore specifies the topic.
  2. To access all of the posts for this topic, you should click on "Latest" immediately after you click on the hashtag itself. This should pull up ALL posts with that hashtag. (If you view only "Top" posts, then you may not see all posts, and they are not in sequential order.)
  3. Although no one can "own" hashtags on Twitter, I am the only person consistently using those beginning with "#dd_", so nearly all of the posts you see will be from the DemographicDoom account. There may, however, be "noise" from other accounts, where people have used the same hashtags for different purposes. For the most part, these tend to be old tweets (prior to 2019) so they will only appear at the end of the "Latest" list.
  4. Occasionally, these hashtags may be shared with my personal Twitter account BadDalaiLama. (I will use my personal account for references that can't be linked to this project.) DemographicDoom hashtags usually begin with "#dd_" while BadDalalLama hashtags usually start with "#gpc_".
  5. Twitter has been pretty faithful in fully indexing every tweet I produce. If you click on a "#dd_" and then on "Latest", you will probably get a complete listing of everything I have produced. 
  6. However, there can be glitches, including temporary "Shadow Bans" of this account by Twitter. A Shadow Ban is when Twitter temporarily fails to recognize hashtags on a certain account, making old tweets difficult to access. When this happens, the hashtags work for me within my own account, but they don't work for you when logged onto your own account. Shadow bans have no clear explanation, and they are usually lifted within 24 hours. In my experience, they tend to happen when I have generated a relatively large number of posts in a short period of time. If you click on a #dd_ hashtag and get nothing—or get only posts from BDLNotes—then a Shadow Ban is probably in effect. You can still browse my feed, but hashtags may not yield useful results for the next 24 hours. When I become aware of Shadow Bans, I try to note them under #ddoom_shadowban.
  7. When I first started using hashtags in this account in April 2019, all my hashtags began with "#ddoom_". This was unnecessarily long and limited the number of hashtags I could include in one tweet, so I have migrated to "#dd_" hashtags instead. Old "#ddoom_" hashtags still work.
  8. My utility Twitter account BDLnotes provides various tools for hashtag maintenance. Do Not Follow This Account, or you will be overwhelmed by useless posts. BDLnotes tweets are intended to be accessed only by hashtag. Entries in this account will help you find hashtags in the main DemographicDoom account. For example if you click on a "#dd_" hashtag, and entry in BDLnotes should tell you about "#ddoom_" hashtags.
  9. I link #dd_ and #ddoom_hashtags together in Tweets with the hashtag #dd_HashtagSwap.
  10. Only a few of my original "#ddoom_" hashtags are retained for continuity, including #ddoom_mypodcast, #ddoom_hashtag and #ddoom_shadowban. Others have been migrated to "#dd_" or eventually will be.
  11. In my latest tweets, I try to categorize them broadly into 4 general areas, each with a very short hashtag.
    • #dd_d = Demographic tweets, concerning human populations and family issues
    • #dd_e = Economic tweets, chiefly concern with out current economic collapse
    • #dd_cvs = Coronavirus tweets, concerning the Covid-19 epidemic starting Jan. 2020
    • #dd_m = Miscellaneous tweets that don't fit into the 3 categories above.
  12. Countries are now indexed by their 2-letter internet code. For example: #dd_ca for Canada and #dd_uk for Britain. I use the same #dd_XX codes for both @DemographicDoom and @BadDalaiLama, and they can be used for any kind of reference to that country.
  13. When I want to further break down a topic just for that country, I may add a keyword to the code. For example, #dd_ukDebt would refer to debt just in the UK. (I rarely have to make these kind of finer distinction. Usually just #dd_uk is enough.)
  14. I also have broader regional tags, assuming the tweet refers to the entire region not just a specific country.
    • #dd_eu for Europe (including both EU members and non-EU members).
    • #dd_eeu for Eastern Europe (former Communist states)
    • #dd_asia
    • #dd_africa
    • #dd_latam for Latin America.
  15. If a tweet has no country or region tag, #dd_us can usually be assumed, as the majority of my tweets tend to refer to the USA>
  16. There are only a few two-letter codes that do not refer to countries. These include:
    • #dd_QE for "Quantitative Easing", or money printing by the Federal Reserve and other central banks.
    • #dd_rt to indicate a retweet.
  17. Hashtags of three or more characters (after #dd_) are so numerous and actively evolving that no comprehensive list is possible. Instead, you have to access them from existing tweets. 
  18. US states are indexed by #dd_usXX tags, where XX is the 2-letter state postal code. e.g. #dd_usca for California.
  19. Podcast episodes are accessed on Twitter through hashtags of the form "#ddPC99" where "99" is the podcast number.
  20. My own live-action videos from before the podcast are indexed through hashtags for the form "#ddVIDxxx" where "xxx" is a code of several letters for that video, perhaps reflecting the initials of the video title.
  21. My own YouTube playlists are indexed through hashtags of the form "#ddPLxxxx" where "xxxx" is some sort of Keyword, like #ddPLfam for all my podcasts and videos on family structure.
  22. I like Emoji, and I try to use them whenever possible to clue users in to the topic of the tweet. They can be a lot of work, however, and I tend to drop them in follow-on tweets and BDLnotes tweets. My reference for Emoji is Emojipedia.
  23. "📣GC:" indicates my own opinions. See all of these tweets via this search.
  24. You can do a word search for my tweets using the Twitter search box, with "@demographicdoom" as the first search term. For example, here is a search for all my references to "Federal Reserve" (but #dd_fed works better).


Sunday, May 24, 2020

44. Casualties of the Crisis: Real Estate and College Campuses (Demographic Doom Podcast)

This is the script for my Demographic Doom podcast episode (#44) recorded on 24 May 2020 (released on 25 May 2020). It may differ slightly from the final broadcast. This episode is available on major podcast platforms, including PodbeanApple Podcasts and a video version on YouTube. See the description on the YouTube version for extensive annotations, links and corrections. You can also comment on this episode there. (If you leave comments on this blog post, I might not see them.) The main website for this project is

I’m Glenn Campbell. I call myself a demographic philosopher. I’m looking at life and trying to predict the future through the lens of demography, or the study of human populations. I'm seeking to view the world from the widest possible angle, as aliens would see us from space.

In this episode, I'm continuing my discussion of the Covid epidemic and the worldwide financial collapse it has triggered, but today I'm looking at just a slice of it, one disaster of many. I'm interested in how the epidemic has already reorganized mankind's relationship with "place". All of a sudden, in a matter of months, real estate has lost a significant portion of its intrinsic value. Although the real estate crash of the 2020s hasn't really gotten started yet, I predict that in the near future, much of the world's real estate markets will be in free-fall and will never regain their previous highs.

It turns out that with modern computer technology, we just don't need places the way we used to. This includes places to work in knowledge-based industries and places to be educated, especially for young adults. We don't need those massive office buildings any more, or college campuses. The crisis is teaching us that higher education isn't a place anymore. It's an address on the internet. So what's going to happen to all of the places previously used for these functions? I'd like to try the predict their fate in this episode.

Spoiler alert: It's not good.

This is May 24, 2020. We're now about 2½ months into the lockdown phase of the coronavirus epidemic, and 4½ months since the first cases were publicly reported in China. During this time, stock markets took a dive but then recovered much of their losses on what can only be described as a temporary fever of false optimism. Real Estate markets, however, hardly seemed to have been touched. Homes, for example, are selling now for the about the same prices as four months ago.

America hasn't yet seen any serious price-cutting in real estate, but I attribute this to the fact that real estate is a very slow-moving market. No one makes decisions in a matter of minutes. Real estate decisions take months, and both buyers and sellers often have the option of putting things off. That's what I think is happening here. There isn't yet a glut of homes on the market because sellers have declined to offer them. They are waiting to see how the epidemic plays out. The sale of real estate is considered a non-essential business, so most agents in the U.S. are closed. This means there no opportunity for a market to be made in real estate right now. We'll have to wait for the economy reopens before the damage can be assessed.

I predict that the damage to real estate markets in the long run will be massive. That's not just because the rest of the economy is in free-fall, but because the virus has done more than any other event to turn our economy into a virtual one. Any job that primarily involves the processing of information doesn't have to be done in an office anymore. It can be done in the worker's home. To be sure, the change was a long time coming, starting with the internet revolution in the 1990s, but the pandemic has forced companies and organizations to make full use of the technology. Now that workers are successfully performing their duties from home, there's very little incentive to return to the old ways.

If most of its employees are working from home, a information-based company hardly even needs an office anymore. A place is only needed for certain physical transactions that still can't be done online.

Think of an insurance company, selling car, home and life insurance. That's maybe 90% an information processing business. I can think of two things that an insurance company needs a physical presence for: They need to inspect whatever physical object they are insuring, and they need to inspect any damage for which a claim has been filed. Virtually everything else, like the processing a claim, can theoretically be done by workers at home in their pajamas. The virus has forced companies to test those theories, and I suspect that those tests are working out pretty well. Organizations are figuring out how to manage employees and their work without physically lording over them in a office block.

An acquaintance of mine is an insurance claims adjuster. Until March, he was working in a high-rise office building in downtown Boston. Now he's working from his bedroom while nothing in the nature of his work has changed. He is still doing the same things he was doing in the office, mainly typing on a computer and talking to clients on the phone. As long as his workflow is being monitored, there's no reason at all that he needs to sit in someone else's office or make the long commute to get there.

There is talk in this guy's company about the office reopening, but the logical question is why? If things are working out and the employee is providing his own office space for free, the savings to the company in the long run are huge. It no longer has to pay rent on that expensive office space in Boston. There's no utilities or maintenance cost, and they don't have to physically protect their employees. Whenever a business invites someone onto their premises, there's a certain liability involved, and with the lingering coronavirus, that liability will be huge. What if my friend goes back to work in the high-rise and contracts Covid-19 there? In hyper-litigious America, he could sue the company for failing to provide a safe environment. The company incurs no such liability if the employee stays home.

The economic implications for commercial real estate are huge. When the leases on all those offices come up for renewal, maybe they won't be. That's going to result in a slow-moving collapse where more and more offices are vacant, driving down the rents on all the others. It's slow-moving crisis because leases are generally for a year or more. For businesses that fail in the next few months, the shock to landlords is going to be rapid. For businesses that remain solvent, the shock is going to be spread out over the next 1 or 2 years as companies that have switched to telecommuting fail to renew their leases.

Eventually, this means major job losses for all the workers who construct and maintain those office buildings. The first effect you can expect is that no one will construct a new office building in Boston anytime soon—if ever—which puts construction workers out of work. All those vacant offices don't need cleaning staff, so they're out of work, too. Even if an office building is only partly occupied, you still need maintenance staff for all the basic systems, but it's not out of the question that some offices will merely abandoned as the companies that run them go bankrupt. Now you don't even need the basic maintenance workers anymore.

Things are obviously going to be bad for commercial office space, and but retail space is also in deep trouble. Having been banned from stores during the lockdown, consumers are relying even more on online shopping. Every few days, you hear of the bankruptcy of another well-known retail chain, and as these businesses fail, shopping centers and other retail space is going to empty out, driving down rental rates. Except for groceries, luxury goods and some personal services like haircuts, shopping isn't a place anymore. It's online data processing. Brick and mortar stores can't compete, so storefronts are going to empty out and no new retail space will be built.

But what about residential real estate? If people are working from home, they still need a home, right? Yes, but it no longer needs to be in an expensive urban area. In the post-virus world, Silicon Valley knowledge workers no longer need to live in the Bay Area. They can live anywhere, which leads to an exodus of people from expensive cities like San Francisco and an eventual crash in those overinflated housing prices. If new housing is ever built again, it's going to be in places where land is cheap, like three hours outside of San Francisco.

Since real estate is a slow-moving business, this is all going to play out over years rather than weeks, but the pain will still be great. Half-empty office towers will never be full again, and lodging costs in expensive cities can only go down, not up. This is bad news mainly for people who have already invested in real estate at their earlier values. People with million-dollar homes are going to see their equity plummet while their mortgage payments remain the same. Eventually this leads to defaults and foreclosures that push even more units onto an oversaturated market.

Added to this are the demographic factors that were already in play before the virus. Baby Boomers entering retirement are downsizing their from houses to condos to assisted living and eventually nursing care. Although many would like to stay in their original homes, they will need to liquidate them to pay for their retire—especially as pension systems collapses in a whole different slide of the crisis.

On the other side, the younger people who would buy these homes can't afford it. They are saddled with student debts and have little interest in the McMansions that the Baby Boomers built. There's also a crisis of numbers. The simply aren't enough young people to absorb all this excess capacity. Eventually, this will drive down home prices. Even if the Boomers can sell their McMansions, they're going to take a huge hit, and vast wealth will be lost in the process.

Even the whole notion of a "home" is becoming fluid. Personally, I don't have one. I'm recording this podcast in a rental car sitting by the side of a river in New Hampshire, but if I didn't tell you, you probably wouldn't know. I could easily be putting out the same product from anywhere in the world.

In my earlier adult years, you needed a fixed residence of some kind simply to have a telephone. You needed a home so employers could call you, but now that service is in our pockets. Even if you're talking on Zoom and employers can see where you live, a little stagecraft can make the tiniest apartment look like a proper home office. This new flexibility is great for workers, who not longer have to live in big cities and endure long commutes, but it's going to be devastating for the housing market in the big cities they left behind.

There will always be a need for places. You have to have a place to sleep and a placed to get your hair cut, and there has to be a place to repair your car, which many people will still need to get from place to place. The servers that rule our lives are located in places, but they are often remote places with cheap land and power. The tasks that don't need a place are knowledge work, which is a huge portion of our economy. Humans making decision based on electronic data don't need specific places to work in, and the current crisis is driving that home in a very painful way. It's going to be painful for people who have already invested in real estate at inflated values, and it's going to be painful for anyone whose job revolves around maintaining the places that used to house these workers.

And it's going to be painful for colleges and universities, because most higher learning doesn't need a place either. Covid-19 has taught everyone this, as classes have been cancelled and moved online. Sure, you got into Harvard, but you're not actually "going" to Harvard this semester. You're just taking some online classes with the Harvard logo them. This begs the question: Why do you need the campus at all?

For two millennia, education was a place you went to were learned men taught you things. You had to go where the learned men were because that was the only way to communicate with them. I actually visited one of these places from two millennia ago: Aristotle's Lyceum in Athens. Aristotle would stroll through the pleasant grounds while lecturing to his students. The site is just foundation remnants now, but the same model of education persisted for the next 23 centuries. The written word could convey some things, but if you wanted to interact with a teacher to guide your learning, you had to go to where the teacher was.

All of that changed, starting about 20 years ago, when technology made it possible to interact with a teacher and follow a curriculum without the teacher and student being in the same room. Today a learned scholar can give a lecture on video and potentially have it be seen by 100,000 students, knowledge can then be tested via online exams. If a student writes an essays, it still needs to be evaluated by another human, but that human can be anywhere in world, no on a certain campus

Why does every college need to re-teach the same History 101 class? The answer is, they don't. Once classes move online, huge economies of scale are possible, and the horrendous costs of higher education can potentially go down. This leaves physical campuses like Harvard out in the cold. They've got this huge overhead that an online university doesn't have.

I looked up the current cost of tuition at Harvard. It's $70,000 a year if you live on campus. At least that's how much you'd pay if your Daddy is rich. Most students get scholarships that bring down the costs, but they're still going to be indebted for years with their student loans. What are they getting for that apart from a diploma with "Harvard" on the top? Basically, not much more than an online university, especially this semester.

One thing you for your $70,000 is the opportunity to interact with other Harvard students, who must be pretty smart if they got into Harvard. I acknowledge that there could be some value in this. There's a certain social component in leaving home to go to collage. People aren't suddenly adults the moment they graduate from high school. They need more time to develop, and college has traditionally served as a sort of halfway house between your parents' home and full self-sufficiency. There's more to campus life than just classes, and its nice to be thrown together with other high-achieving kids, but $70,000 a year or 20 years of personal debt is an absurd price to pay for these somewhat nebulous privileges,

I don't really know what online classes look like, but the process sounds pretty simple. You present the student with information; give him some exercises, and then test him on his abilities. If this is a practical exercise like dissecting a cadaver in medical school, you really got to be there, in the same room as the cadaver, but it seems to me that for 80% of the other things a university does, online learning ought to work just fine. Human feedback may be an important part of the educational process, but the human you are dealing with can still be at home in their pajamas.

I think the death blow of college campuses was struck in the early 2000s, when internet technology took off. It has just taken a while for society to figure this out, but Covid-19 has suddenly made the transformation complete. If I students get through the current semester with online learning alone and they test fairly well on their mastery of the material, then the college campus is going to be proven a fraud. Many of these physical campuses are going to collapse because they won't be recruiting enough paying students to support their bloated infrastructure. I predict that the weaker ones will simply close their doors, while the bigger institutions with prestigious names will morph into online megaliths directly competing with each other to bring down costs. Maybe someday everyone will be able to go to Harvard, and at a lot lower cost than $70,000.

Of course, I'm only talking about formal learning here: the transfer of describable knowledge and skills from one generation to the next. What about the social function: this halfway house between home and real life? Well, students will just have to find some other way to do it.

I like the system in Israel, where most young people are required to participate in national service. Usually its joining the military, but other forms of service are possible. You are taking young people out of their parents' home and throwing them together with other people their age in a dorm-like setting with a structured series of training activities. This is a chance for both knowledge transfer and the building of social skills, and the tuition cost for these students is zero. No one has to pay $70,000 or go into debt for 20 years to join the military. The country, in turn, gets a valuable labor force that it can use for a variety of purposes.

I'm not saying that's how things should be done in the US. One country is so fractured, paralyzed and insolvent right now, that I don't see any system of National Service every being implemented—or frankly anything all being implemented. I can only say that if we define education as the teaching of knowledge, then online learning works just fine for most things, and physical college campuses are dinosaurs doomed to extinction.

I don't have the same view of primary education, especially Kindergarten through 6th grade. That period is much more about social development, which can't be taught by computers. I think the actual knowledge transferred in the early years is less important that learning to obey rules and work with others. When you get into the higher grades, like 7-12, the situation gets murkier. These kids are perfectly capable of learning online, and it might be better for them in some cases. Once advantage of online learning is that a gifted student can jump ahead of all the others. They don't have to learn in lockstep with all their classmates, which I think kills the spirit of learning. If one student can do a year-long Algebra course in 6 weeks, they shouldn't be held back by all the others.

I do worry about the loss of the social component of education. Physically interacting with other humans has something to be said for it, but this has become an expensive process. I admit that I don't know what the long-term solutions are.

Correction: I do have a plan for education within my hypothetical Modular Family system. In some future world, I envision permanent households of 9 to 18 kids, educate mainly at home. They would follow traditional lesson plans, perhaps online, while being taught social skills by their siblings and elders. I introduced the Modular Family in Episode 11 of this podcast as well as an earlier video, and I expect to get back to it in future podcasts.

So I have something of a education plan for the long term. I just don't know what society at large is going to do during a transition to this model. As governments collapse under the burdens of their debts, so will public education systems. I don't have a plan for that, and I don't think anyone does.

So that's my take on real estate, be it offices, retail space, homes or college campuses. These buildings and plots of land just don't have the intrinsic value they once had, and pretty soon real estate markets and educational markets are going to realize that. Prices are going to plunge and wealth will be lost.

What I mean by lost wealth is that all that hypothetical money the real estate owner thought they had could vanish quickly. If you own a million-dollar home, you might think yourself a millionaire, but if you sell it for only a half million and or, worse yet, can't sell it at all, suddenly you feel a lot poorer. Not having this perceived wealth anymore is bound to change consumer behavior. The people who lost the wealth won't be spending money the way they used to, and this is going to have ripple effects throughout the rest of the economy.

The bottom line is that real estate is in deep trouble, along with industries based on real estate like higher education. And this is only one little slice of the economic crisis. In other podcasts, I talk about the looming crises in debt and the value of the US dollar itself. The collapse of real estate prices is enough to trigger a broader economic downturn, but that's only one pot boiling over on the stove.

The stove is full of overboiling pots right now.


Written, recorded and edited by Glenn Campbell. For annotations, links and corrections, see the description on the video version of this podcast. You can also leave comments there. 

Sunday, May 10, 2020

43. A History of Our Dysfunction: 1945-2020 (Demographic Doom Podcast)

This is the script for my Demographic Doom podcast episode (#43) recorded on 10 May 2020 (released on 17 May 2020). It may differ slightly from the final broadcast. This episode is available on major podcast platforms, including PodbeanApple Podcasts and a video version on YouTube. See the description on the YouTube version for extensive annotations, links and corrections. You can also comment on this episode there. (If you leave comments on this blog post, I might not see them.) The main website for this project is

I’m Glenn Campbell. I call myself a demographic philosopher. I’m looking at life and trying to predict the future through the lens of demography, or the study of human populations. I'm trying to view the world from the widest possible angle, as aliens would see us from space.

Today I'm going to try to summarize the entire economic and demographic history of the United States in a single episode, from the end of World War Two to the present day, May 10, 2020, with the aim of trying to explain the economic crisis we're now experiencing. Although my focus is on America, much of this history may also apply to Europe, Canada, Australia and other countries that have closely tracked the U.S. in their economic development.

Two days ago, May 8, marked the 75th anniversary of "VE Day"—that is, "Victory in Europe" or the defeat of the Nazis. It's a major event in world history. Victory in the Pacific would follow 3 months later. Relatively speaking, the past 75 years have been good times, at least compared to prior centuries. There have been amazing breakthoughs in technology over this time, including medical and safety advances that resulted in dramatically increased lifespans, but there has also been a disintegration in some of the fundamentals that keep us afloat. Technology has created some profound dangers that our society hasn't yet learned to absorb, and I don't mean the obvious dangers you're thinking of, like atomic weapons and climate change. Some dangers are subtle and unexpected, like birth control and improved health care. Technology that seems good on the microscopic level—that is, for individuals—can have some bad long-term effects on the macroscopic level—this is, for the long-term health of society at large. Some of those good things gave us our current financial crisis.

The current crisis wasn't caused by Covid-19. That was merely the catalyst. The financial collapse it triggered has much deeper roots. I see the current crisis as the culmination of five demographic and economic trends over the past 75 years. We can think of history as being a series of layers. These are trends and cycles lying on top of each other that dictate the overall fate of society. There are many different layers, but only a handful of them are critical. I choose to focus on five processes over the past 75 years that I think made the Crash of the 2020s inevitable. They are:
  1. The rise and fall of the Baby Boomers, who powering the economy in the late 20th Century and are now draining it in the 21st.
  2. Improvements in safety and medical science that have extended the human lifespan by some 20 years. That's great for people like me who have benefited from the life extension, but it's bad for the economy, which must now support more elderly people, living longer into old age and using far more medical resources. 
  3. The inflation of personal tastes over the past 75 years, so that things that were once considered luxuries are now seen as necessities. Since 1945, consumers have higher expectations and economy has become more vanity-oriented, which makes the economy more vulnerable in a downturn.
  4. The huge debts that have be incurred by governments, corporations and individuals that can't possibly be paid off. Sooner or later, there has to be a day of reckoning, and I'm betting on sooner.
  5. The desperate manipulations by governments and central banks to try to save us from the four other layers. They've lowered interest rates and printed new money in a desperate attempt to keep the economy afloat. This may have rescued us in the short term, like in 2009, but it will make matters far worse in the end.
History has many other layers. We could talk, for example, about climate change or the widening gap between rich and poor, but the five processes I just mentioned are enough to explain our current economic collapse. Each one is sufficient to assure a downturn, but together they equal full-bore disaster—the one that's currently unfolding.

So why do I start this story with World War II? That was our civilization's previous low point. So much was destroyed in the war that it gave the world a fresh start, a blank slate to construct a new civilization, led this time by the United States. From that low point, a new society was built very different from the one before the war. It was an increasingly complex society with more technology, organization and regulations than any one person could grasp. This complexity was also a monster that no government could tame. Even as governments got bigger, they became weaker in guiding the fate of their countries. There was little any government could do about the five layers I just mentioned.

The end of World War II ignited the great post-war economic boom, which I claim is ending right now with the great 2020 collapse. No one could have predicted the current pandemic, at least in its timing and pathogen, but a massive economic collapse was very predictable, based on these five processes set in motion in the 20th Century and exacerbated in the 21st. In this episode, I want to try to summarize those events for you without getting too deep into the details.

But before I go on, let me nail down my place in history, since you are probably a time traveler listening in the future. This is May 10, 2020. We're roughly a month and a half into the lockdown phase of the Covid-19 pandemic, when people have been told to stay home and nonessential businesses have been ordered to close. The last seven weeks have seen the most rapid job losses in U.S. history. The unemployment has gone from about 3% to something like 20%. It's hard to tell the exact numbers because most of the people not working have ostensibly been furloughed, with the expectation of going back. The problem is, many of the businesses now closed will never reopen, and those that do are going to be faced with plunging demand. Who is going to buy a new car or an expensive vacation right now?

In the month between February 23 and March 23, U.S. stock markets fell about 35%, one of the fastest and deepest losses in history. The remarkable thing, though, is that markets regained about half of their losses in April, in one of the greatest rebounds in history. This is insane when you consider that the real economy didn't get any better in April. In fact, it got much worse. So you have the economy in freefall and markets surging upwards. What's going on here? That's one of the things I'm trying to explain in this little history.

So let's start at the beginning: World War II. By all accounts it was a terrible event. It was especially devastating in Europe, which was wiped out economically and traumatized emotionally. No matter how bad things get in 2020—and they will get bad—they probably won't compare to the physical pain and destruction rained down on Europeans and some Asians during the war. Things were much better in America, where the mainland was completely untouched by any bombs or bullets. Americans endured their own hardships, like the the rationing of food and the loss of their sons in battle, but these could be seen as an extension of the hardships faced in the Great Depression, whose effects were still lingering at the time the war began. From an economic perspective, the Depression and War Years were one continuous era, from the crash of 1929 to VE day in 1945. That's 15 years of deprivation following the Roaring 20s when anything seemed possible.

Coming out of the War was like coming into the light after 15 years in a bunker. Suddenly, America was the economic powerhouse of the world, with all of its industry still intact. With the end of the War, America became the de-facto "leader of the free world", pulling the rest of the non-Communist world out of its pit. America helped rebuild Europe and Japan, which I think was one of the great heroic acts of history. Europe and Japan, in turn, became America's trading partners, and together we started building a colossal world market to the temporary benefit of all.

What really started growth trend, however, were babies. Lots and lots of babies. GI's coming home from the war married their sweethearts and the baby-making began. And the phenomenon was repeated elsewhere in the world. Canada, Australia and eventually Europe joined the baby train. This Baby Boom is my first layer of history. You can't have an economy without people earning money and buying things, and the Baby Boom provided them in abundance.

This Baby Boom was something of an anomaly, because up to that point birth rates were consistently falling in the developed world. As countries industrialized, their citizens had fewer and fewer children, even without reliable birth control. A lot of this can be attributed to better opportunities for women, later marrying ages and maybe choosier marriages, where young people waited for true love, rather than accepting a mate assigned by their elders. In Colonial America around the time of the American Revolution, the fertility rate was something like 7 babies per woman, with many of those babies dying in childhood.  By the middle of the Great Depression, fertility had fallen to less than 2.5 babies per woman—which is very close to the 2.1 replacement rate. Again, this was without the birth control pill, although condoms were available starting in the 1920s.

Then, after the war, baby-making exploded in America. The war in Europe ended in May 1945. GIs came home over the summer, and nine months later, in early 1946, babies started popping out of American women, peaking at a fertility rate of about 3.5 babies per average woman in the 1950s. This means that for every woman who had no children, there must have been another who was having 7 or 8. The party didn't end until the 1960s with the invention of oral birth control, the pill. Birth control had a huge effect on society, giving rise to women's liberation and turning sex into a recreational activity. The main economic point is that it ended the Baby Boom, in roughly 1964, and fertility rates resumed their long-term downward trend.

Although the boom in births ended in the 1960s, the children themselves didn't go away. In effect, the Baby Boom was a huge economic stimulus program that powered economic growth from roughly the 1970s until, let's say, 2011. As they came of age, the Boomers needed homes, so huge subdivisions were built for them, as well as shopping malls, cars, appliances and all the services and infrastructure to support a growing population. The Boomers themselves provided the labor for these projects, so they were a self-sustaining project for a while, powering the US economy through the end of the 20th Century and into the 21st.

You may think the economic growth of the 1980s and beyond was caused by the pro-business policies of Ronald Reagan, but that was the period when the Baby Boomers reached the peak of their economic productivity. In 1986, the Boomers were all between the ages of 22 and 40, which would have been the time when the most people were buying homes and buying new stuff to put into those homes. Although the Boomers didn't have babies at the same high rate as their parents, they did have them, maybe only one or two of them, and this became known as the Baby Boom Echo. All those children needed toys and supplies, and thanks to rising prosperity they got a lot more money spent on them than the Baby Boomers did. In short, the Boomers were a huge engine of growth at just about the time Reagan came along.

The tide started turning in 2011. That was the year when the first Baby Boomers born in 1946 turned 65, or the generally accepted retirement age. Not everyone is lucky enough to retire at 65, but the general trend still holds: more and more people would leave the workforce over the next couple of decades. When someone retires, they start collecting more money from the government than they give. They stop investing and start selling their investments to pay their expenses. They stop producing resources and start absorbing them. That's one of the reasons our economy is in dire straits right now. There are too many retired people and not enough active workers to support them, and with so few children in the pipeline, the trend can only get worse.

Stimulus of any kind always has a bad side, namely what happens when the stimulus ends? It is kind of like an athlete taking steroids to improve his performance. Yes, he races ahead of all the other athletes for a few years, but then the costs kick in and his body goes to hell. The Baby Boom boom was a mixed blessing for the US. Sure, it powered the growth of the late 20th Century, but it also established unreasonable expectations for growth. Even beyond 2011, Americans continued to plan and invest as though continued growth was inevitable, like a roller coaster that only went up. Few of us were ready for the dip on the other side, which is what we're staring into right now.

The natural boom-and-bust cycle of the Boomers growing up and growing old was bad enough for the economy, assuring a painful reckoning right around now, but I see four layers on top of this base layer that are making things far worse.

The next layer of history is the vast improvements in medical care over the past 75 years. Before World War II, the average longevity for an American was about 60 years. Today it's around 79 years. That's roughly 20 years added to the human lifespan. In 1946, if you had a heart attack, you died. Now, if you get medical attention fast enough, you're probably going to survive. Modern medicine might even save you from your second, third and fourth heart attack, as well as countless other serious diseases that would have killed people in an earlier era.

This is certainly good for the people saved—like myself for example, dealing with cancer—but it's not good for the economy, because every life saved guarantees higher medical expenses and pension costs in the future. At the time Social Security system was established in 1935 and Medicare in 1965, the average citizen didn't live very long beyond age 65. Now someone who reaches age 65 is expected to live to about 83, in ever-worsening medical condition. Each additional year carries ongoing pension costs and rising medical costs.

America doesn't have free public health care for all, but it does have almost-free health care for people 65 and older, called Medicare, so the government is committed to paying medical costs for its citizens during the single most expensive phase of life: the dying phase. The government can try to raise the retirement age or the age for Medicare, but ultimately you can't cheat death. If people don't die quickly of a specific disease, they die slowly of an accumulation of medical issues collectively known as "old age". Look at any elderly person in their 70s or 80s, and you'll see that a great deal of their lives revolves around visiting doctors and taking medicine to stave off their inevitable demise. Especially with advanced medical technology, old people absorb a lot of medical resources as the approach their end, and this expense is becoming increasingly difficult for society to bear.

These statistics are pretty easy to calculate. Demographers know, in general, how long people will live and what kind of drain they will be on Social Security and Medicare. You'd think that a sensible government would prepare for the coming shortfalls, but there is hardly a sensible government on Earth. Kicking the can down the road is the official sport of politics because there's no benefit to politicians to solve a problem decades in the future. You only get credit for making things better since the last election. Raising taxes or lowering benefits won't win you any votes, so politicians inevitably resort to borrowing whenever they can get away with it.

We'll talk about this debt problem in Layer #4, but I want to throw in another layer first. Layer #3 is something I call "taste inflation". It is a psychological phenomenon that afflicts us all. I invented the term "taste inflation" in an essay in 2009. It is the observation that when excess resources are available to someone over an extended time, their tastes tend to expand and become ever-more refined until the excess resources are absorbed. Taste inflation means that no matter how much money you make, it is never enough, because your "needs" have risen along with your wealth. The past 75 years have been a period of taste inflation in America when expectations have risen along with our prosperity. People have taken on unnecessary debt to support these desires, while whole new industries have arisen to service these frivolous needs. This makes the whole economy more vulnerable in a downturn.

Here's an example: When America was first emerging from World War II, the population as a whole was pretty frugal and utilitarian. They had just emerged from 15 years of hardship, and they had learned how to get along with very little. When a young couple got married right after the war, they were happy enough to move into a simple tract house in a newly built development in the suburbs. Tons of these simple homes were constructed in the 1950s and 60s. Every house was identical, and they were laid out on a rectangular grid. People were happy with their simple home because it served the basic needs of shelter and providing a safe environment for their children.

But these modest goals didn't last. As prosperity grew, so did the tastes of home buyers. They expected fancier and fancier homes. Whatever your income was, you bought the most elaborate house your income could afford. It didn't serve the shelter function any better than the tract home, but people felt they needed it. They needed it for their ego and to show their status to others. In the end, someone might have been making more money than they would have in the 1950s, but they still felt poor because their debts had committed them to these higher tastes.

In the late 1940s, you had plumbers, heating technicians, pest exterminators and other businesses serving the basic needs of homeowners. By 2019, desires were far more complex, and there was a proliferation of businesses to serve those needs. You had businesses selling marble countertops, curtains, specialty soaps, exotic food and a vast array of entertainments that simply didn't exist in the mid-20th Century. I talked about this in Episode #41 and an earlier video, where I call it the "vanity economy." The vanity economy displays a society's wealth, but it's also highly vulnerable in a downturn, because no one really needs this stuff.

In the beginning of this 75 year period, we had a need-based economy. People were seeking food, shelter, clothing, a safe place to raise their children and not a lot more. By the end of the 75 years, we had a vanity-based economy that was largely dependent on selling people things they didn't really need. This is supportable in times of prosperity, but it becomes a problem in a downturn, when nonessential products and services are the first thing people cut from their budgets. A simple change in the consumer confidence can kill half the economy in an instant, just like it's doing now. The other problem is when people have borrowed to support their inflated lifestyle, like buying an SUV for $600 a month when they could have bought a sedan $300. Those debts don't magically deflate when your income goes down. This leads to defaults and all their ripple effects.

By many measures, people were much wealthier in 2019 than they were in 1950. We have access to goods and technologies that could hardly be imagined back then, but because our needs have expanded to fill our income, we don't feel wealthy. The inevitable trap of taste inflation is borrowing money to support our vanities, which leads us to the next level of our macroeconomic history: excess debt.

So Level #4 is the vast explosion of debt over the past 75 years. In the U.S. and the world at large, governments, individuals and corporations have far too much of it. By any outward measure, adding up the worlds debt and its income, there's more debt outstanding than can possibly be paid back. In 2019, the debtors of the world were barely keeping their heads above water. The crash of 2020 will push many of those heads underwater.

Let's just look at the simplest example: US government debt. At the end of the World War II, the government had a ton of debt, roughly 110% of GDP, but it had a good excuse: It had to borrow to fund a war and save the world. That debt was brought down over the course of the following decades, reaching a low of 24% of GDP in 1974. Since then, the national debt has been climbing, and by the end of 2019, it was back to roughly 110% of GDP, with no war to justify it. There's no real excuse for our current debt levels. It's just that politicians would rather borrow from the future than raise taxes or cut popular programs. Frankly, who can blame them? It could cost them their jobs to plan for the distant future.

There's also been an explosion of consumer debt. This is a 20th Century phenomenon. Before the war, you might have had a home mortgage with a local bank or a credit account with your local department store, but credit didn't become ubiquitous until technology linked banks and merchants together. General-use credit cards weren't invented until the late 1950s, and they didn't reach wide acceptance until the 1970s. Now you can use your credit card anywhere in the world.

Computer technology gave us a dizzying array of other credit instruments. We don't just have mortgages but mortgage-backed securities, exchange traded derivatives and a thousand other credit-based products that investors, banks and corporations trade among themselves. If the consumer is up to his neck in debt, so are corporations with trained economists on the payroll. Hardly anyone can resist the lure of debt, especially when interest rates are low, as they have been thanks to the next Layer of history, which I'll get to in a minute.

So we've got four processes going on in the first four layers of history since 1945: the rise and fall of the Baby Boomers, increasing lifespans, the rise of the vanity economy and the explosion of debt. These things were sufficient in themselves to bankrupt the economy and lead to a massive crash. I contend, in fact that the crash should have happened in 2008. We certainly had a massive downturn, but it wasn't massive enough. Governments and central banks rescued us, using tools that only set us up for an even worse crisis later.

Layer #5 in modern economic history was the desperate attempt by governments and central banks to rectify all the problems caused by the other four layers. In 1971, Nixon took America off the gold standard. There were legitimate reasons for this, and you can argue that he had no choice, but the net effect was to detach the dollar from any kind of fixed value, like a certain amount of gold per dollar. Instead, the value of the dollar would be managed by a central bank, the Federal Reserve, which would set interest rates and control the amount of money in circulation. Turns out, this is far more power than any human or human organization can manage.

I'm going to skip over 37 years of monetary policy to the last financial crisis in 2008 and 2009. This should have been the time when all the problems of those other four layers came to a head. The economic stimulus of the Baby Boomers was starting to run out; people had reached the maximum longevity benefits of health care; the vanity economy was in full swing, and debt had already reached unpayable levels. This should have been the start of the Great Collapse. Indeed, the economy was in horrible shape, and governments and central banks tried desperately to save it. Banks were bailed out; interest rates were lowered and new money was printed. These efforts were effective in the short term, but didn't resolve the underlying issues.

If I were to give you a year when the economy ran out of gas, I'd say it was 2008. Since then, it has been running on fumes. The economy appears to have been prosperous, but this is an illusion supported entirely by Federal Reserve manipulation. In particular, the Fed and other central banks lowered interest rates to near zero and kept them there for almost 12 years so far. Instead of promoting true economic growth, this created an environment of speculation and asset inflation. It discouraged people and institutions from conventional "safe" investments like savings accounts and government bonds and pushed them into speculative ones like stocks. The more money poured into stocks, the higher the prices went, resulting in the still astronomical stock indexes I see at this moment.

Since you're a time traveler, I want to describe for you just how insane stock market prices are right now, May 10, even after the economy is at least seven weeks into its worse downtown since the Great Depression. Although US markets dropped by some 35% from Feb. 23 to March 23, they have since rebounded by more than half. As the news got worse and worse in April, the stock markets did better and better. Two days ago, on the morning of VE Day, the U.S. Labor Department released the worst job-loss report in American history, indicating unemployment has jumped from 4.4% to 14.7% in a single month. This is terrible news, especially since some economists, including those at the Fed, think the real unemployment figure is much higher, at least 20%. Later the same day, major stock market indexes rose by about 2%. It's astounding to me, an exercise in antigravity and perpetual motion. Bad news is being treated at good news.

I shouldn't have to remind you that unemployed people don't spend much money. Neither do people who fear they might become unemployed, which describes most of the other 80%. Businesses that are closed for the virus don't generate any revenue and don't buy much from other businesses. Industry after industry, from oil to cruise lines to sit-down restaurants, seem close to collapse. This all adds up to horrible corporate profits, perhaps for years to come, and profits are supposed to be the basis for stock prices. So why are stock prices still flying relatively high?

One stock market index, the NASDAQ has regained all of its losses for the year. The latest index price is 9121, compared to 8972 on Dec. 31. It's like the virus and the resulting shutdowns never happened. Why would anyone buy a stock right now at the same price as 2019 with the absolute certainty of a devastating recession?

The answer is anyone's guess, and I have two of them: My Guess #1 is that Investors are stupid and are in denial. They think the economy is going to bounce right back as soon as the shutdowns end. Keep in mind that markets are driven mainly be the people who buy a stock, not the people who don't, so only the true believers are driving the market. Those who don't believe have already withdrawn from the market altogether. The smart money has left the building, so only the stupid money remains to determine stock prices.

My other guess is that stock markets are rising on bad news because investors believe that bad news will assure Federal Reserve intervention. Over the past 12 years, the Fed has created the expectation that it will always step in to rescue markets. In the past, it did this by lowering interest rates. Today, it is buying corporate bonds and printing new money. In other words, the Fed has created an artificial world where earning don't matter anymore; the economy doesn't matter anymore and borrowed money is always cheap. This may prop up the market in the short term, but it can't work forever. Now, with the Covid-19 crisis shutting down businesses, the Federal Reserve is locked into massive money printing scheme with no end in sight. The government is spending money on a unprecedented scale, and the Fed is effectively printing the money to make up the shortfall.

A few days ago, I received a check for $1200 from Donald J. Trump. I didn't ask for this money; it was simply handed to me for having been a taxpayer in the previous year. It is called helicopter money: money just dropped from the air onto average citizens in the hope that it will stimulate the economy. Now don't get me wrong: I'm not going to turn away free money, but you have to wonder where it's coming from. The answer is that it was conjured into existence out of thin air. It's magic money supported not by tax revenue, which is collapsing, but by suckers around the world willing to buy U.S. bonds. It's like no one has to work anymore because they can just receive money from the government, no strings attached.

But there are strings. There always are. The government can't just print money indefinitely. There's always a breaking point. As discussed in Episode #39, I think the result will eventually be significant inflation, even hyperinflation. I just don't know when. For now, in May 2020, the world is soaking up US bonds and US dollars as fast as the government and Fed can produce them. For various technical reasons, the world outside the US desperately needs dollars right now, but This can't go on forever. There has to be a satiation point where investors say, "That's enough. I already have enough bonds and dollars." That's when the price crashes.

A price crash for US bonds means a rise in the effective interest rate, which is devastating for a government that has become used to low interest rates. Right now, the US Government can borrow money from a gullible public for 10 years for an annual interest rate of about 6/10s of one percent—that is, less than 1%—which is insane for a debtor who obviously can pay his bills. Compare this to the historic norm of something like 5% for a government that was much more solvent. An interest rate of less than 1% tempts politicians of both parties to borrow and spend even more, because the annual interest cost is so low, but if the interest rate rises, say to the norm of 5%, the government would be spending almost half its annual tax income on interest payments alone. This is the sort of nightmare scenario you can expect when there are more bonds than buyers, and in one way or another, it means the collapse of the whole government.

The Federal Reserve can't let the US government collapse, so it is obligated to buy any excess bonds to try to support the price. The money it uses to "buy" these bonds is conjured into existence, just like the $1200 I got from Donald Trump, increasing the supply of US dollars. Although foreign investors currently love dollars, this too will eventually reach a breaking point where there are more dollars than buyers of dollars. A crash in this market means inflation. The amount of goods each dollar can buy is going to decrease. As I discussed in Episode #39, I think the inflation is mainly going to hit the things you really need, like food, while the things you don't need, like luxury cars, may actually decrease in price.

If inflation rises then eventually interest rates will, so there's really no way out. As more businesses fail and more people move from "laid off" status to full "unemployed", the pressures will build on politicians to increase their bailouts and stimulus payments for individuals and businesses. Since the tax base is now shrinking, this money can only be borrowed. In 2019, the US government spent $4 trillion while taking in only about $3 trillion in taxes, leaving a deficit of $1 trillion, which was bad enough. Now the deficit is shaping up to be around $4 trillion in 2020, with a lower tax income, so the government is borrowing and printing far more money than is making in taxes. This is a stunning development that would cause massive hyperinflation in any other country, but the dollar's special status as a reserve currency is keeping it afloat for now. It just can't go on forever.

You know Wile E. Coyote in the Roadrunner cartoons? He runs off a cliff while chasing the Roadrunner, but it will take him a while to realize it. He has to look down first, hold up a sign that says, "Yipes!" and then he falls. That's what's happening to the economy. It's still suspended in mid-air after running off the cliff some time ago. I contend that the Coyote's feet left the solid ground back in 2008. The whole economy has been supported by cartoon physics ever since.

When the Coyote finally falls, he's gonna fall hard.


Written, recorded and edited by Glenn Campbell. For annotations, links and corrections, see the description on the video version of this podcast. You can also leave comments there. 

Tuesday, April 28, 2020

42. Best Practices Medicine vs. Triage Medicine (Demographic Doom Podcast)

This is the script for my Demographic Doom podcast episode (#42) released on 29 April 2020. It may differ slightly from the final broadcast. This episode is available on major podcast platforms, including PodbeanApple Podcasts and a video version on YouTube. See the description on the YouTube version for annotations, links and corrections. You can also comment on this episode there. (If you leave comments on this blog post, I might not see them.) The main website for this project is

I’m Glenn Campbell. I call myself a demographic philosopher. I’m looking at life and trying to predict the future through the lens of demography, or the study of human populations. I'm trying to view the world from the widest possible angle, as aliens would see us from space, so I am interested in what large groups of people are doing, rather than individuals.

In this episode I want to return to a topic I've touched on earlier: It's a basic dilemma faced by modern medicine: Do you throw all of your resources into saving just a few people, or do you distribute your resources, trying to save as many people as possible? Saving as many people as possible involves a rationing of medical care, because there is never enough medical resources to serve everyone.

I brought this up in Episode #37 earlier this month. This was an hour-long personal podcast about my cancer relapse and how my hospital was handling Covid-19, but there's actually some demographic philosophy buried in there, and I'd like to flesh it out a little. First, let me replay the relevant part of that episode on April 5. It's about six minutes long.
There's a conflict in medicine that I've touched on in previous podcasts and videos and that's the difference between best-practices medicine and triage medicine. 
Best practices medicine is when you pull out all the stops to save one patient. You want to give him the best of everything and you try not to expose him to any kind of risk, and that's how how medicine is practiced in the developed world. Whatever risk there is, we're going to mitigate it. Whatever the patient needs we're gonna give it to them. We're not going to compromise on anything. 
And this is actually backed up by our tort legal system in America, our system of lawsuits. If ever a doctor were to give a patient less than optimal care and something bad were to happen, the patient or their family is going to sue that doctor. That's how America works so American hospitals have no choice but to offer optimal care, best practices care to everyone. 
The alternative to that would be triage medicine. Triage medicine is when you don't have the resources available to treat everyone, and this is true in over half the world. They don't have the medical systems to treat everyone, so they have to parcel out their resources in such a way is to save the maximum number of people. 
This is the sort of thing that would happen on a battlefield. Let's say you have a battlefield Hospital and you have a hundred wounded sword soldiers that come in, and you've got beds for only a dozen of them. Who are you going to serve, and how are you going to serve them? That's a an exercise in triage, in deciding how to parcel out your very inadequate resources.  
In the case of a wartime hospital you're going to focus on the patients that you could do the most for. in other words there's soldiers that come in that are so badly wounded that you can't do anything for them. They're probably going to die anyway so you shunt them aside to begin with. And then there are soldiers who are so lightly wounded that they're going to survive no matter what you do for them, and they can can get away for a while without medical treatment, so you put them aside, and what you focus on is that middle range of patients who can be most helped by the limited resources that you have.  
And you don't try to give them perfect care. You give them just good enough care that you save them and can move on to the next patient. And you're playing a game of numbers here. Maybe you save them. maybe don't. You're just going to trying to increase their odds, but when you're in triage situation you have no choice. You have to make do with the resources you have.
And that's rapidly approaching with the Covid-19 thing, that we're going to be in situations here where we don't have enough ventilators. We don't have enough facilities and doctors and everything to treat everybody, so somebody at some point has to make some triage decisions about who gets treated, but from the hospital's standpoint, it doesn't happen here. It doesn't happen in Beth Israel, because Beth Israel, like every other Hospital in the country, is focused on best practices and giving the the patient everything they need without any compromises. It's essentially unsustainable in an epidemic like this. 
It's unsustainable, but there is this firewall between the hospital and the outside world. The outside world might have to deal with triage, but the hospital itself doesn't. Once you get into the hospital you're guaranteed optimal care within the resources that they have. They might still have not have enough ventilators, but they're going to do everything in their power to eliminate risks and give you everything you need to survive. 
Best practices is also essentially the the philosophy behind all of these lockdowns. So when New York State or Massachusetts tells all of their citizens to go home and don't interact with anybody and keep a 6-foot distance between all people, they're really practicing this sort of perfect medicine where they're trying to eliminate any kind of risk whatsoever. 
And I think the silliest example of that is closing in the beaches in Massachusetts and elsewhere. The place you're least likely to catch a disease would be a beach because there's all this huge distance between you and your fellow beachgoer. There is virtually no chance of catching Covid-19, but it falls under this blanket thing. Lock downs are basically a sledgehammer approach where we're going to eliminate every possible source of infection no matter how unlikely. 
And like best practices elsewhere, the only problem is that it is frightfully expensive to do this. The horrible expense here is that by locking down everything and shutting down the economy, you are destroying people's livelihoods, you are assuring a massive depression that's going to be caused a lot more human misery than the virus itself.  
So the virus itself will be under control by the end of 2020, but the great depression, the huge economic collapse is going to go on for years and decades and it's going to be made all the worse by the fact that these these municipalities and states and countries impose these draconian lockdown rules instead of addressing the things that really matter.
So I'm back at the end of April again, four weeks later, and I've been in an out of the hospital in my cancer treatment, and I've seen a lot of best-practices medicine and virtually no triage medicine. When the slightest anomaly happens, they order a whole slew of very expensive tests, which happened to me only a few days ago. I had this disruption in my vision where everything in my left visual field was blotchy. It made it impossible to work on my computer. Within half hour of it happening, I reported it to my nurse, and that set all the wheels in motion: two MRIs, a CAT scan, an EKG, consultations with two neurologists and an opthalmologist, and they hooked me up to a heart rate monitor that I'm still wearing so they didn't miss anything.

Without getting too deep into the details, there were two explanations: the benign explanation and the slightly scary explanation that might affect my treatment. There's a high probability—I'd say 99%—that the benign explanation is true. It's only the 1% scary possibility that triggered all the tests. And that in a nutshell is the problem with best-practices. It is largely incapable of making compromises. Even a one in a thousand chance of the bad thing is enough for the specialists to be all over it and to order all the tests, and they won't rest until they have definitively ruled out the bad diagnosis.

That's one of the reasons health care costs are so high. It's not just a screwed up delivery system or all the well known problems of American health care. There's also the problem that no responsible doctor can leave any stone unturned in assuring the health of their patient. If there's a one-in-a-thousand chance of something bad happening, and it's within your power to diagnose or treat it, then you're obligated to run down that one-in-a-thousand possibility, at a huge cost to the system.

Never mind that the patient is obese or a smoker, or the patient is ninety years old and will probably die before this one-in-a-thousand risk ever happens. Doctors are obligated by the medical system, the legal system and probably their Hippocratic Oath to do everything they can for their patient, even if this risk is trivial compared to real-world concerns.

Triage medicine, on the other hand, would have to take into account the real-world costs of diagnosis and treatment, and it wouldn't bother with relatively trivial risks. In my case where there's a 99% chance this thing is benign, the triage physician would say, "Okay, those are pretty good odds, so let's forget about that other unlikely possibility." If doctors were allowed to make judgment calls like this, you might be saving 50% of all medical expenses, which ultimately means that more people are going to get served and more lives are going to be saved.

There's only place I'm aware of in modern hospitals where triage medicine is actually employed. It's when there are multiple competing diseases in the same patient, and doctors have to prioritize them to save the patient's life. The patient has cancer, but he also might have heart issues or vision issues or dental issues. The patient is dying, so you can't use best-practices for everything. You have to focus on the one thing that's most important right now, that's going to save the patient's life, and everything else is pushed into the background. As soon as the patient is saved, and the time pressure is gone, then the system falls back into best-practices mode.

This isn't a matter of socialized medicine vs. the American capitalist model. This is a dilemma faced by any medical system, even in Canada or the UK or any other country where health care is free. Health care, of course, isn't really free. Somebody pays for it, and medical expenses are rising everywhere, helping to bankrupt countries like Canada and the UK. As long as medicine keeps advancing, it naturally gets more expensive, if for no other reason that when you save someone's life, you're guaranteeing more medical expenses for that person for all those extra years. If the patient lives to be 90 because you saved him from a heart attack when he was 60, you've guaranteed 30 more years of medical expenses that society has to somehow pay.

In Canada and the UK, they still use the best-practices model, which means that if there's a 1% chance of something bad happening, they still got to run all the tests. No medical system in the developed world is capable of making triage decisions, where you prioritize patients to save as many lives as possible. In the modern world, survival is more a matter of whether or not you get into the hospital at all. If you get into the hospital, you get optimal treatment. If you don't get into the hospital, you don't get treated at all and you die. There's no middle ground.

I'm not saying there's a solution. In an ideal world, you would ration medical care to save the most lives, without any delineation between rich and poor, but in the real world, it's more likely to be the rich with good health insurance who get treated. At the same time, a lot of people who have taken very poor care of themselves are also getting optimal care. If you never exercise, smoke like a chimney and couldn't care less what you eat, the best-practices system is going to treat you no differently than someone who has done everything right. In fact, the people with poor health habits are soaking up a disproportionate amount of medical resources, because the best-practices system is not allowed to discriminate against them.

No doctor is allowed to judge whether or not someone deserves to live. This means, ironically, that a 60-year-old Death Row inmate is going to receive exactly the same medical attention as a law-biding college student with their whole life ahead of them.

A public hospital in a poor Third-World country is more likely to adopt the triage model. There's way too many patients and not enough resources, so someone has to make some hard choices about how those resources are used. If the choice is between saving one patient at enormous cost or ten patients at the same cost, the ten patients are going to win, and life-saving treatment will be denied to that one patient.

As a regular customer of the best-practices system, I can't see the system changing anytime soon. Doctors are trained to give every patient optimal care, as though they were the only patient in the world. This is fine as long as you live in a rich country with plenty of resources, but the system breaks down when the needs outstrip the resources. If that's the case, only a select few get optimal treatment, and everyone else gets no treated at all.

So that's the end-game of the best-practices system. As health care gets more expensive, fewer and fewer people will have access to it. It could happen because you don't have health insurance and the hospital won't admit you or because wait times are so long that people die before they get into the hospital.

There's no easy way out of this. Simple socializing medicine won't fix the problem, because the issue will still be too many patients and not enough resources, no matter how it's paid for.

The irony here is that the more medicine advances, the longer people live, and the greater their lifelong health care costs will be. In turn, this means that fewer and fewer people get healthcare at all, and more end up dying.

I cover this is in a video from June 2019 called The Medical Science Paradox: Why Longevity is Falling. My point there is that at some point, technical advances in medical science are going to stop saving total lives. A few chosen people may live longer and longer, at ever-greater expense, but overall longevity of the population may actually fall. Medicine may have already reached a steady state where its not improving society anymore. If you're interested in this topic, you might want to check that video out.


Written, recorded and edited by Glenn Campbell. For annotations, links and corrections, see the description on the video version of this podcast. You can also leave comments there. 

Sunday, April 26, 2020

41. Casualty of the Crisis: Things You Don't Need (Demographic Doom Podcast)

This is the script for my Demographic Doom podcast episode (#41) released on 26 April 2020. It may differ slightly from the final broadcast. This episode is available on major podcast platforms, including PodbeanApple Podcasts and a video version on YouTube. See the description on the YouTube version for annotations, links and corrections. You can also comment on this episode there. (If you leave comments on this blog post, I might not see them.) The main website for this project is

I’m Glenn Campbell. I call myself a demographic philosopher. I’m looking at life and trying to predict the future through the lens of demography, or the study of human populations. I'm trying to view the world from the widest possible angle, as aliens would see us from space, so I am interested in what large groups of people are doing, rather than individuals.

Today, in the midst of a worldwide economic crisis, I want to rewind to an earlier, simpler time of one year ago. Today is April 26, 2020, about three months into the COVID-19 epidemic outside China and about one month into widespread lockdowns in the U.S. where "nonessential" workers are expected to go home and stay there. Exactly one year ago today, April 26, 2019, I put out a video entitled The Vanity Economy: The First Casualty in the Next Recession.

This was back before I started my podcast, when I was still making live-action videos around the world. This video was made in a cypress swamp in Florida, and I'm standing ankle-deep in the muddy water. I've got two cameras running and am cutting between them. Every video was a big production taking a lot of time to produce and edit, which is why I gave up the whole visual element and started doing podcasts instead.

At the time of the video, I knew nothing about any pandemic, but I did know a massive crash was coming. Even a year ago, it seemed a foregone conclusion to me. Although I didn't know what would trigger the crash or when, I knew that the current economy was unsustainable and had to fall sooner or later, and that's exactly what's happening now. What this videos give you is some perspective on what will fail first, and it's basically all the things you don't need, all the vanity products and services that each of us knows we can live without.

I find the video so relevant today that I'm going to play the whole thing for you. It's about ten minutes long. If you are listening to the video version of this podcast, you can actually see me speaking, standing the swamp, but there's nothing important in the visual field. I'm going to play the whole thing for you right now, then I'll come back afterwards and talk about it in light of the current crisis.
If you want to know how bad the next economic crash will be, you just need to walk down the street of wherever you live, especially if you live in America. Just walk down the main street and look at all the businesses along the road and in shopping centers. You might see a florist, and here's a home renovation center, and here's a martial art studio, and all these other things, all these other services, and ask yourself are those businesses essential? 
And all these products and services I call the "vanity economy". You might think of this as the luxury economy but we usually think of luxury as yachts and sports cars and mansions. The vanity economy, as I define it, is something that we all participate in, in that we buy things that we know we don't really need, but we feel we need them. These are the first things that are gonna fall apart in a big economic downturn. 
You might see these businesses as a mark of prosperity, because people seem to have enough disposable income that they can they can buy these vanity items, and you might see this as good. Okay, we're a rich society so we can do these things, but the other side of the coin is whenever things go bad, we don't need to do those things, so we're gonna cut them out, and it just means that we have much further to fall. 
Now we all know that a crash is coming. We may disagree on why it is coming or when it is coming, but we can agree based on past history that every once in a while there's a big crash. My personal theory is that this crash will be powered by demographics, by the fact that there are so many old people, so many retired people, so many people leaving the workforce and not many people coming into the the workforce, but this isn't the time to talk about that. You may not agree with me, but you can agree that there's going to be a crash, and when there's a crash people get laid off or they feel at risk of being laid off, and what's the first thing they do? They're going to cut their expenses, and the expenses they're gonna cut first are all of these vanity items. 
They're gonna cancel their gym membership, and they're not gonna do any home renovation, and they're not gonna be buying any flowers. So when this happens, all those vanity businesses are going to be in deep trouble, and they're gonna start laying people off, and when that happens even fewer people have money to spend on these vanity services and it becomes a self-reinforcing cycle, what physicists call a positive feedback loop. 
Now a positive feedback loop is not "positive" in that it almost always results in some kind of disaster. A positive feedback loop is when there's a change in a system, that change feeds back to accelerate the original change. So the more people that are laid off the less money they have to spend on flowers, and the more the florists lay off workers, then there's fewer people to buy stuff. So this can be a cycle that economists call a deflationary spiral, and the best example was the Great Depression. After the stock market collapsed, people had no money, so they stopped buying cars so the price of cars went down. So in the modern world this can happen perhaps without any actual deflation, without anybody cutting prices, but it's still a spiral, a death spiral that takes everything down. 
This is exactly what happened in 2008. No one was doing anything; no one was buying anything; no one was initiating new projects. That's when the central banks lowered interest rates and the government's pumped a lot of money into the economy to get it restarted again. The trouble is, in the next economic crash, they don't have those those tools anymore. They're so deeply in debt that they really can't pump a lot of money into the economy without jeopardizing their credit rating, and they can't lower interest rates because interest rates are already close to zero, so we're going to get the same thing again where nobody buys any vanity products and things just accelerate down to the bottom, down to some base level where people are just surviving and just buying the products and services they need to survive. 
The trouble is that's an extremely low level. If the economy is in the dumps for six months, people are going to cut their obvious expenses, cut their gym membership, but they basically want to keep the same lifestyle they had before. If the downturn lasts for years then people are going to start modifying their lifestyle and cut their costs even more, which is going to further accelerate the decline. 
For example if you have a dog and you lose your job you're still going to feed your dog. You're still going to take your dog to the vet when the dog gets sick because those are seen as essential products and services. Two years later, your dog dies as dogs tend to do, and this time because you're in economic stress, you don't get a new dog. So now you can cut your your expenses even more. You're not held down in terms of where you live by your pets. You can you can cut your expenses to even lower, 
And that's good, in that people should be economical. It's good for the soul to use your resources well, but it is horrible for the economy, especially an economy over the past 50 years or so which has come to depend on all of these vanity products and services. You kno1w the steel industry seems like it should be immune to this, but it isn't because the steel industry feeds the auto industry, and if you're under economic stress you're not gonna buy a new car, so that means no auto industry and no steel industry. 
So this is all gonna come down. Sooner or later, it's gonna come down. It came down in 2008. The government temporarily rescued us by pumping a lot of credit into the economy so people were able to buy more stuff because they borrowed more money. If you see a big beautiful SUV on the highway, you know people didn't pay cash for that SUV. They got an auto loan, so all this prosperity we've known since 2008, it has been fueled by debt that is gonna collapse when the vanity economy collapses. Eventually the debt economy is going to collapse because what happens when you lose your job or you fear losing your job is you're gonna cut your expenses, you're gonna cut out all the vanity items that you don't need. 
And when that doesn't work that you still don't have enough money you're gonna cut out your debt payments. In other words, if you've got a student loan now and the student loan is a big burden every month, you might just not pay that that. You might stop paying that student loan. A lot of people are already doing it. If enough people do it and it gets out that nothing really bad happens when you don't pay your student loans, a lot of people are gonna do it. So you've got a whole economy full of people who aren't buying things they don't need and who are refusing to pay make their debt payments. 
They're not making their payments on their SUV. They're saying, "Just come and take my SUV," because you if don't make your payments on your car, well you still got three months of free use of that car before they catch up with you. So this is the kind of disaster we're facing once we get into this cycle into this these feedback loops, these positive feedback loops that just drain everything. Then eventually the government can't function, because government taxes depend on people being employed. Over time, the government can't function. The government can't repair the roads. It can't maintain basic services, and you've got big governments collapsing.
So what we're looking at in some future financial crash is essentially a Dark Age, an age where everything that we've come to depend on, all the institutions we've come to depend on collapse. Governments collapse. Banking systems collapse. This doesn't people mean people are going to die. It just means people are going to be lost for a while, and they'll have to restructure themselves in some way without these institutions. I can't say in advance how they're going to restructure themselves. That's something to be determined, but just like the Dark Age of the Middle Ages, there's going to be a Renaissance at some point where people pick themselves up, group together in some way and find a new way to structure themselves without the excesses of the old days. 
So all of this flows from you walking down the street in your hometown or wherever you live, looking at each of those businesses that you see and asking yourself, what's going to happen to them in an economic downturn? And I'll bet you for 80% of those businesses, they're not going to survive because they're not essential. 
I'm gonna go for a walk. Hope there aren't any alligators.
So we're now back in 2020 again, and I'm still pretty happy with what I said a year ago. Right now, we are trapped in the same sort of deflationary spiral and positive feedback loop that I talked about back then. All sorts of vanity products and services are collapsing right now, but the collapse is being masked by the lockdowns. If you work for a florist or a martial arts studio or a carpet store or some other nonessential business, you've been told to go home and isolate yourself to try to save lives. On the surface, this seems like a temporary thing, but it's easy to see that many of those businesses are never going to reopen again because demand has collapsed.

Grocery stores will always have customers, because everyone needs food, but not many people are going to be in the mood for high-end restaurants, even if they reopen and we resolve the social distancing issues of sitting down to eat. The whole population of the planet has gone into bunker mode at the same time, not just to protect themselves from the virus but to protect their finances. If you were thinking of buying a new car a few months ago, you're probably not going to do it now, even if you have the money or the credit, because the future is so uncertain. You're not going to fly somewhere on vacation even if the travel restrictions were relaxed, because it is money you don't need to spend if you don't feel secure in your income. Maui can wait. You know it will still be there five years from now, so there's no compelling motivation to visit this year or even next.

It's hard to say how much of our economy is "vanity", because it's a matter of definition, but it's not unreasonable to say that 50% or more of the products or services we buy can be delayed, maybe even for years, and we're now at the point where virtually the entire world population is doing exactly that. Putting things off. Not spending more money than they absolutely have to. Even if the economy fully reopens and people can do anything they used to do, confidence is now shot. 50% percent of the economy, at least in rich countries, has essentially vanished, and this has started a feedback loop that is just going to get worse and worse.

The virus didn't cause the financial crisis. It just triggered it, and now that the collapse has been set in motion, even a complete resolution of the virus—like a perfect vaccine or perfect cure—won't bring the economy back. Humpty-Dumpty has fallen off the wall and can't be put back together again. Now we're dealing with all the structural problems that were building up for years, like all the humongous debt that was unsustainable in even the best of times.

In a sense, the virus is promoting a sort of false optimism. Investors are thinking, "Things will be fine as soon as the virus is brought under control," and this has encouraged them to reinvest in the stock market. To recap the US stock markets over the past two months: They dropped by some 35% in late February, while in April, stocks recouped more half of those losses. As of today, the Dow and S&P are down only about 16% from their highs, which is insane given the absolutely stunning job losses and business closures during the past two months. Looking at the actual economy and the overvaluation of stocks before the virus, markets ought to be down 50%, and I think they will be, but the market hasn't figured that out yet.

The bulk of investors, the ones actually participating in markets right now, seem to believe this is a one-off problem that is likely to be resolved soon. In their view, as soon as the virus is "fixed", everything will go back to normal, as if the stock markets before the virus were sanely priced to begin with. They weren't. Since 2008, there has been very little real economic growth. It has all been false growth, or the false appearance of growth, generated by loose monetary policy.

In my video a year ago, I said that governments had run out of ammunition to fight the next recession, and I still think it's true. There is no ammunition left. There is only the appearance of ammunition, which takes the form of money printing. The US government and Federal Reserve are essentially the same agency now. The government spends as much money as it wants, and the Fed is obligated to print more money to pay for it.

Every stimulus program, every bailout, and virtually every response the government has to the virus  involves printing new money to pay for it. In 2019, the Federal deficit was $1 trillion, which was seen as huge back then. Now the best estimates for the the 2020 deficit are at least $4 trillion, or more than the government collects every year in taxes. The only way for the government to generate this money is by selling more bonds, and this ultimately leads to the Fed buying the bonds to keep the system stable. In essence, the government is just printing money to pay its bills. This has happened many times throughout history, and it always ends badly.

Right now, this doesn't seem to be a problem, because investors of the world want US dollars and government bonds as fast as they can be issued, because US instruments are somehow seen as "safe". This is the attitude right now, but it won't always be true. At some point, the government will have issued so many bonds and the Fed printed so many dollars, that the market becomes saturated. That's when we'll see inflation, serious inflation, because that's always the result of exponentially expanding the money supply. Whatever dollars you have in your wallet right now, they are going to be worth a lot less. I can't say exactly when, because I don't know the saturation point of the market, but inflation has to happen. That $100 bill in your wallet will hardly buy what $50 buys right now, and it can only get worse from there.

I talked about inflation in Episode #39, so let me shift gears back to the issue in my original 2019 video: the vanity economy. If the market for vanity items like marble countertops or skiing equipment hasn't already collapsed, it soon will. Businesses providing these services will collapse and even more workers will be laid off. In the meantime, the market for essential products and services will go on. Everyone needs food. Everyone needs medical and dental care. Maybe dental offices are closed right now, but when they reopen, people will still have cavities that need filling.

There's going to be a growing gulf between things you don't need and things you do, and it's going to get easier and easier to define, because businesses in essential fields will continue while those in nonessential fields will fail. I predict also that there will be inflation in essential products and services, while nonessential goods might even drop in price. If you're trying to sell luxury real estate right now, you can expect to get lower prices than before the virus, if you can find a buyer at all. Meanwhile, the price of food is going to rise. Everything you truly need is going to go up in price as inflation takes hold.

In a sense, the collapse of the vanity economy is good. Nobody needs this stuff. It's wasteful of resources, and no one's life is really improved by it. Does it make any difference to your nutrition if your kitchen countertop is marble or linoleum? No, it doesn't. It doesn't hurt your life personally if you get rid of all that crap. The only problem is that our economy has grown increasingly crap-dependent, and it can't go cold-turkey on its crap addiction without a devastating crash. Everyone in crap-related industries is going to lose their job, and there won't be enough new jobs in essential industries to make up for it. Food production, for example, will continue, but it's not going to increase, because people can only eat the same amount they're eating today.

So what we'll have as the fog of the virus lifts is only about half of the economy we used to have, and it's going to be stuck there for some time, maybe even forever. Governments are furiously printing money to make up the difference, rescuing industries and supporting families, but it's going to end badly. The US dollar is going to drop in value, and everything valued in dollars is also going to drop. You may still own a million-dollar home, but that million dollars won't be worth the same. Maybe it only buys you a hamburger, who knows?

So my position today isn't all that different from my position a year ago. The vanity economy is now collapsing, just as I predicted it would, and that's going to bring down everything else. Governments can print all the money they want, and it will seem to fix things for a while, but the fix won't last. There's going to be inflation. There's going to be desperate poverty like we haven't seen since the Great Depression.

With all the stimulus programs now in place or coming down the line, the government's going to be giving away a lot of free money, even though there's no such thing. Free money isn't really free. There's always a bill to pay. I'm not willing to say when the bill will come due, but I think it's going to happen quickly, like within a year. Everything you thought was stable about the world is going to be called into doubt. Will the dollar be worth anything a year from now? Will be even have a functioning government?

I'm not willing to bet it. I'm not willing to bet on anything. The only thing I'm willing to bet on is that there's going to be a lot of chaos in coming months and that things won't be getting better anytime soon.


Written, recorded and edited by Glenn Campbell. For annotations, links and corrections, see the description on the video version of this podcast. You can also leave comments there.