Dubious about demography

by John Quiggin on November 10, 2006

Tyler Cowen launches another round in the long-running EU vs US productivity debate. As regards the productivity issues, I don’t have much to add to this piece from a couple of years ago.

But there’s one point on which Cowen lays a lot of stress in this post from the Sheri Berman seminar – the fact that Europe has low birthrates and therefore, on average, is likely to have lower output per person in the future. As he says, this is an issue on which I and CT commenters have been conspicuously silent.

Yet family life gets plenty of attention here, and it’s certainly an issue I take seriously. So why did I and others ignore this aspect of the argument?

First up, I (and most others at CT, I think) take a libertarian line on fertility. It’s a matter for families to decide for themselves, and government policy should be focused, as far as possible, on making it easy for people to follow the path they prefer. Of course, there’s no meaningful sense in which government can be ‘neutral’; one way or another policy settings will have implications for family choices. But the idea that fertility rates should be a target of government policy seems profoundly mistaken to me*.

If you accept that position, then it should be obvious that the response to any argument that low (or high) fertility rates is bad for measures of GDP should be “so much the worse for measures of GDP”. As all economists know, GDP is a lousy measure of economic welfare, and this is particularly true if you compare populations with different age structures.

In any case, most claims about economic implications of demographic change are overblown. A recent conference held by the Reserve Bank of Australia deflated a bunch of claims about asset price meltdowns and so on.

It’s true that, if you’re a government official in charge of a pay-as-you-go pension system, a declining birth rate is a big problem. On the other hand, there are some big demographic dividends from declining birth rates, which may not have the same salience but are important nonetheless. For example, if you have a rapidly growing population, a substantial amount of investment has to be allocated to housing, and if savings rates are low, that produces a current account deficit that is at least as problematic as a domestic budget imbalance associated with social security obligations.

To sum up, I didn’t respond to the demographic argument because, without having looked at it closely, I think it’s a furphy. Feel free to convince me otherwise.

  • I’m talking about developed countries here. I don’t want to get into a debate on population policy in developing countries, but I’ll agree there’s an arguable case for policy aimed at speeding up the demographic transition from high death rates and birth rates to low death rates and birth rates.

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1

Ray 11.10.06 at 6:06 am

* missing footnote?

2

glenn 11.10.06 at 6:24 am

I’m in Italy and I’m literally witnessing a country (and a culture?) that’s withering. Rapidly aging with low birth rates, how can this country grow without: a)massive labor reform and b)immigration?

These social issues are I believe the real challenges to declining birth rates. Italy is perhaps the worse postioned in europe, but with its heretofore homogeneous culture and political and popular stubborness against (largely African)immigrants, social ills will be an almost predictable consequence of low birth rates.

3

John Quiggin 11.10.06 at 6:34 am

Footnote problem fixed, I hope

4

stostosto 11.10.06 at 5:40 pm

John Q:

I am dubious about the libertarian view. Especially in light of your own statement regarding government policies inevitably having conseqences for family choice. And when you endorse the desirability of speeding up the demographic transition in developing countries, you completely forfeit the libertarian view — and rightly so, in my opinion.

But if you prefer low fertility and ditto mortality to high fertility and ditto mortality, why is it somehow inherently wrong to prefer a fertility that ensures a stable or mildly growing population and a more manageable pension burden on society?

I live in Denmark, and I really, truly dread the prospect of Europe becoming dominated by 60+ agers. Not that there’s anything wrong with them — and when I get to be one myself, they will surely be the greatest 60+ generations of all time. But I’d like also to have a significant youthfulness around me, and I don’t think there’s anyway getting round the fact that a population’s age profile determines a lot of the dynamics in society.

It’s already the case that the political agenda here is dominated by old people issues to an appalling extent.

Also, I suspect that the amazingly low birthrates in countries like Italy, Spain and Germany are resulting from a particular set of social circumstances that skew and constrain people’s choices of having the number of babies that they would prefer if not so constrained. I know this is slightly tautological, but I don’t see anything wrong in a deliberate policy to target these social constraints. On the contrary. It will still be people’s own choice whether to have children and how many.

5

jim 11.10.06 at 5:41 pm

Glenn’s (#2) point is well taken and can be taken further.

Demographics in developed countries is not just a question of the birthrate of long established natives. Immigration rates play a major part, particularly since immigrants typically retain their higher birthrates for a generation or two. The birthrate among US long established natives is on the same order as that of Europe, but the US is (despite its rhetoric) in practice friendly to immigration and therefore is not sufering the economic consequences.

If an aging demographic is bad for measures of GDP, government policy can remedy that by increasing immigration. It need not look to change the birthrate.

6

John Quiggin 11.10.06 at 5:54 pm

stostosto, I agree with your last para in principle, but I’d be interested to see you spell out the social circumstances you see as obstacles to people following their own choices about family size.

7

stostosto 11.10.06 at 5:54 pm

jim,

what you say about relative fertility in host populations and immigrants in the US vs. Europe is on the mark — the U.S’s higher fertility largely explained by its proportionately greater immigrant population.

But immigration does undeniabliy create problems. It does so in the U.S., despite its comparatively welcoming and accommodating set of structures, and despite a comparatively cultural similarity of the immigration source countries. It does so even more in Europe with its pronounced ethnically, culturally and linguistically defined nation states and its welfare arrangements that probably require a certain extent of homogeneity and mutual trust in order to retain popular support. The communitarian elements that Berman was right to sress in what she wrote about social democracy.

8

stostosto 11.10.06 at 6:03 pm

John,

publically funded childcare, generous parental leave arrangements, employers being relieved of any cost of employing childbearing women. Also, direct financial support for families with small children. NOT means tested.

I believe the comparatively high fertility in the Nordic countries vis-a-vis e.g. Germany, Italy and Spain, is evidence of the effect of such policies. We not only have a higher fertility rate, we also have a higher female labour market participation rate.

It will be expensive, no question. And politically difficult to achieve because we have such large parts of the electorate caring more about their pensions and health care prospects.

9

John Quiggin 11.10.06 at 6:19 pm

I have no problem with what you’re suggesting stostosto.

It’s notable that, except for the earned income tax credit, the US has none of the policies you suggest, but still has relatively high fertility, not entirely confined to recent arrivals, I think. I’m surprised by this, and would be interested in explanations.

10

kb 11.10.06 at 6:49 pm

“but still has relatively high fertility, not entirely confined to recent arrivals,I think. I’m surprised by this, and would be interested in explanations.”

Poor sex education ?

American teens aged 15-19 have birth rates 4-5 times that of their western european counterparts.

11

claus vistesen 11.10.06 at 7:09 pm

Hi John, the rest of CT, and of course the regular commentators and readers.

You have happened to touch upon a subject which is of great interest to me and since I do not agree with you, there should be ground for an interesting exchange here. Let us begin with this …

‘To sum up, I didn’t respond to the demographic argument because, without having looked at it closely, I think it’s a furphy.’

This, I am afraid, is a fallacy John and I shall do my best to convince you that you are wrong. In fact, you point to many of the salient factors in your post yourself and as such I don’t quite see how you can write off demography as a ‘furphy’. Consequently, you are right when you point to the underlying political issues of maintaining the sustainability of public finances as the population age (intergenerational issues are important here as well). Italy and Japan are prime examples here. Yet you also point to the economic implications of the demographic dividend and more generally the effect of having a relatively young and productive population. Frothy house markets and current account deficits; Spain with a relatively young population and which is experiencing an immigration driven boon is a good place to start here.

I am not trying to trap you here John but I am merely pointing (through your own arguments) to the very real and important transmission mechanism between the population structure of a country and its economic growth path. So what is the underlying tendency here? To put it in few words; the demographic transition is not over. In fact we are in the midst of an ageing process in the developed world which no-one effectively can see the end of. The primary drivers of this process are birth postponement and low fertility. A quick look at OECD’s fertility levels will illustrate this; how many countries have above-replacement fertility (+2.1)? Not many!

A libertarian view on fertility?

I am sympathetic to this I really am and in any case those countries that face the most serious problems won’t have the fiscal leverage to do a meaningful attempt at pro-natalism anyway. However, I am sure you and the other at CT (provided they agree with you of course) would agree that being a libertarian does not constitute being blind to the facts and just letting be. Only if we accept that we have an issue to deal with here can we avoid very serious problems in for example Japan and Italy; I am not saying this lightly!

So, have I convinced you John? I guess not entirely  but I have given it a fair shot. Let me end this with some petty self-promotion and point to a group blog http://demographymatters.blogspot.com/ where you will find plenty more testaments to my final point that demography in fact does matter.

Now, of course, you are welcome to convince me that I am wrong.

Best

Claus

12

Crystal 11.10.06 at 8:05 pm

Apparently, countries like Italy and Spain (as well as Japan, which has an extremely low birthrate as well as an extremely low rate of marriage), women find it very hard to combine career and family. Men don’t help with the housework or child-rearing, and workplaces are fairly inflexible. Therefore, women are staying single and childless in droves – particularly in Japan, where government officials are starting to wonder how to encourage marriage and children.

It seems that in northern Europe and the US, more men are willing to pitch in with the housework and childcare, and jobs are more flexible. The US has a dismal safety net as far as family leave and childcare are concerned, but women, at least in higher-level jobs, can get sufficient flexibility there and help from their husbands that childrearing is do-able.

13

Martin James 11.10.06 at 9:30 pm

Although I don’t think it is true that lower fertility is particularly bad for economic growth, I don’t think that Tyler’s point was narrowly economic.

His point seemd more cultural and historical. If you can’t reproduce the people, you can’t reproduce the culture. Yes, a country with a fertility rate of 1.5 can be rich and properous and grow in per capita GDP, but its also doomed.

Can you at least acknowlege that if liberty leads to permanent fertility rates of 1.5 then liberty it leads to extinction?

No need to worry though, evolution does all right without us.

14

a 11.10.06 at 11:00 pm

“Yes, a country with a fertility rate of 1.5 can be rich and properous and grow in per capita GDP, but its also doomed.”

Doomed? I guess in the same way that a country with a fertility rate of 4 is also doomed – at some point there won’t be enough room to stand in the country, much less resources to support the population.

I sorry to respond so fatuously, but I’m afraid I think I’m replying like for like. A country with a 1.5 fertility rate *now* is doomed only far in the future and only assuming that the rate will continue for hundreds of years. Surely a more reasonable take of the question is whether in ten or 50 years the population will be better off with that kind of fertility rate. There are of course problems with an inversed age pyramid, but problems can always have solutions.

And before throwing raspberries at the countries with a 1.5 fertility rate (you’re doomed! doomed!), one should note that a world with that fertility rate would almost surely be a better place in 50 years than it is now or than it would be with a fertility rate over 2.

15

Edward Hugh 11.11.06 at 1:06 am

Hi John,

I’d just like to quickly endorse what Claus says above by adding a couple of points.

The ongoing demographic transition (or second demographic transition as some theorists call it) isn’t just about fertility, it is also about increasing life expectancy (indeed on some versions of investment theory we could postulate that the two of these were interconnected, with more years of life expectancy making it more worthwhile investing more in education and general life experience before starting work, hence the birth postponement phenomenon which is the characteristic phenomenon of lowest-low fertility – sub 1.3tfr – which is now very widespread indeed and extending to places like China – it has already arrived in the tigers – and other developing countries).

The by-product of all of this is that median *population* ages continue to rise and rise, into hitherto uncharted territory. The top 3 – Italy, Japan and Germany – are now at 44 and rising. Since we have never reached this stage of the transition before no-one really knows quite what will happen. But there are some pointers.

Following Modigliani, we have some sort of life cycle theory of saving and consumption, and this seems to apply to populations just as it does to individuals. So we can see that in the three countries mentioned domestic consumption becomes rather flat, and they become increasingly dependent on exports to get growth. This is a big part of the ‘global imbalances’ story which interests eg Brad Setser so much. The consumption path in China is also affected as people age rapidly in a society with little in the way of pensions provision.

And growth is – unfortunately – important here since we depend on growth in the developed economies to find a sustainable path for pensions and other welfare systems. I say unfortunately since there are good ecological and other arguments as to why growth itself might not on its own be such a marvellous process as some seem to imagine.

The one serious macro economist who has noticed all of this is Ben Bernanke, and his recent speech on the impact of the demographic transition in the US was very much to the point. Also his global savings glut thesis, which many ridiculed, but the problem doesn’t go away, has part of the picture.

You mention the RBA conference, I would say the two interesting papers there were from David Canning & David Bloom (on the demographic dividend) and from Ralph Bryant on the mechanics of the global imbalances.

One final point. A lot here depends on life expectancy and health. Basically there is a big difference between an average increase in life expectancy from 45 to 65 which is economically very good news, and one from 65 to 85 which is good news for all of us socially, but which is economically much more complicated. If there is a demographic dividend, is there a demographic penalty? That is the big unanswered question. A lot depends on health. If people are living longer because their active productive lives are extending then the economics of this is fine. But if they are ageing at the same rate as ever, but increasing medical care is extending our lives, then this is another story. The answer to this will come from biology and not from economics, but economic futures will depend a lot on what this answer is. Basically we urgently need some reliable biomarkers of ageing, so we can assess the productivity impact of steadily rising median ages.

And last, but by no means least, all this is happening as we move away from Paygo welfare models which become unsustainable as the age pyramid inverts. The issues of generational fairness then become paramount.

In sum, in demography it is not population size that matters from the economic point of view, but population age structure. This is the core of the new paradigm. I don’t suppose I have said enough here to convince you, but at least I hope you will find some food for thought in all this.

16

finnsense 11.11.06 at 1:40 am

There is a huge difference between a population that replaces itself without growing and one that fails to replace itself. Finland, for example, has a rate of 1.9 children per woman. Thus to replace the population we need either to lift that a tiny bit or
have a bit of immigration, which we have. The demographic problem we face then, is a bubble. Survive the bubble of the retirement of the baby boom generation and everything will be fine. Finland is already running surpluses to this end and is modifying the retirement age so you can choose to retire earlier or later and get proportionately more benfits. No crisis necessary.

Tyler’s doom and gloom predictions are based on two assumptions. The first is that social democracies promote below replacement birth rates – which is not born out by the evidence. It seems to be a cultural thing though the top end, admittedly, is around replacement level. That’s a good thing though. It’s not like we have too much space.

The second is that even if we could get our population to replacement level, our finances cannot survive the bubble. That’s a better argument but there is no reason to think that we can’t get by with some fiscal prudence and we know, at least, that non-Anglophone countries do much better at that than Anglophone countries.

17

Matt 11.11.06 at 2:15 am

stostosto, There’s an article by Will Kymlica and a colaborator (sadly I forget his name) in the latest issue of the journal Ethics and International Relations that claims (fairly persuasively) that there is very little evidence that ethnic and cultural diversity hurts support for public assistance and welfare programs and some good positive reason to think this isn’t true. This is counter-intuitive, but I think they make a pretty good case, one that’s worth looking at. Importantly it’s an emperical argument for the most part while the arguments on the other side had largely be a priori.

18

Ingrid Robeyns 11.11.06 at 3:00 am

How immigration relates to the welfare state (i.e. questions related to support for the welfare state, but perhaps even more importantly also differences between the share of net-beneficiaries vs net-contributors among immigratns and non-immigrants) surely must differ between countries with different kinds of immigrants; in the Netherlands, for example, the Statistical Office released a report a few years back which showed that “non-western immigrants” are net-beneficaries. Hence the argument that the public pension system or other welfare state provisions under demographic threath can be saved by encouraging immigration, is rather dubious. This is of course only one empirical aspect and not even the beginning of a full normative analysis, but it is something that scholars of demography and the welfare state should take on board. I have not studied these issues, but my perception is that Canada and the USA have a very different type of immigration than western Europe, for example in terms of labour market skills.

19

David Moles 11.11.06 at 4:04 am

Net beneficiaries in the sense that they take out more from the social insurance system than they put in in taxes, or net beneficiaries in the sense that they’re an overall drag on the economy? An important difference, I think.

20

abb1 11.11.06 at 5:21 am

But I’d like also to have a significant youthfulness around me…

Actually, young people are typically very annoying, especially the teenagers. And often destructive and dangerous. It makes perfect sense to limit their quantity by importing mature adults from abroad.

21

stostosto 11.11.06 at 7:31 am

The World Bank’s online source for population data.

22

stostosto 11.11.06 at 1:08 pm

matt #17:

Thanks, I looked it up. It’s Will Kymlicka, Keith Banting: Immigration, Multiculturalism, and the Welfare State in the September 2006 issue of Ethics & International Affairs.

23

stostosto 11.11.06 at 1:31 pm

I even skimmed the article. It’s interesting, but not all that persuasive of the case for immigration being neutral to welfare states. Indeed, it says that countries with a high pace of immigration have had lower growth in social spending than comparable countries with low immigration.

All the same, my own take would be that the immigrants cause the welfare agenda to become highly defensive of the host population’s privileges, and to be trimmed in a manner designed to limit immigrants’ access to benefits.

That’s certainly what has been going on here over the last five years. And it has been caused more than anything, I think, by the perception that immigrants don’t carry their load as regards contributing to the common coffers.

Of course, this very trimming has served to strengthen the tensions between immigrants and host population.

However, if you look at broad measures of social expenses, they have been holding up quite well. That doesn’t refute the point I was making that immigration into robust welfare states will tend to cause more problems than immigration into more low level public spending states.

The problem Ingrid robeyns mentions above in #18 is also known here: Immigrants from third-world countries tend to be more of a burden than a bonus in terms of tax contribution/social benefits accounting.

This has a lot to do with the fact that since 1973(!) all immigration has been due to either family reunion or asylum seekers. That is, none of this immigration has been targeted at Danish labour market needs. And, indeed, the unemployment rate among immigrants and descendants is much higher than among ethnic Danes, and their labour market participation rate is much lower.

24

Maynard Handley 11.11.06 at 1:37 pm


His point seemd more cultural and historical. If you can’t reproduce the people, you can’t reproduce the culture. Yes, a country with a fertility rate of 1.5 can be rich and properous and grow in per capita GDP, but its also doomed.

How true. Which explains why there are all those English speakers in India and Africa? Or maybe not.
The quality of the arguments on this thread shows exactly why we’re all doomed as a species. The same people that, a week ago, were shouting and screaming about getting global warming under control are now telling us that countries whose populations aren’t growing are headed for disaster and that their governments ought to be encouraging births.

If there’s one truism of the 20th century it is that woolly-minded claims that involves various magic words like “family” and “culture” will always trump rationality and science. I have seen exactly one post in this thread, #14 by “a”, that points out that there are problems on the growth side, and that those problems are a hell of a lot more serious and more pressing.

25

DW 11.11.06 at 1:57 pm

Um, don’t birth rates vary pretty dramatically in Europe? I seem to recall a recent NY Times story on France pointing out that the French birth rate was pretty close to replacement level. So it’s specific parts of Europe (including “new” Europe) that have a birth dearth problem. Maybe Europe will just get more and more French dominated. On the other hand, France’s pro-natalist are easy to copy as long as you don’t mind (in effect) throwing money at women.

While we’re at it, what happens to the coming Pacific century if all the developed Asian nations have birth rates well below replacement levels? Maybe developed nations have to be feminist to survive in the long run.

26

Matt 11.11.06 at 4:19 pm

In the US, at least, (where the vast majority of immigration is also for family reunification [or formation] purposes) immigrants, even the unskilled, are net contributors by most counts. Parly this is, of course, the ungenerous US benefits system, but partly also because most immigrants have past school age but are young and so don’t take up retirement or much health care yet. Full membership is also much easier in the US than in most european countries, and immigrants are not eligable for any social benefits except emergency ones for 5 years and sponsors must assure no access to public benefits for 5 years. Some such system seems reasonable to help ensure reciprocity, and seems better than the rather distasteful nationalism and xenophobia often coming from Europe on such matters.

27

stostosto 11.11.06 at 4:36 pm

matt,

that is my understanding as well. The US is niggardly with benefits, and low-paying jobs are easy to get. The reverse is generally the case in the EU.

What is “full membership”?

28

stostosto 11.11.06 at 4:38 pm

By the way:

the rather distasteful nationalism and xenophobia often coming from Europe on such matters.

Isn’t there at least some of that going on in the U.S. as well? Especially since 9-11?

And how do the illegal immigrants fit into this picture?

29

stostosto 11.11.06 at 4:40 pm

(The second line of #28 is a quote from matt’s post. Seems I bungled the blockquote feature.)

30

Matt 11.11.06 at 4:56 pm

By more straighforward and reasonable access to full membership I mean that the naturalization rate is much higher in the US than it is in most (but not all) European countries, based in part on a more political and less cultural understanding of membership. The situation is better yet in Canada, it seems, so I don’t want to claim the US’s system is the best here by any means. It seems fairly clear, though, that the US and Canada are more open to immigration for many purposes than are most European counties, that this is due to not basing membership on ethnic/cultural understanding, that Canada is likely better than the US on most of this, and that this is all for the good, and that the European system has some nasty undersides. But, it’s quite late from where I’m writing (deep in Eastern Europe, where I’ve had to deal w/ being stuck in the middle of nationalist anti-immigration marches in the last week) so I’m going to bed.

31

joe o 11.11.06 at 9:13 pm

Crystal has a good point that I hadn’t realized til I saw this graph . The effect she points out is pretty huge.

32

lemuel pitkin 11.12.06 at 12:40 am

Crystal and Joe O. make a good point: “family valiues” is bad for families! Not so surprising when you think about it…

But my question is, why can’t we be as happy (and if we’re happy, who cares about GDP?) with a stable or declining population, as with an increasing one?

33

CapTVK 11.12.06 at 8:18 am

Seeing as my other colleagues of DM have responded I´ll add my 2 eurocents as well. Edward and Claus have done their part and I´ll add a bit about demography in general…

First I have to note that John Quiggin seems to see the problem from the Australian perspective. While in Australia the problems of ageing are not as pressing as in many European countries they still have introduced a number of pronatalistic policies. But, if economic and demographic problems in Australia are overblown then why have they introduced those measures? I wonder why JQ makes no mention of them.

As for Europe, that can be divided into two parts: NW Europe where birthrates recovered after the onset of the babydip in the 70´s to a more acceptable level of around 1.6-1.9 and the rest of Europe with a TFR below 1.5. I should point out that timing also plays a role. In Germany the TFR dropped to 1.4 in the mid 70´s and has since remained around that level, Spain and Italy dropped to even lower levels towards the end of the 80´s and in Eastern Europe in the 90´s. Why the duration of low fertility is important I´ll get to in a minute. Let´s just say that until now (2006) there has been no significant recovery in those countries.

So at what level becomes a low TFR a problem? A country that still has a decent birthrate, like 1.7 or higher (and combined with a population that is open towards immigration) will not have as much to fear from population ageing as a country under the 1.5 threshold. A TFR off 1.7 means that the next generation will be one fifth smaller, a TFR of 1.4 means that the next generation will be one third smaller, a TFR of 1.2 means two fifths smaller and so forth….

…and this is where the potential crisis lies. The dynamics of population decline mirror those of population increase: halving times mirror doubling times and population momentum can press downward as well as upward. At first this will result in population ageing and eventually will come population decline. Although actual decline can be offset by further increases in life expectancy.

Note the emphasis I place on generation. That means it takes a long time (25-30 years) before the first effects become truly apparent. The absolute birthrate can remain stable during that period if earlier cohorts are large enough but once the first cohort of the babydippers reaches maturity and they choose to have the same average number of children as their parents you enter a negative feedback loop. Germany is the country to watch for the moment because it´s the first country to have experienced low fertility for one generation. If current projections hold up Spain, Italy and Eastern Europe will join it towards 2010-2020.

“Tempus omnia revelat”

34

serial catowner 11.12.06 at 10:42 am

The idea that a falling (or fallen) birthrate would be linked to less output-per-person seems on the face of it absurd.

To be sure, such a thing might happen, but middle and upper class families typically reckon just the opposite in the modern world- that fewer children optimize the resources for each child.

The falling productivity of the older worker, and their desire to leave the workforce, are myths, especially in an age of “power-everything”. Today, workers are marginalized in their late-40s, when they still have, typically, twenty years of productive ability.

Now, turning to the next error of Cowen, he fails to understand that the America we know has been built for a lifestyle that is soon to disapear. The portion of our GDP derived from commuting is not a strength, but a weakness. Adding a GPS to a car for drivers too dimwitted to find a pizza stand is not an improvement in “productivity”.

In any case, unless we make some changes soon, the world population will be about 10% of what it is today, but the population of Finland, Sweden and Canada will be much larger than they are today. And it won’t be because their condoms burst.

35

Walt 11.12.06 at 12:06 pm

The trouble I have with these kinds of arguments is that they rely on predictions on a) future productivity and b) future demographics, both of which to my knowledge are wrong approximately 100% of the time.

36

Alex 11.12.06 at 3:02 pm

@walt: indeed…

@ed hugh, serial catowner: wouldn’t it be nice if the demography and sustainability folk got together? perhaps they would make beautiful music together, and either 2.1 or 1.4 babies, depending on who won the argument!

Further, back in February I remember talking to Ed in Barcelona, when he expounded his theories to me and I mentioned the distinction in evolutionary biology between r-selection and k-selection (r-selected species are generalists and reproduce rapidly; k-selected are specialised to a niche and reproduce slowly). Perhaps we are flipping from r to k? K certainly seems a better choice in the long run. Some of the Worldchanging/Bruce Sterling/Stewart Brand people have been talking about these concepts with regard to buildings for a long time.

37

notjonathon 11.13.06 at 6:35 am

Trying to get my head around the total economic picture of changing demographics is proving quite trying, but for starters, I have lived in Japan for the past 15 years and am now one of those just entering the over-65 age group. I may well be forced to retire within the next couple of years, which will reduce my effective contribution to the system as a whole, in spite of the fact that I can probably remain an effective worker for several years beyond that point.

One factor that has only been lightly touched upon in the general paean to growth is the environmental cost of that growth. Japan’s 1.29 birth rate has politicians claiming the absurd conclusion that the population will eventually reach zero. The fact is that Japan can feed at most (without crop failures or agricultural pestilence) 50-60 million people. I would argue that suggests an ideal maximum population of about 40 million. Even that figure represents an optimistic outlook, for the largest pre-industrial population of Japan was in the range of 20 million, with periodic famine not unknown. Since the present population is over 120 million, immigration to sustain population growth would only exacerbate the environmental overdraft that Japan’s economy represents (I suppose that would be offset to some degree by the amelioration of overpopulation of the Philippines or China). Some other nations will have to divert resources to feed Japan, which in turn must then overproduce energy-using manufactured goods to purchase these agricultural products, and fuel must be expended to transport the traded goods in both directions. Cheap petroleum-based energy has fueled this world trade growth (including feedstocks for manufactured goods, chemical fertilizers, energy for production and fuel for transportation). When we run out of oil, this trade system will face collapse. Countries that cannot feed themselves will face shortages, perhaps famine.
As much as I love my Bing Cherries from Washington, my avocados from Mexico, my blueberries from Canada and my wine from Australia, Chile, France and California, the system of world trade is tied together by a very slender, very fragile thread.
Since the political will to tackle the world problems of overpopulation and over-use of energy is lacking, extreme measures to curb growth will be needed. Perhaps the sense of foreboding among young people has as much to do with falling birth rates as tax policy. Or perhaps Gaia is telling anyone who will listen that this madness cannot go on.

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Kang de Veroveraar 11.13.06 at 11:40 am

It’s not the main focus of this thread, but nevertheless it’s not a completely irrelevant remark: Tyler Cowen sounds like a relic from the roarin’ nineties. And the talk about multi-factor productivity, enlightening as it is, obscures that somewhat.

Kenneth Rogoff’s take avoids the generic bloviation which most of the “productivity miracle” apologists like to indulge in: “…together with a few sister “big box” stores (Target, Best Buy, and Home Depot), Wal-Mart accounts for roughly 50% of America’s much vaunted productivity growth edge over Europe during the last decade. Fifty percent! Similar advances in wholesaling supply chains account for another 25%! The notion that Americans have gotten better at everything while other rich countries have stood still is thus wildly misleading. The US productivity miracle and the emergence of Wal-Mart-style retailing are virtually synonymous…But I do have some reservations about the Wal-Mart model as a blueprint for global growth…Indeed, many Europeans, and others, will view… (the) video simulation of Wal-Mart’s spread as a horror film… The big question for Europeans is whether they can find ways to exploit some of the efficiency gains embodied by the Wal-Mart model without being overrun by it.”

If Rogoff is right, the “productivity miracle” in the US will (be about to) run its course.

Cowen for his part intones the well-known hosannahs: “(m)any stories can be told about why the US is gaining on Europe. Most plausibly they involve greater micro-productivity in R&D, higher education, and the use of information technology.”

But hey, “Europeans have to work harder at shopping”! That’s a way to put it, I guess.

Concerning the main topic of discussion of this thread, I think that the “demographic bears” are not addressing John’s point head on:”there are some big demographic dividends from declining birth rates, which may not have the same salience but are important nonetheless.” The housing issue is indeed important, as are the quite specific demographic trends in cities. It appears that the population of successful cities will in all likelihood remain stable or grow moderately, even if country totals fall. This should have some beneficial effects on productivity.

After all, it makes the strategic placement of those Wal-Marts easier…

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MQ 11.13.06 at 1:51 pm

The world is overcrowded. A lower total population would be a good thing. The question is how to manage the transition; it will produce benefits in some areas and shortfalls in others. The right-wingers trying to recycle old racial declinist tropes from the late 1800s/early 1900s are not so concerned with that. They just want to dump on Europe, that’s the size of it.

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Noel Maurer 11.14.06 at 8:57 am

I really wish people on this thread would stop saying that the world is “overcrowded.” That’s a useless value judgment. To give an example: I like South Florida now much more than 25 years ago, traffic notwithstanding. So, as far as I’m concerned, an America of 500 million sounds great.

And that would be a stupid basis for policy, wouldn’t it? After all, there are real costs to population growth that my value judgment ignores.

Ditto, there are real costs to having an ever-rising median age and a shrinking population.

Mileage may vary on one’s estimate of the relative costs and benefits of population growth/population aging, and the corresponding burden that one is willing to bear to avoid them. But those costs are what the debate is about: I don’t immediately see why “a total lower population would be a good thing,” although it may, in fact, be. That’s the debate.

But it would be really useful, I think, if we left personal preferences out of it.

Otherwise I’ll be here yelling, “Build more Brooklyns! It’s a good place! Bring on a billion Americans! And I like teenagers!” while others will kvetch about “Traffic! And, like, ugly buildings! I like trees! Plus screw those goddamn teenagers and their noise!”

Boring as all get-out and intellectually-vacuous.

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