Declining car usage in the West: more evidence.

A previous post Has road traffic in the west peaked? pointed to emerging data on the peaking of traffic and so I was interested to see in a recent article The end of the road by Fred Pearce, New Scientist 13 August 2011 (p.26-7) that more evidence of this trend is available:

• In the USA sales of new cars has fallen from 11 million in  1985 to 5.5 million in 2009.(The cars do, however, last longer.)

• In Japan, where they talk of demotorisation’, per-capita road travel peaked in the 1990s.

• In the USA, UK, Germany, France, Australia and Sweden the per-capita road travel began to decline in 2004 and this has continued to the present.

• The fraction of American 17-year olds with a drivers licence has dropped by about 25% since 1998.

•  In both the USA and the UK young people are seeing the biggest decline in car usage.(Social scientists detect a new ‘culture of urbanism’, with the young shunning the suburbs and preferring to spend their money on other things than cars.)

•  The correlation between rising income and per capita car travel breaks down when income exceeds $30,000 p.a.  (Could this be because the affluent prefer to spend their money on flying?)

Offsetting this decline in road distance travelled per person the rate of car occupancy has fallen. In the USA  the average car on the average journey carries 1.7 people, compared to 2.2 in 1970. Also, anecdotally, I have noticed that cars are getting bigger and more powerful. Frequently, I have to park between two private vehicles each the size of a commercial van, often just carrying one person. The article backs this up.

Sources quoted in the  article:

The road... less traveled, 2008 report by the Brookings Institution, Washington DC

World transport policy and practice vol.17, p.31

Transport Reviews, Lee Schipper, vol.31, p.357

Phil Goodwin at the University of West England, Bristol

Maurie Cohen, New Jersey Institute of Technology, Newark

In the developing world, especially China and India, private car usage is of course expanding fast.  Hopefully, at some time not too far off, new ways of getting from A to B flexibly will be found.

See also Has the US reached peak car? (Sci. Amer.)

A comments facility is available below. Alternatively email me at

cosmik.jo@gmail.com

John
Author, 2077 AD

The age of debt: the party's over

What is the reality of the current financial situation in the developed world? Nobody knows but we have to discuss it and in the end a few people in a position to do so have to make decisions which will profoundly affect the material prosperity and security of everyone on the planet. Even the developing world depends on these decisions.

Here are the major factors which world leaders, from Europe, USA and China currently have to take into account.

• Most banks in the world have been directly rescued from insolvency by tax payers in the major economies i.e. by government intervention; but the governments have bought bonds in the banks with money they do not have, i.e.'fictional money entered into financial computer systems.

• Since the governments which have rescued the banks are themselves heavily in debt the banks will fail again unless international pre-emptive action is taken. In such a scenario there will be no, or limited, protection for depositors, whether they be individuals or institutions.

• The major economies owing most money abroad per head of the population are the UK ($144,300), followed by the USA ($45,100) followed by the European Union ($27,900). These are approximate figures for last year.  These figures  are from the World Factbook (CIA), quoted in Wikipedia . See comments below.

• Within the eurozone’s 17 countries Greece, Spain, Portugal and Ireland have had serious debt problems. In recent months attention has also focused on Italy (spending deficit plus slow growth) and France (in that it has a lot of money tied up in the USA, which is more indebted than the eurozone).

• Economic growth in both the USA and Europe is slowing down and this affects their ability to generate wealth as a means of paying off debt. Even Germany’s economy has recently stalled (0.1% GDP growth in second quarter of 2011).

• China also has its problems. Its foreign market is declining, its population has growing inequalities and there are property bubbles in its major cities.  Its economy is still growing significantly (around 8% p.a.) but by much less than the world has been used to. Who will buy exports from the west?

• The USA’s economic well being is reliant upon a debt reduction programme, upon investment in productivity-enhancing infrastructure, training and education and upon economic export-led growth.

If the eurozone breaks up, i.e. if Germany is unable to lend money to weak, indebted countries within the eurozone it could set off a major world banking crisis beyond the control of any government or governments. Nobody other than some speculators have an interest in this, especially Britain with external debt per head exceeded only by Ireland (over $0.5 million), which fortunately is only a small country.

One plan for keeping the eurozone together is for it to issue eurobonds from the European Central Bank. Anyone owning eurobonds would be able go have them redeemed from the joint resources of the 17 eurozone members. This would require some hard thinking and talking by the eurozone members and most of the money would come from Germany; but Germany could have more to lose than any other state if the eurozone collapsed.  In return the eurozone countries would have to give up some of their economic sovereignty.

China is looking for a safe currency in which to store its sovereign wealth and which it can use for international trade. Traditionally this has been the US $. But the eurozone is bigger than the USA and has less debt per person. So China it is likely to be fully behind any attempt to keep the eurozone in tact.

 If Germany and China can't rescue the eurozone another possibility is that strict balancing of the books would be enshrined in the constitution of each eurozone state, if not every state in the European Union.There would have to be a long lead in time (10 years?) but if agreement can be reached on this it could be the best solution. If Europe remained stable it would help the USA and China sort out own their problems.

Feedback welcome.

See also

Reforming the world economy

John

Author, 2077 AD

cosmik.jo@gmail.com

UK debt and looting - not unrelated

The recent looting in the UK’s major cities is a result of parts  of UK society (to which I belong) having lost its grip on the real world. Not only the looters, but parts of a society which has a  responsibility to provide leadership, guidance, wisdom, hope and a sense of right and wrong to the young  : parents, teachers, religious leaders,  police, judiciary, sociologists, local authority leaders, politicians, the government,  the media, entertainers, artists, the literati and the intelligentsia. 

 The time honoured rules for a stable, prosperous society have been at least partly abandoned or ridiculed or adherred to only for fear of being caught out: honesty, loyalty, prudence, humility and restraint from extremes of greed or sensuality. It has happened countless times to societies throughout human history, and learning to adhere to them seems to be a painfully slow process, not helped in recent years, I maintain, by a denial of their divine origin.

But some bankers, financial service workers, economists and ordinary citizens have also been looting – plundering the economy in the belief they can get something for nothing.

A recent posting concerned the US debt mountain; but the UK is in even greater debt  which does not seem to have registered with the media, possibly because it is small compared to the USA and the eurozone.  

Although the UK government’s annual deficit is ‘only’ 10% of GDP (gross domestic product, the total money a nation spends on goods and services, serving as a measure of economic activty), compared with the US’s 12%, the British people have amassed a staggering amount of private debt per person by taking on excessively high mortgages from financial institutions which have in turn borrowed the money from foreign institutions.

Private UK citizens and the UK government together owe $144.3 k per person

to foreign creditors.  UK citizens have been spending money on foreign goods and property with abandon and appear to be living in a fantasy world. Only Ireland has a higher foreign debt per capita: $505 k. 

 The corresponding total debt per person values for other countries are

USA $45.1 k, Germany $57.8 k , China $0.3 k,  Greece $47.6 k  Japan  $19.1 k .

The average for the European Union is $27.9 k.

Greece’s total debt per capita is similar to the USA’s. Its anuual budget deficit (12% of GDP) and  accumulated government deficit (100% of GDP) are also similar.  But Greece is in trouble now because its economy is small, it has a low productivity, its GDP is falling fast, its currency is not a reserve currency (like the dollar)  and it investors fear it will exit the eurozone, voluntarily or otherwise.

The UK is in trouble, and in the long term it could be in worse trouble, because its banks are unable to finance business expansion even with government rescue at tax payers’ expense and because the Bank of England is having to buy bonds with money it does not have (quantitative easing) to keep banks solvent, thereby risking inflation. With UK house owners in debt to banks which are in debt to foreign banks there is a huge burden of debt making it difficult to invest in new technology, new skills and a rejuvenated infrastrucuture.

Other countries are having economic problems, including China, and we are all interconnected, but when you lose contact with the real world it has a habit of catching up with you.

Peace cannot be founded on illusions. So let’s get real.

Feedback welcome.

John

Author, 2077 AD

cosmik.jo@gmail.com