The world’s population continues to grow, but the pace of growth has slowed to a rate of under one percent, a pace not seen since 1950. The populations of 61 nations are projected to decrease by 1% or more between now and 2050.
Source: The Decline of Demographics – Northern Trust – Commentaries – Advisor Perspectives
And:
A population that averages fewer than 2.1 births per woman is likely to decline, and most advanced economies have fallen below that rate. Government policy can do little to support fertility. Financial considerations are substantial when planning a family: a recent study estimated a cost to U.S. parents of over $300,000 per child.
Government programs can defray some of these costs through public childcare, tax credits and direct financial support, but a baby is not merely a major purchase. Fiscal supports are an afterthought relative to the life-changing commitment of child-rearing. We find it instructive that nations that offer the most generous support to young families have seen no uptick to their birth rates. And even if family support policies could be highly effective, increased births today will take decades to grow the working-age population.
The left side political camps say if we only provided free or subsidized childcare, and generous family leave time – the young couples in the U.S. would have more kids. As I pointed out, Denmark has long had very generous policies but has a fertility rate even lower than the U.S. does!
The authors of the linked article, above, believe immigration is the solution. But that too will not work for most countries when all countries are in decline.
They note that taxes will need to be higher in the future plus:
- Working longer. The notion of retirement may become an anachronism. While some physically demanding jobs may keep a maximum age, workers should expect to stay in the labor force for longer. The pandemic’s normalization of remote work may create opportunities for more older workers to stay engaged and productive.
- More business investment. As prime-age workers become more scarce, employers will need to make more investments into productivity-enhancing, labor-replacing technologies. Automation still has a great deal of potential.
- Slower growth. Ultimately, an economy’s potential output is simply the product of its capital stock, labor force and labor efficiency. A smaller prime-age population will weigh on potential. In practice, this will mean more of the scarcity and disruption that COVID-19 previewed: logistics disruptions, staffing difficulties and reductions in business hours and service may become unfortunate parts of the new normal.
We must continuously seek process improvements leading to greater efficiencies, and broad adoption of automation. This is the only way we can increase productivity to yield the funding to pay for promised and/or essential services in an aging population.
Sadly, politicians, political activists, environmentalists, and our technocratic elite overlords are not aware of these issues – we are literally led by the clueless stuck half a century ago, oblivious to these fundamental demographic changes. They are leading us into a worse future.
