The Canadian (And Western World) Population Trap

The Bank of Canada last week came out stating Canada has entered its first population trap in modern history. A population trap sees the technological fortunes that saw productivity and therefore prosperity grow for its population start to diminish as it is shared between more and more people. But with the Western World following a declining birthrate, the only thing driving this is immigration. So is Canada the only Western country facing the same ‘trap’… And what follows the trap? - Disease, war, economic collapse and famine. So is it already too late?

Bank of Canada

In a recent report from the National Bank of Canada economists’, Stefane Marion and Alexandra Ducharme, they claim Canada is caught in a ‘population trap’ that needs to rein in immigration significantly to escape it. Between October 2022 and October 2023, their population grew by 3.2%, with 1.25 million immigrants the quickest pace of growth since the 1950s baby boomer period (sound familiar Mr Albanese?).

The main issue is the sheer rate of immigration is stretching the country’s capacity and resources, increasing inflation and diminishing standard of living. In particular they identified the strain in the housing market (again a hot topic here in Australia). They argue the rate should be no more than 300-500,000 per annum.

Malthusian Trap Theory

So what is a population trap? A population trap is otherwise known as a Malthusian trap. The trap is named after Thomas Malthus, who identified the issue in an essay he wrote in 1798 ‘Essay of the Principle of Population’. The Malthusian theory ensures that gains in income per person through technology or productivity gains are lost through subsequent population growth.

He identified 2 ‘Fixed laws of nature’;

1. That food is necessary to the existence of man
2. That the passion between the sexes is necessary and will remain nearly in its present state

He went on to argue that when population remains unchecked due to the effect of two unequal powers (being the fixed laws of nature) that there becomes a difficulty in subsistence. His example: if a new invention doubles agricultural output, health, longevity and quality of life go up, causing population to increase. Over a few generations food per person falls again back to the previous ‘subsistence equilibrium’. Basically food production and gains are linear and population growth is exponential.

The IPAT equation is used to express the Malthusian Trap in an equation:

I = P x A x T

Where:

I = Environmental Impact

P = Population

A = Affluence

T =Technology

The Malthus Catastrophe

The Malthus Catastrophe is what occurs when equilibrium is breached, the population becomes bigger than available resources – starvation, war and misery lead to controlled subsistence population model, that without technological advancement or productivity growth - population becomes linear through ‘catastrophes’

What’s the Difference between an Immigrant and a Refugee?

On a recent trip to California, after looking around at the tent cities and misery that had changed the landscape of the state of Disneyland and Hollywood that I remember, I was talking to a businessman about immigration and the open border policy of Biden. I made the observation that the growth in the population should eventually be a good thing if controlled better, to which he made an observation that has resonated; ‘Theres a difference between a refugee and an immigrant’. His analysis was as follows; A refugee generally poorly educated, growing up in war and famine, within a poor health system will never add to the state but will take from it as the state is burdened with their wellbeing, they may never work and subsequently become a ‘ward of the state’. An Immigrant, on the other hand may be highly educated, looking for a new start that can and do add to the productivity of the state, through entrepreneurship and work ethic they add to the output of their new home. Now I say this very generally, I know some very impressive refugees who have overcome adversity to be amazing and productive citizens, but this businessman was right – there is a difference, and this difference appears to be currently driving the population trap as one takes resources and the other increases resources. To be clear this is an economics discussion not a humanitarian one and I fully appreciate the need for the latter as well.

The 21^st Century Population trap

More and more developed countries are starting to identify immigration as a major stress point in their country’s wellbeing; some recent examples;

• Sunak, Prime Minister of the UK, has proposed a new migrant law to deport Illegal immigrants to Rwanda.
• Trump has proposed mass deportation of all illegal immigrants if elected

• In Australia 1 in 36 people in Australia arrived last year

Are we Already in a Malthus Catastrophe?

What indicators are there that we are already in a Malthus Catastrophe? Aside from the disease and wars that have escalated in the preceding decade, several Western Countries have started to see a decline in life expectancy including Russia, India, France and America. Are we already in the catastrophe side of the Malthusian Trap?

This Bank of Canada has coined the tinderbox for 2024, and with more and more wars following a global pandemic, what else is the Malthus Catastrophe going to throw at the Western World and will politicians start putting their population ahead of their votes before it’s too late?

We regularly remind you that our current (and all previous) credit driven Fiat currency economies combined with the political disposition to spend more than you receive to win votes, are nothing more than a Ponzi scheme in the truest sense of the word. Australia has been in a per capita recession for some time now but we expand our economic ‘growth’ by importing more people and avoid a technical recession. The US’s interest bill is now similar to both Defense and Health expenditure. What is larger? Social Security… Eventually, obviously, this fails. The Ponzi scheme collapses as the population trap completes. In ALL previous such collapses one asset prevails. Gold.