Vertical Divider
Population Decline in Developing World to Stymie Economic Growth
February 23, 2020
The signs of the coming bust are clear, at least according to the data Bricker and Ibbitson’s book. Almost every country in Europe now has a fertility rate below the 2.1 births per woman that is needed to maintain a static population. The UN notes that in some European countries, the birthrate has increased in the past decade. But that has merely pushed the overall European birthrate up from 1.5 to 1.6, which means that the population of Europe will still grow older in the coming decades and contract as new births fail to compensate for deaths.
Morland, a demographer by training, is skeptical that humanity is on the cusp of a tectonic reversal in population trends. He is less prone to the blanket certainty of Bricker and Ibbitson. He recognizes that population expectations have frequently been confounded in the past and that certainty about future trends is unreasonable. He suggests that China’s population will peak short of 1.5 billion in 2030 and then stagnate, with an aging population and gradual absolute decline thereafter. Bricker and Ibbitson, on the other hand, warn that China’s fertility rate, already in free fall, could actually get much worse based on the example of Japan, which would lead China to shrink to less than 700 million people in the second half of the century. Morland does agree with Bricker and Ibbitson on one important point: when it comes to global population, the only paradigm that anyone has known for two centuries is about to change. The underlying drivers of capitalism, the sense that resource competition and scarcity determine the nature of international relations and domestic tensions, and the fear that climate change and environmental degradation are almost at a doomsday point—all have been shaped by the persistently ballooning population of the past two centuries. If the human population is about to decline as quickly as it increased, then all those systems and assumptions are in jeopardy.
Both books note that the demographic collapse could be a bright spot for climate change. Given that carbon emissions are a direct result of more people needing and demanding more stuff—from food and water to cars and entertainment, it follows that fewer people would need and demand less. What’s more, larger proportions of the planet will be aging, and the experiences of Japan and the United States are showing that people consume less as they age. A smaller, older population spells some relief from the immense environmental strain of so many people living on one finite globe.
Whether the concomitant greening of the world will happen quickly enough to offset the worst-case climate scenarios is undetermined—although current trends suggest that if humanity can get through the next 20 to 30 years without irreversibly damaging the ecosystem, the second half of the twenty-first century might be considerably brighter than most now assume. The downside is that a sudden population contraction will place substantial strain on the global economic system. Capitalism is, essentially, a system that maximizes more—more output, more goods, and more services. The success of capitalism in providing more to more people is undeniable, as are its evident defects in providing every individual with enough. If global population stops expanding and then contracts, capitalism—a system implicitly predicated on ever-burgeoning numbers of people—will likely not be able to thrive in its current form. An aging population will consume more of certain goods, such as health care, but on the whole aging and then decreasing populations will consume less. So much of consumption occurs early in life, as people have children and buy homes, cars, and white goods. That is true not just in the more affluent parts of the world but also in any country that is seeing a middle-class surge.
No capitalist economic system operates on the presumption that there will be zero or negative growth. No one deploys investment capital or loans expecting less tomorrow than today. But in a world of graying and shrinking populations, that is the most likely scenario, as Japan’s aging, graying, and shrinking absolute population now demonstrates. A world of zero to negative population growth is likely to be a world of zero to negative economic growth, because fewer and older people consume less. The future world may be one of enough food and abundant material goods relative to the population; but it may also be one in which capitalism at best frays and at worst breaks down completely. The global financial system is already exceedingly fragile, as evidenced by the 2008 financial crisis. A world with negative economic growth, industrial capacity in excess of what is needed, and trillions of dollars expecting returns when none is forthcoming could spell a series of financial crises. As growth grinds to a halt, people may well start demanding a new and different economic system. Add in the effects of automation and artificial intelligence, which are already making millions of jobs redundant, and the result is likely a future in which capitalism is increasingly passé.
If population contraction were acknowledged as the most likely future, policies might preserve and even invigorate the basic contours of capitalism by setting much lower expectations of future returns and focusing society on reducing costs (which technology is already doing) rather than maximizing output. But those policies would likely be met in the short term by furious opposition from business interests, policymakers, and governments, all of whom would claim that such attitudes are defeatist and could spell an end not just to growth but to prosperity and high standards of living, too. In the absence of such policies, the danger of the coming shift could compound a complete failure to plan for it. From: Foreign Affairs
February 23, 2020
The signs of the coming bust are clear, at least according to the data Bricker and Ibbitson’s book. Almost every country in Europe now has a fertility rate below the 2.1 births per woman that is needed to maintain a static population. The UN notes that in some European countries, the birthrate has increased in the past decade. But that has merely pushed the overall European birthrate up from 1.5 to 1.6, which means that the population of Europe will still grow older in the coming decades and contract as new births fail to compensate for deaths.
- The population bust is going global almost as quickly as the population boom did in the twentieth century.
- Fertility rates in China and India, which together account for nearly 40 percent of the world’s people, are now at or below replacement levels.
- Fertility rates in other populous countries, such as Brazil, Malaysia, Mexico, and Thailand are also at below replace rates
- Sub-Saharan Africa remains an outlier in terms of demographics, as do some countries in the Middle East and South Asia, such as Pakistan, but it is only a matter of time before they catch up, given that more women are becoming educated, more children are surviving their early years, and more people are moving to cities.
Morland, a demographer by training, is skeptical that humanity is on the cusp of a tectonic reversal in population trends. He is less prone to the blanket certainty of Bricker and Ibbitson. He recognizes that population expectations have frequently been confounded in the past and that certainty about future trends is unreasonable. He suggests that China’s population will peak short of 1.5 billion in 2030 and then stagnate, with an aging population and gradual absolute decline thereafter. Bricker and Ibbitson, on the other hand, warn that China’s fertility rate, already in free fall, could actually get much worse based on the example of Japan, which would lead China to shrink to less than 700 million people in the second half of the century. Morland does agree with Bricker and Ibbitson on one important point: when it comes to global population, the only paradigm that anyone has known for two centuries is about to change. The underlying drivers of capitalism, the sense that resource competition and scarcity determine the nature of international relations and domestic tensions, and the fear that climate change and environmental degradation are almost at a doomsday point—all have been shaped by the persistently ballooning population of the past two centuries. If the human population is about to decline as quickly as it increased, then all those systems and assumptions are in jeopardy.
Both books note that the demographic collapse could be a bright spot for climate change. Given that carbon emissions are a direct result of more people needing and demanding more stuff—from food and water to cars and entertainment, it follows that fewer people would need and demand less. What’s more, larger proportions of the planet will be aging, and the experiences of Japan and the United States are showing that people consume less as they age. A smaller, older population spells some relief from the immense environmental strain of so many people living on one finite globe.
Whether the concomitant greening of the world will happen quickly enough to offset the worst-case climate scenarios is undetermined—although current trends suggest that if humanity can get through the next 20 to 30 years without irreversibly damaging the ecosystem, the second half of the twenty-first century might be considerably brighter than most now assume. The downside is that a sudden population contraction will place substantial strain on the global economic system. Capitalism is, essentially, a system that maximizes more—more output, more goods, and more services. The success of capitalism in providing more to more people is undeniable, as are its evident defects in providing every individual with enough. If global population stops expanding and then contracts, capitalism—a system implicitly predicated on ever-burgeoning numbers of people—will likely not be able to thrive in its current form. An aging population will consume more of certain goods, such as health care, but on the whole aging and then decreasing populations will consume less. So much of consumption occurs early in life, as people have children and buy homes, cars, and white goods. That is true not just in the more affluent parts of the world but also in any country that is seeing a middle-class surge.
No capitalist economic system operates on the presumption that there will be zero or negative growth. No one deploys investment capital or loans expecting less tomorrow than today. But in a world of graying and shrinking populations, that is the most likely scenario, as Japan’s aging, graying, and shrinking absolute population now demonstrates. A world of zero to negative population growth is likely to be a world of zero to negative economic growth, because fewer and older people consume less. The future world may be one of enough food and abundant material goods relative to the population; but it may also be one in which capitalism at best frays and at worst breaks down completely. The global financial system is already exceedingly fragile, as evidenced by the 2008 financial crisis. A world with negative economic growth, industrial capacity in excess of what is needed, and trillions of dollars expecting returns when none is forthcoming could spell a series of financial crises. As growth grinds to a halt, people may well start demanding a new and different economic system. Add in the effects of automation and artificial intelligence, which are already making millions of jobs redundant, and the result is likely a future in which capitalism is increasingly passé.
If population contraction were acknowledged as the most likely future, policies might preserve and even invigorate the basic contours of capitalism by setting much lower expectations of future returns and focusing society on reducing costs (which technology is already doing) rather than maximizing output. But those policies would likely be met in the short term by furious opposition from business interests, policymakers, and governments, all of whom would claim that such attitudes are defeatist and could spell an end not just to growth but to prosperity and high standards of living, too. In the absence of such policies, the danger of the coming shift could compound a complete failure to plan for it. From: Foreign Affairs
|
Contact Us
|
Barry Young
|