Sustainability

• Sustainability has become a major concern in all aspects of economic and financial decision making

• How sustainable is our society?

• What signs we should look at on sustainability?

Children as the future of our society

• We often say children are the future of our society.

• How about the fertility rates in Canada?

• About 1.6.

Detailed consequences

• School enrolments keep declining in most school districts.

• In Prince George, we already experience two waves of school closure in the last ten years.

• University enrolment

• Future work forces

Factors determining sustainability

• Abundance of natural resources

• Living standard

• Irrelevance of natural resources in a technology society?

More detailed analysis

• Fixed cost and sustainability• High school have higher fixed cost than

elementary school.• When a community cannot support a high

school, young families start to move away.• Eventually, the community cannot support an

elementary school. More families move away.• The community eventually disappear.• Example, Hixon, which is between Prince

George and Quesnel.

Why most economists are not concerned

• Economists mostly use GDP as the measure of health of the society.

• GDP is still growing in most wealthy countries

• We believe fertility rate, which is the return on human investment, is a much more fundamental parameter.

Examples

• If fertility is used as a measure of social health in Japan, you can recognize its eventual decline in early 70s.

• However, even today, economists are still arguing about how past policy mistakes wreck Japanese economy and how a good policy can revive Japanese economy.

• If fertility is used as a measure of social health in Europe, you would be much less ambitious about expansive social engineering such as Euro zones. Instead various countries will prepare for maintaining and reducing their social structures.

• If fertility is used as a measure of social health in China today, policy makers would attempt to slow down instead of speed up economic growth, to avoid future economic collapse.

• If fertility is used as a measure of social health in Canada today, we would stop further burdening ourselves with things like carbon tax; we would stop worrying for the impacts to future generations for we have already stopped producing future generations.

• Historically, the sharp decline of fertility is always the harbinger of decline of highly developed civilizations.

• However, there is a time lag between the decline of fertility and the decline of economic output.

• The initial decline of fertility reduces the ratio of dependents over workers, which actually speed up economic growth.