Scary Stuff: Part I

Given that it is Halloween one of the blogs I read decided to come up with a few "scary" graphs to show where we are and where we might be going.

It was scary, to a point.

The charts in question were G7 Debt to GDP Ratios; Health Care Costs and Aging Populations; Income Inequality; and Global Food Consumption.

Taking them briefly one at a time I have the following comments.

It is no surprise that the Debt to GDP ratio of the G7 has risen steadily since the financial crisis such that they have risen from 80% to 120% in the last 6 years (according to the IMF).  This ratio is in and of itself neither surprising nor overtly disturbing-unless we have another financial crisis.

If we do have another debacle, assuming it will hit the G7 nations hard, then they will have much less flexibility to finance their way out of the problem then they did the last time around.  This is why there is such a fine balance between austerity programs designed to decrease deficits and unemployment which could trigger declines in real estate values and social unrest which just might require either less austerity or none at all.

The second chart, Health Care Costs and Aging populations showed that health care costs are creeping up as the population ages combined with lower birthrates in the industrialised world resulting in lower social payments being made to the system. 

This can't be good- and it isn't.  But declining birth rates in these countries reflect in many instances a realisation that children have a financial responsibility associated with them and therefore many people choose to have less children than they might have liked.  Of course there are many people who ignore the cost of children either out of ignorance or a misguided belief that to have children is either a right or even a requirement to have children.

Which takes me to the last chart, Global Food Consumption. 

Thomas Malthus predicted that there would come a time when population growth outweighed the increase in farming productivity such that at some point there would not be enough food.  This was 200 years ago.  To date we keep coming up with new means of increasing agricultural productivity, but there is a tipping point out there lurking around the (next?) corner.

Which takes us back to the third chart, Income Inequality.  This is perhaps the scariest chart.  It showed the wealth distribution to the bottom 50% of the top 15 industrialised nations and that held by the top 10%.  The chart essentially says that the bottom 50% are in trouble-and they are in the industrialised world.  Except for the USA, where despite its' claims of political and economic democracy it looks more like a third world state, these are relatively wealthy states with social policies one would have thought would have presented this inequality.

Without wanting to be alarmist, or Marxist, one cannot deny the fact that as food prices go higher, health costs go higher, and debt ratios to GDP preclude a sustainable increase in social spending that the threat of social unrest will increase.  This could have far-reaching effects on democratic institutions and ideals, and could conceivably result in an increased probability of revolution.

If social cohesion does come apart at the seams- the future could look very scary.