America’s Great 2012 Drought

Thursday, August 9th, 2012

by George Washington, Washington’s Blog

The progress of the drought has been horrific:

The current drought is covering almost as much of the U.S. as during the 1930s dust bowl:

As the Weather Channel  pointed out last month,  the area covered by drought rivals some of the dust bowl years:

As of June – the area covered by severe drought was still lower than during the Dust Bowl years, but still made the top 10 list:

But – despite the recent rains in some areas, which reduced by 1% the area covered by drought – the farm states remain parched, and the area covered by severe drought is still growing.

Unfortunately, the one certainty is higher food prices.

Much of the area hit during the Dust Bowl – and again today – is naturally prone to drought.  As the Weather Channel notes:

The area is known as semi-arid and is naturally prone to drought and high winds. In fact, early settlers referred to it as the “Great American Desert.”

Interestingly, HowStuffWorks notes:

About 90 percent of the 450 million hectares of arid land in North America suffers from moderate to severe desertification [source: Center for International Earth Science Information Network]

But as Ezra Klein notes, there have been much bigger droughts in the distant past:

Scientists have looked at data from tree rings and found (pdf) that North America endured brutal “megadroughts” during the medieval period. These droughts were similar in intensity to today’s dry spells, but lasted 20 to 40 years and were possibly linked to massive La Niña ocean events:

 

Fortunately, we haven’t seen anything that bad in recent times.

Postscript:   July was reportedly the warmest month recorded in the U.S. since records began in 1895.  And AP reports:

The first seven months of 2012 were the warmest on record for the nation. And August 2011 through July this year was the warmest 12-month period on record, just beating out the July 2011-June 2012 time period.

Some say this proves global warming is a dire threat, while others say that it is dishonest to claim that short-term weather proves anything.

But we can all agree on the following:

• We should use benign technology – and not cures which are worse than the ailments (like sending nearly microscopic particles of specially made glass into the Earth’s upper atmosphere or cutting down trees and burying them) – to address climate

• Nuclear is not the answer … although the nuclear lobby would like you to think it is

• As Britain’s energy regulator and many others note, microgeneration is key

• Reducing soot is crucial … and economically feasible

• Imposing fascism is never justified

• Downsizing the military is vital
• Cap and trade is not the least bit helpful

Tags: Arid Land, Drought, Droughts, Dry Spells, Dust Bowl, Early Settlers, Earth Science Information, Earth Science Information Network, Ezra Klein, Farm States, Food prices, Great American Desert, High Winds, International Earth Science, Medieval Period, Ocean Events, oil, Science Information Network, Source Center, Tree Rings, Weather Channel
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Dirt Economics: Demographics Matter! (Research Affiliates)

Friday, March 2nd, 2012

Dirt Demographics: Demographics Matter!

by Shane Shepherd, Research Affiliates LLC

My maternal grandparents grew up on Midwestern farms. As was typical in those days, they came from large families with seven children each. I like to think that my great-grandparents were motivated by a hard-earned grasp of “Dirt Economics”: knowing the benefits of cheap (and even free!) farm labor, they chose to have large families to help work the farm. And, given the economic realities facing a poor South Dakotan farming community, they certainly weren’t relying on their tiny savings to provide a comfortable retirement. Just as they had done for their parents, my great-grandparents hoped their children would run the family farm, put food on the table, and pay the doctor and the dry goods store bills once they were too old to work the land.

My great-grandparents intuitively understood the concept of support ratios: having just one or two children wouldn’t guarantee the retirement security they needed. Despite the economic devastation wrought by the Great Depression and the Dust Bowl of the 1930s, the underlying economic potential for their generation remained quite strong, especially following the Second World War. A growing workforce promised increasing demands for goods and services, and the production capacity to meet that demand. But a problem was forming on the horizon: Americans—my grandparents among them—stopped having so many kids, with long-term implications for the economy and investments. In this issue, we will examine how demographic changes affect portfolios in different economic environments.

The Demographic Bust

If only we found ourselves in such a fortunate situation today as prior generations did. Soaring deficits, massive debt, and worsening demographics—our frequently mentioned “3-D Hurricane”1—leave my generation in a far more dire situation than my grandparents faced. Exceedingly high debt levels and growing deficits across the developed world have attracted much attention, and rightfully so. Deficit spending is by nature a transfer of future consumption to the present. Particularly when built up across generations, excessive deficits can powerfully reduce future economic growth when those bills come due. The economic prosperity of Generation X will certainly be reduced by the need to pay back the heavy borrowing of the Baby Boomers.

Even if we could clean up our current fiscal mess with a wave of Ben Bernanke’s magic wand, our future prosperity still would decline for an even more powerful and fundamental reason. Simply put, I don’t have enough siblings. In addition to running large deficits and spending my generation’s income ahead of time, my parents’ generation forgot about Dirt Economics—they didn’t have enough children to support them in their retirement. As we moved from a predominantly single family support system to a national system anchored on Social Security, the incentives to directly replace one’s labor value vanished; instead, we shifted the burden to society as a whole. Therefore, if the Boomers begin to retire as anticipated, we won’t be able to produce enough goods and services to meet their demand! The core problem faced by the developed world today is not just the disastrous fiscal situation we see headlining the newspapers every day, but—lurking beneath the surface—our impending demographic bust.

Examining the deteriorating support ratios for the developed world puts the magnitude of this problem in context. In 1970, there were five working adults for every retiree. Today, that ratio is 3.5:1 and if the retirement age remains constant, that ratio is projected to drop below 2:1 by 2050.2 The demographics trends in Figure 1 show that, in the early 2000s, there were 10 new entrants into the workforce for every retiree; by 2020, that ratio will invert and show one new worker for every 10 retirees.

Continue reading below – Fullscreen for the better read, or download, options available at the bottom of the pane.

Fundamentals Feb 2012 Dirt Economics Demographics Matter

Tags: Debt Levels, Demographic Changes, Dry Goods Store, Dust Bowl, Economic Devastation, Economic Environments, Economic Realities, Farming Community, Food On The Table, Fortunate Situation, Great Depression, Large Families, Massive Debt, Maternal Grandparents, Matter Research, Midwestern Farms, Research Affiliates, Retirement Security, Second World War, Shane Shepherd
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