Demographic Winter


Demographic Winter More Certain Than Global Warming



http://ldsmag.com/church/article/8183?ac=1

Someday, in the not-so-distant future, someone in the midst of hustle and bustle will stop and listen, and as they listen, slowly their face will empty of expression, and then sadden, maybe a tear will fall. Their companions will ask what is wrong and they will say, “I’ve just realized, I didn’t catch it before, I can’t hear them, and I can’t remember the last time I heard, the sound of children.”
Now this may seem far-fetched, but go to Europe, travel around a bit in Germany, Spain, and Italy. You’ll begin to notice how few children there are.


Can you imagine a world without the sound of children? How will that make us feel about the future? Doesn’t the sound of children’s voices playing, laughing, asking a question, answering a question, singing a song, doesn’t this bring a happy feeling, a hopeful feeling into our hearts? There’s a future. There’s someone to pass our work onto, our hopes and our dreams. There’s a world ahead to help build.


One of the most ominous events of modern history is quietly unfolding. Social scientists and economists agree - we are headed toward a demographic winter which threatens to have serious social and economic consequences. The effects will be severe and long lasting and are already becoming manifest in some parts of the world. In the words of Philip Longman, Senior Research Fellow at the progressive think-tank New America Foundation, “This is at least as big a deal as global warming, only far more certain.”


The term demographic winter refers to what happens socially and economically when human populations are unbalanced, with too few children being born, the elderly living longer, and the stock of human capital, moral capital and social capital diminishes. As we will see, the effect goes well beyond mere numbers.


The New Economic Reality: Demographic Winter, a documentary to be shown this month on BYU Television, draws upon experts from all around the world – economists, demographers, sociologists, psychologists, civic and religious leaders, revealing in chilling soberness how societies with diminished family influence are now grimly seen as being in social and economic jeopardy. Together, these scholars uncover the dangers facing the world’s economies and societies when human capital dramatically declines and an aging population structure becomes pervasive, dangers far more imminent than global warming and at least as severe.


Human population growth has long been a subject of study, particularly in the last 200 years, which has seen significant increase in the rates of population growth. Benjamin Franklin posited that populations would double every twenty years, and this idea stuck. In the late 1700s Thomas Malthus would relate this projected human population growth to consumption of resources, theorizing that populations would outgrow the ability to sustain themselves. Indeed, particularly as advancements in medicine lengthened expected life spans, human populations did continue to expand and temporarily strain resources regionally.


Post World War II, human population exploded as never before in history. Beginning in 1946, over an 18 year period, 77 million children were born in the United States, 450 million worldwide. In 1951 American economist and journalist Sylvia Porter called it “the biggest, boomiest boom ever known in history”, and from that came the moniker “baby boom generation”.


In 1968, Paul Ehrlich’s book The Population Bomb warned of impending doom to the planet and its inhabitants, predicting that people would overrun the earth, and that by the 1970s and 80s there would be mass starvation followed by die offs in the millions, reducing the world’s population by two thirds before it would finally level off at a “sustainable” level of about one and a half to two billion people, a goal which many in the movement still hold today.


Ehrlich said that the only way to reduce the consequences of this horrible future was to “take immediate action at home and promote effective action worldwide” to reduce populations. “We must have population control at home, hopefully through changes in our value system, but by compulsion if voluntary methods fail.”


Like Thomas Malthus before him, Paul Ehrlich was completely wrong in his predictions. The “baby boom” occurred just ahead of unprecedented prosperity and technological advancement, including what has been termed “the green revolution”, which resulted in huge improvements in food production. Yet his book enjoyed widespread popularity and his ideas were adopted by many popular movements. Zero population growth became the goal, and this goal fit in very nicely with increasingly individualistic, urban lifestyles.


So while we were crying out that there are too many people in the world, a refrain still imbedded in our public thinking today, something else was quietly happening throughout the world – people were having fewer and fewer children. By the mid 1970s, the total fertility of 80% of women in the United States had fallen to a sub-replacement rate of 1.8 children per woman, where it remains today. Total fertility in the U.S. today, because of immigration, is at 2.05.


Replacement fertility is the number of children born per woman in order for a population to replace itself. 2.13 is considered to be the normative number for replacement fertility. All of the developed countries of the world today, and many developing countries, are below 2.13. Europe as a whole is only at 1.38. Japan’s fertility rate is 1.2. Russia is at 1.17 and is losing people at the rate of 750,000 people per year.


“The most dramatic global trend with respect to fertility has been this remarkable march toward sub-replacement fertility on a global basis over the past generation and a half,” says Nicholas Eberstadt, Henry Wendt Scholar at the American Enterprise Institute. Over the last 50 years fertility rates have dropped by more than half. “Sub-replacement fertility is now the norm for the world as a whole,” says Eberstadt. What’s more, those rates continue to fall, and it is unclear to demographers when or if the trend will level off.
Nobel Prize winning economist Gary Becker warns about the results of diminishing human capital. “Human


capital,” he tells us, “refers to the knowledge, skills, information, that people have, …the foundation of modern economies. Any economy that doesn’t have substantial investments in its people as human capital won’t be able to become a modern or a rich economy.”

“Adam Smith, probably the greatest of all economists,” says Becker, “once wrote that prosperity is associated with growing populations and depression,… is associated with declining populations.” So there are two ways to increase your human capital: by advancing the education and skill level of the working age population and by increasing the population.



Human capital makes up 70%-80% of wealth in the economy. So what happens when you have shrinking populations? Unless each worker in the coming populations has far greater productive capacity, the economies of the world will contract as “human capital” diminishes. There will be a much greater challenge just to keep the current standard of living.


The European Union, the United States, Japan and China together make up nearly 70% of the world’s Gross Domestic Product. So consider that these countries together have an average fertility rate of only 1.59, and falling. The years ahead will see very significant economic contraction.

If you have contracting economies, what does this say about our future ability to pay for a baby boom generation coming into its senior years, soon to leave the workforce and needing support? What does it say about our future ability to pay down our current huge budget deficits? The engines of commerce will be strained as the workers of today fail to replace themselves, the consumer base shrivels, and you have fewer innovators.


Population will continue to grow until around mid-century. This is true despite falling birthrates, because people are living longer. According to the United Nations Population Division, the worldwide fertility rate is 2.6, only .5 above replacement, and fertility rates are falling everywhere, with the exception of only a few countries. Rates are falling particularly fast in developing countries.


With the advent of the health explosion, people started living longer. Take this together with falling birthrates, and the world’s population is rapidly aging. We have been financing retirement and health benefits for the elderly by taxes on the working population. By as early as 2030 we will begin to see a worker to retiree ratio of two workers for every retiree. How will we continue to support the elderly when the stock of workers continues to decline relative to the number of elderly?


In the United Nations Population Division December 2009 report on World Population Aging, the report called the problem “a process without parallel in the history of humanity”. The report said that “population aging is pervasive since it is affecting nearly all the countries of the world,… and results mainly from reductions of fertility that have become virtually universal…. Population aging is profound, having major consequences and implications for all facets of human life. In the economic area, population aging will have an impact on economic growth, savings, investment, consumption, labor markets, pensions, taxation and intergenerational transfers. In the social sphere, population aging influences family composition and living arrangements, housing demand, migration trends, epidemiology and the need for healthcare services. In the political arena, population aging may shape voting patterns and political representation.”


One consequence has already begun to be felt, but will increase in coming years, and that is in the area of real estate. Dowell Myers, Professor of Urban Planning and Demography at the University of Southern California says that most people think that builders supply the majority of the housing market with new homes. “In reality”, he says, “that’s only about 15% of housing supply. The other 85% comes from existing homeowners, who then relinquish their used homes for sale.” The baby boom generation, as they moved up the economic scale bought bigger homes. They are now beginning to downsize, “and when that happens we’ll have this glut of homes that they occupied that will then be released onto the housing market, and as it gets released, the generational bubble could collapse. There’s about 60% too many sellers relative to the number of buyers in future decades,” says Myers.


Population aging is fast upon us and is already impacting some parts of the world. What are countries doing to combat this problem? Encouragement of immigration has been one way, bringing in labor that is not coming through births in the native populations.


In Europe most of these immigrants are coming from Muslim countries, people who traditionally have higher birthrates. In the United States they are coming chiefly from Latin America, also peoples with traditionally higher birthrates. Immigration and higher birthrates among immigrants have helped these countries’ economies.


But birthrates in developing countries are falling very rapidly. In 1970 Mexico’s fertility rate was at 6.8, and today it is 2.4. Similarly, nearly every developing country in the world is experiencing falling fertility. So the flow of immigrants into developed economies is likely to slow. In addition, those who do come will arrive with ideas of having much smaller families.


We have been engrossed over the last 50 years in thinking that there were too many people in the world. Benjamin Franklin and Thomas Malthus convinced us that populations were destined to continue to grow exponentially until we reached a crisis of resources and, as Paul Ehrlich predicted, people would die off in the millions. But instead, fertility rates began to fall ever more rapidly, and continue to fall so that tomorrow’s headlines are likely to speak of the consequences of depopulation. And these consequences are already beginning to be felt in many parts of the world. What will we do as the world’s economies contract? How will a generation experiencing a birth dearth provide for a baby boom generation growing old? Will people have even fewer children as times get hard?



After years of worrying about population growth, it may be hard for us to start worrying about depopulation. But as the consequences mount, we will be seeking solutions. In analyzing all of this, we have to ask ourselves, why did fertility fall in the first place? Perhaps within the answer to this question lay the seeds of solution. In the next article, we will look further at The New Economic Reality: Demographic Winter, as we review the social and economic reasons why fertility has declined, explore economic solutions, and look at what some countries have already begun to do.


The New Economic Reality: Demographic Winter, may be seen on BYU Television on June 29, 7-9pm and again 10pm-12am. The film may be purchased and more information found at www.theneweconomicreality.com.

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