Surviving the population crash

“To them that hath shall (more) be given” is generally a reliable guide, especially in economic matters, but it doesn’t work if the beneficiaries are too stupid to take advantage of the gift. The scarce and precious commodity in this case being people, who are in increasingly short supply.

The global average birth rate has halved since 1960 and is now just above the ‘replacement’ rate of 2.1 children per woman. However, that is misleading, as averages often are. Only sub-Saharan Africa and the Middle East still have the old, high birth rates. Everywhere else there is a rising panic about a future where the old will outnumber the young.

In the Americas, Europe, Oceania and above all in Asia birth rates have fallen at an astonishing rate. The limiting case is South Korea, where the current population of 51 million will halve within fifty years if the current average of only 0.7 children per woman persists.

There is no good reason to believe it will recover, since other East Asian countries are facing only slightly less steep declines in the birth rate: China’s 1.4 billion will be halved by 2090, Japan’s 125 million a little later. Even the bigger developing countries of Asia, like India and Indonesia, are down to replacement level, although the fall started more recently there.

Now, there’s no harm in having a smaller population in principle. After all, almost every country did have a smaller population in the past, and there were rarely complaints that there were not enough people around.

The challenge is how to make our way safely down from the old high-birth-rate regime to a new low-birth-rate future, because the present pace of change will leave us dealing with inverted population pyramids for about a century. Each generation born will be dramatically smaller than the older ones, which imposes a heavy burden on the young.

In China, where 36 years of the brutal ‘one-child policy’ have already created this sort of generational pyramid, they call it the ‘4-2-1’ relationship: each person in the working generation must support two retired parents and four elderly grandparents. Double that for a couple, plus any children of their own.

There are huge impacts on the economy as a whole, too. For example, the housing market is heading for a century-long crisis as the number of potential house-buyers on the planet halves. Such changes will be painful and expensive, and there are bound to be domestic and international upheavals.

However, some countries – the rich ones – can avoid much of that turmoil just by bringing in immigrants to fill up the ranks. Not trying to maintain the old population one-for-one, just providing enough extra people to smooth the descent by doing the jobs and providing the care for the sick and elderly that cannot be covered by the local youngest generation alone.

Such a migration has already been going on for decades at a smaller scale in the rich countries of the West. Rich East Asian countries could easily do it too if they could get past their historical obsession with racial and cultural purity. Other countries lack the wealth to attract large numbers of immigrants now, but that may change.

Where would these immigrants come from? Probably mostly from Africa and the Middle East, because that’s where the remaining high birth rates are. The tens of billions a month in remittances from millions of sons and daughters working abroad might even provide the resources for modernising their home economies.

Sounds like a pipedream, right? Well, large bits of it certainly will happen, and lots more of it could happen, but the key part of it is the large-scale immigration from poor countries to prosperous ones that would fill the generational hole. Unfortunately, rejection of immigration is the sharpest tool in the populists’ toolbox.

From Nigel Farage’s Reform UK in Britain and Marine Le Pen’s National Rally in France to President Donald Trump in Washington and Prime Minister Sanae Takaichi in Tokyo, a phalanx of right-wing populists in power or closing in on it are painting immigration as a threat and peddling ‘great replacement’ narratives to the angry and the ignorant.

As PT Barnum almost said, “Nobody ever went broke underestimating the intelligence of the public,” so they may all achieve their goals and shut down the immigration flows altogether. Then, unless they can build robots that can do a nurse’s work, they can watch their grandparents die of neglect.

That would serve them right. However, it would be far better if they could see where their own long-term interests lie and act accordingly. Don’t expect that to happen now, but give it five or ten years and you might be surprised.