America's Biggest Edge Over the Rest of the World

Check out these recent headlines:

"Japan's population falls by record 244,000 in 2013"

"China's Working Population Fell Again in 2013"

"Germany Fights Population Drop"

"Putin Vows to Reverse Russian Population Decline"

The Census Bureau estimates at least 27 large counties will have smaller populations in 2050 than today, including China, Russia, Germany, South Korea, and Japan. This is not good news. There are two ways to grow an

economy: productivity growth, and population growth. Some of the world's largest economies will soon get no help from the latter.

To understand what an aging population does to an economy, it helps to know the story of Japan since the end of World War II.

Like America, Japan had a baby boom right after the war as demobilized soldiers married and families were rebuilt. Eight million Japanese babies were born from 1947 to 1949, which is enormous given a population of around 70 million at the time.

But Japan was bludgeoned during the last year of the war, with its industrial base and major cities bombed out. The book Embracing Defeat notes that in 1945, rural Japanese living standards fell to 65% of prewar levels, and city living standards to 35%. One million Tokyo residents alone were homeless, with more than a quarter-million buildings destroyed. Three months after surrender, an Australian newspaper noted that Japan had enough food supplies to "furnish a diet averaging only 1,551 calories per person next year, compared with 2,160 calories which the Japanese healthy authorities hold is necessary."

It's hard to support a growing population in these conditions. So the Japanese did something about it. Tokyo-based journalist Eamonn Fingleton explains:

[In] the terrible winter of 1945-6 ... newly bereft of their empire, the Japanese nearly starved to death. With overseas expansion no longer an option, Japanese leaders determined as a top priority to cut the birthrate. Thereafter a culture of small families set in that has continued to the present day.

Mariko Kato of The Japan Times explains how this was done:

Abortion was effectively legalized in 1948 ... The government also accepted other contraceptives, including the diaphragm, condoms and spermicide. Previously they were mainly considered ways to prevent sexually transmitted diseases.

It worked. Japanese fertility jumped from 3.1 children per woman in 1945 to 4.51 per woman in 1947 -- that was the baby boom -- and then plunged all the way down to 1.96 by 1961, which isn't enough to keep population growth positive.

This had a big impact on the economy. As Japan entered the 1970s and 1980s, the baby boom generation -- called "dankai," or the "massive group" -- hit their peak earning and spending years. They started businesses, bought cars, built houses and fueled an economic boom. Economists extrapolated this growth and figured Japan would own the 21st century. In 1988, former Reagan official Clyde Prestowitz said, "The American century is over. The big development in the latter part of the century is the emergence of Japan as a major superpower."

But over the last two decades, Japan's dankai ended their peak-spending years, and began retiring. Spending growth dropped and the need for assistance rose. The dankai passed the baton to a smaller cohort produced by Japan's small-family culture.

Japan's economy is smaller today than it was in the early 1990s. There are many reasons for this, but as Mark Steyn writes, "there is no precedent in human history for economic growth on declining human capital." In 1992, there were 86.7 million Japanese aged 15 to 64 (prime working age). Today, there are 77.5 million. That's the equivalent losing three-quarters the population of Tokyo. 

Japan has demonstrated better than any country that it is devilishly hard to grow an economy with an old, graying, and shrinking population. This is an important lesson, because it describes a lot of the developed world today.

Except, perhaps, America.

Yes, our country is aging. Baby boomers -- America's own dankai -- are retiring. But America has some of the best demographics in the developed world, largely due to immigration. Twenty-five million more people live in America today than did in 2004. That increase is like adding three New York Cities. The Census Bureau projects the U.S. population will rise by another 26 million over the next decade, and by more than 80 million by 2050.

Importantly, America's working-age population is still growing, and projected to increase by 5.5 million over the next decade. Tobias Levkovich of Citigroup writes that, for the first time since the 1990s, the number of Americans age 35 to 39 -- a sweet spot for spending -- is set to rise over the next two decades, according to Census Bureau projections.

Some of the biggest economies in the world can't say the same. Predicting the future is hard, but I think this is one of the most important charts of the coming decades:

Source: Census Bureau International Database.

No one in the 1920s forecasting Japan's economic path could have predicted the demographic shocks it faced in the 1940s. That's true today, too: These are just projections, and projections are often wrong.

But there's so much focus today on how America's retiring baby boomers are going to hurt the economy. The truth is that not only will the U.S. add tens of millions of more workers over the coming decades, but few other countries can say the same. (India will grow its working population more, but its lower life expectancy and massive poverty tamps down this benefit). This is America's biggest edge over the rest of the world. And just as economists overlooked how devastating Japan's poor demographics would be 20 years ago, I get the feeling they're underestimating how advantageous America's will be 20 years from now.

Check back every Tuesday and Friday for Morgan Housel's columns on finance and economics. 

 


Read/Post Comments (42) | Recommend This Article (66)

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  • Report this Comment On April 25, 2014, at 9:50 AM, maximusdesimus wrote:

    Good article, Morgan. Over the next 20 to 30 years we will have an interesting dichotomy that further divides the developed and non-developed world. The key to economic growth is not simply to have a higher population or an expanded capital base. You have to have both, in the correct combination. The developed world is facing the problem of too much capital and not enough people as Morgan expresses in the above piece. The non-developed world will be facing the problem of too many people and not enough capital, a classic Malthusian population trap. While both lead to stress on economies, the solutions to these problems are quite different and countries will compete for the world's scarce factors of production to bolster their economies.

    Enjoyed the article...thought provoking.

  • Report this Comment On April 25, 2014, at 10:22 AM, Interventizio wrote:

    Excellent article. I assume cultural propositions hinder a major support to population from immigration in Japan.

    Are japanese racists?

  • Report this Comment On April 25, 2014, at 11:05 AM, Tomohawk52 wrote:

    Wouldn't a more useful statistic rather than raw GDP be GDP per person? I would think that if Country X's population dropped by 10%, and it's GDP dropped by 5%, then the average person there would be better off, not worse off, no?

  • Report this Comment On April 25, 2014, at 11:05 AM, Tomohawk52 wrote:

    Sorry "its" GDP. My bad.

  • Report this Comment On April 25, 2014, at 12:10 PM, Mathman6577 wrote:

    I just read that the Commerce Dept. plans to report "gross output" along w/ GDP every quarter which might give a better indication of the trends in living standards and economic growth. Perhaps a future Fool article discussing the new stat would be useful.

  • Report this Comment On April 25, 2014, at 1:45 PM, mdk0611 wrote:

    Very much agreed that we are in a better position than Japan, China and Russia, but at the same time I hope we can stay within the "sweet spot". Immigration is needed, but the right kind of immigration. I look to the Canadian model as superior to ours. And we should clearly pass a "Staple Act", so that graduates from US STEM advanced degree programs can stay in this country.

    BTW, I wonder (in a perverse way) whether Russia partially solves it's "greying population" issue through lower life expectancy.

  • Report this Comment On April 25, 2014, at 3:06 PM, deckdawg wrote:

    On a similar positive note, the Federal government has been saving up future tax revenue (in the form of tax deferred savings vehicles) for close to 40 years now, and those are starting to flow back to the government as the Baby Boomers retire in vast numbers. The CBO estimates that taxes from tax deferred savings will boost federal revenues by about .5% of GDP over the next 75 years, with about half the boost being achieved in the next 15 years. That doesn't sound like much, but federal revenue runs around 18.5% of GDP, so it actually is pretty significant. On the down side, at the state level, pension funds for state employees are significantly under funded, so their future financial requirements could be a bit heavy. States with income taxes will share in the tax deferred bounty. (Unless they get too greedy, and drive thier retirees away!)

  • Report this Comment On April 25, 2014, at 4:18 PM, devoish wrote:

    "A year ago I was invited to go to China to show my films. One of our hosts was an esteemed scientist who told me that only about 10% of China’s soil is usable for farming or grazing. By contrast, over 40% of the soil in the United States is made up of the planet’s most productive soil types—the “molisols” found on prairie grasslands and fertile forest “alfisols.” This scientist also told me that the reality of so little good soil has shaped Chinese culture and character: they are more collective-minded, more careful, more conservative because they have to be. They have to pull together to be able to feed themselves. They have a similar situation with their water resources." - Deborah Koons Garcia, http://www.symphonyofthesoil.com/learn-more/blog/category/co...

    I think the economics of 'growth is good' are going to be completely discarded when it is realized that they were only supported by a wealth of US natural resources. I think the economics of "growth is good' will be shown to be the most destructive ideology in the history of mankind.

    Best wishes,

    Steven Cecchini

  • Report this Comment On April 26, 2014, at 12:43 PM, xetn wrote:

    Consumption, debt money creation out of thin air does not create sustainable economic growth. Only saving and investing in capital goods does.

    China will soon start seeing some population growth due to the government losing the one child policy. On the other hand, many of China's young affluent do not want any children as they are more interested in financial growth and overseas travel.

  • Report this Comment On April 26, 2014, at 12:44 PM, richie54 wrote:

    Good article. My only concern is where all of these people are going to find jobs.

  • Report this Comment On April 26, 2014, at 12:52 PM, xetn wrote:

    Another element of growth in an economy is the level of government intervention in the free flow of transactions in the form of regulations. It has recently been stated that US regulations now impose a $5000.00 annual penalty on every man, woman and child. A cost of $1.8 trillion per year, the price of federal regulations is nearly as large as every penny of annual economic activity taking place in Russia, India, Italy or Canada.

    In other words, the government is soaking up a huge percentage of economic activity and due to the high cost of compliance, locks out many some firms, the traditional source of economic growth in the US.

  • Report this Comment On April 26, 2014, at 1:16 PM, xetn wrote:

    An excellent (although rather long) is Nial Ferguson's "Ascent of Money":

    https://www.youtube.com/watch?v=4Xx_5PuLIzc and an analysis of the latest real estate problems:

    http://www.lewrockwell.com/2014/04/david-stockman/that-was-q...

  • Report this Comment On April 26, 2014, at 1:27 PM, ararat65 wrote:

    The fact that there will be less and less jobs available as technology progresses seems to have escaped the author completely!!

  • Report this Comment On April 26, 2014, at 1:56 PM, kmarkt2 wrote:

    Even if China or India have a 25% reduction in population, its still a much bigger market in the next decades to come and there will be growth of maybe 4%~5% p.a albeit less than the breakneck rates of past 10% of past decades.

    The US should see population reduction as a plus and the aging demographics of baby boomers in developed economies are not as dsmal a potential threat to growth, as economic planners seems to allude to.

    Governments, policy makers should rather focus on the disruptions to economic growth caused by dismal failures of financial oversights, that dislocate and inflict terrible distortions to wealth - i.e the gravitation of wealth re-distribution to the aleady haves, that do not spend as oppose to pensioners who are consumers of goods and services, that have paid forward in their productive years.

    What could be done with all the bailout $$$$ of 2008/2009 that could not be used to increase wealth and have a more balance growth?

  • Report this Comment On April 26, 2014, at 5:55 PM, jrnhkkdo wrote:

    This article fails to address a new and profound problem never before faced by the American public: a current administration actively and aggressively engaged in (1) reducing the labor force participation rate, (2) shrinking the middle class AND at the same time making the remaining middle class poorer, (3) and (3) dramatically increasing the size and oppressiveness of our government, and (4) increasing the level (and increasing the growth rate) of our national indebtedness to foreign countries as well as our taxes paid to the federal government. All of the above factors may very well overwhelm the one benefit posited in this article-which is immigration. I personally am not very encouraged by this article.

  • Report this Comment On April 26, 2014, at 6:43 PM, TMFHousel wrote:

    Hi jrnhkkdo,

    I did indeed fail to address those points. I'd like to use numbers to show why that is.

    <<a current administration actively and aggressively engaged in (1) reducing the labor force participation rate>

    The labor force participation rate has been in decline since 1998:

    http://research.stlouisfed.org/fred2/series/CIVPART

    Most of the decline is due to demographics, which is why demographers predicted the decline years before anyone knew who the current president would be:

    http://g.foolcdn.com/editorial/images/766/partrateb_large.pn...

    <<dramatically increasing the size and oppressiveness of our government>>

    Federal government employment is currently at the lowest level since 1966. That's not a typo: 1966!

    http://research.stlouisfed.org/fred2/series/CES9091000001

    Since 1950, federal spending has averaged 19.5% of GDP. This year it's 20.8%.

    Since 1950, federal taxes have averaged 17.2% of GDP. This year it's 16.7%.:

    http://www.whitehouse.gov/omb/budget/historicals

    <<increasing the level (and increasing the growth rate) of our national indebtedness to foreign countries>>

    The president doesn't decide who buys our debt. Anyone and any country can decide to buy or sell our debt at any time. There are also widely held misconceptions regarding this issue. For example, China has been a net seller of our debt for years, despite the belief that the world will end when they start selling:

    http://www.fool.com/investing/general/2012/12/11/who-owns-ou...

    << as well as our taxes paid to the federal government>>

    Federal taxes as a percent of GDP were recently at a half-century low:

    http://www.washingtonpost.com/blogs/wonkblog/files/2013/04/t...

    Cheer up man! It's sunny outside, stocks are up 150% in the last five years, and a lot of cool business are changing the world.

    Have a fun weekend,

    -Morgan

  • Report this Comment On April 26, 2014, at 7:50 PM, jrnhkkdo wrote:

    Mr. House (may I call you Morgan?), thank you very much for your quick, documented reply. You have given me some serious food for thought. Permit me to prolong our conversation with a few observations that still give me pause:

    1. I don't deny that the labor participation rate did not begin to decline with Obama. It probably started after Reagan left office, and was exacerbated by Clinton, Bush 43, and most dramatically by Obama. That trend is still evident and while demographics are certainly a major factor, I don't see Obama doing much to aggressively address the problem, rather he continues to exacerbate it with policies that retard economic growth. I know some of your commenters are critical of economic growth, but the realpoliticks of historical world economics is such that without economic growth (in the private sector - since government can't create wealth), national economies shrink,, and people suffer and eventually riot, or worse)

    2. I believe the non-military portion of government employment has increased, along with their pay level, compared to the private sector. Incidentally, as we downsize our military willy nilly, we encourage the bullies of the world to keep the rest of us in turmoil: e.g., Putin, N. Korea, China, Al Qaeda (which is not dead by any means) are the recent examples.

    3. The decline in federal taxes as % of GDP is probably due to the fact that there are many fewer taxpayers than there used to be...because of fewer of our citizens being employed. Millions of jobs have been lost since Obama took office, and the ones that have been added nowhere near offset that...yet, anyway.

    4. The fiscal trends are in the wrong direction, by your own figures: Our federal spending is about 6.7% higher this year (as a % of GDP) than the average level since 1950; while our federal taxes are down by about 3% (as % of GDP). That means we must incur more debt when we are already in deep debt. Incidentally, raising tax rates is not the answer; raising tax revenue is...they are not the same thing. I want the pie to grow larger, create more taxpayers, hence more revenue.

    5. If I were China, I would be selling our debt too. The Chinese are anything but stupid. As a creditor, we look pretty risky to me, especially as the $US is slowly being phased out as a reserve currency.

    6. As to your last point, I can believe that our taxes are at a low point as % of GDP. Our economy is not recovering robustly as it has in the past after deep recessions so the number of taxpayers is down, as is the amount of taxable income. The stock market may be OK for the next few quarters (or not), but I choose to look over the next 5-10 years; and I have to say that the immigration advantage that you rightly state we enjoy just may not be enough to overcome the other negative factors that I outlined.

  • Report this Comment On April 26, 2014, at 8:07 PM, TMFHousel wrote:

    Hi jrnhkkdo,

    Thanks again! A few points:

    Non-defense discretionary spending -- which is total government spending minus defense, Social Security and Medicare -- as a share of GDP is currently at the lowest level since Eisenhower was president:

    http://www.americanprogress.org/wp-content/uploads/2013/01/L...

    Labor force participation doesn't have anything to do with Reagan, Clinton, Bush, or Obama. It has to do with a bunch of baby boomers being born in the 1940s and 1950s, and those boomers now retiring.

    Low tax receipts aren't a factor of there being fewer taxpayers, because there are, three million more workers today than there were in 2006:

    http://research.stlouisfed.org/fred2/series/PAYEMS

    The huge drop in taxes/GDP since 2008 was due of the 2009 stimulus package, which was half tax cuts, and the Great Recession, which was true to its name.

    China gains more from owning our bonds than we gain from them owning our bonds. They didn't buy $1 trillion of Treasuries because they wanted to be nice to us, or because we reminded them of their nephew. They do it because it's how they facilitate trade that keeps their economy humming.

    <<Our federal spending is about 6.7% higher this year (as a % of GDP) than the average level since 1950; while our federal taxes are down by about 3% (as % of GDP).>>

    Average spending/GDP is 19.5%. We'll spend 20.8% this year. That's 1.3% above average. Average taxes/GDP is 17.2%. We'll bring in 16.7% this year --that's *below* average.

    Thanks again. I'm going to cut this conversation off here, because it has nothing to do with the article. But I'd encourage you to not get caught up in doom and gloom, because most of it is either out of context or untrue. We're living in a pretty good world, if you're willing to look at it.

    -Morgan

  • Report this Comment On April 26, 2014, at 8:23 PM, jrnhkkdo wrote:

    OK. I will take your comments under advisement. I am willing to be educated further, even at my age (72). I will not accept your stats at face value, but I will study the subject further. Thank you.

    Jim Ricks

  • Report this Comment On April 26, 2014, at 8:26 PM, jrnhkkdo wrote:

    Morgan, sorry, but one last comment. There may be more workers now than in 2006, but I can't see how that is true. If it is, I fear that many/most of them are part time now due to many factors, one of them being the ACA.

  • Report this Comment On April 26, 2014, at 8:34 PM, TMFHousel wrote:

    OK, one more from me:

    It's not a factor of part-time work. Real gross domestic income -- the sum of everyone's wages, salaries, bonuses, etc. adjusted for inflation -- is at an all-time high:

    http://research.stlouisfed.org/fred2/graph/?g=yJ7

  • Report this Comment On April 26, 2014, at 8:53 PM, 8Buckeye wrote:

    Population growth is hardly a panacea for the world or the U.S.. If anything the Chinese and their "one child " policy is a better answer than most.. The idea that the worlds population can keep growing and not cause issues with the availability of food , water ,energy and vital natural resources is frightening and will most likely lead to something catastrophic. The majority of the worlds population already lives in poverty. Population growth is a problem not an answer.

  • Report this Comment On April 26, 2014, at 9:41 PM, cept4Grace wrote:

    Didn't President Eisenhower employ only one White House servant which he paid for from his presidential salary. At last count seems we had 62 household servants serving Michelle and Barak Obama at taxpayer expense?

    The workforce reduction seems to have only impacted selected federal sectors.

  • Report this Comment On April 26, 2014, at 9:57 PM, kyleleeh wrote:

    @jrnhkkdo

    << That trend is still evident and while demographics are certainly a major factor, I don't see Obama doing much to aggressively address the problem,>>

    How about the recent immigration bill? Aside from forced breeding programs, immigration is the only way to grow the work force in the face of decreasing birthrates.

  • Report this Comment On April 26, 2014, at 11:24 PM, lmrohde wrote:

    While the short term economic model produces greater per capita wealth with a growing population, a greater horizon shows quiet the opposite. The issue is resource depletion and climate impact of an ever growing world population. It is relatively easy to determine the consequences if population grew without any reduction of per capita resource consumption. Over the next thousand years most of the natural resources we depend on as well as arable land and fresh water would be exhausted or in very short supply. To be sure, mankind will find substitutes, rely on desalinization, and live more frugally. But is the best economical model really one that relies on an increasing population knowing that it is not sustainable?

  • Report this Comment On April 26, 2014, at 11:36 PM, jonnk wrote:

    We shall see whether population growth and economic growth without end is truly the route we can go in the long term, either as a country or collectively as a world. Will Malthus theory eventually come into play?

  • Report this Comment On April 27, 2014, at 12:11 PM, jensene wrote:

    Population decline is good for the planet and its natural resources. According to some population experts the optimum world population level is no more than 2 billion, and the level now is at 7 billion. The notion of boosting population growth to address economic problems is counter to this planet's long term interests.

  • Report this Comment On April 27, 2014, at 3:12 PM, prginww wrote:

    If the US loosens the immigration laws to allow more immigrants, then we can continue to grow our economy without adding people to the world. However the resulting higher standard of living that the immigrants will enjoy compared to if they had stayed in their home country, comes at en ecological price similar to what it would have been had the person been borne in the US rather than elsewhere.

    We (the world population) can not continue to grow our economy, until we learn to do so sustainable. Wether we ever will learn that is questionable.

    I am guardedly optimistic.

  • Report this Comment On April 27, 2014, at 4:53 PM, xetn wrote:

    TMFHousel:

    "China gains more from owning our bonds than we gain from them owning our bonds. They didn't buy $1 trillion of Treasuries because they wanted to be nice to us, or because we reminded them of their nephew. They do it because it's how they facilitate trade that keeps their economy humming."

    Yes, like earning enough interest to almost pay for their entire military each year.

    jensene"

    That is the same tired old argument which was stated over and over again since the 1800s, but we keep coming up with new ways to increase production on ever smaller parcels of productive farmland.

    I believe that given a free market approach and removing government ownership of huge parcels of land, we could continue to increase production. There are huge amounts of land all over the world that could be placed into production, but have not for many reasons.

  • Report this Comment On April 28, 2014, at 11:39 AM, Gorm wrote:

    There is no doubt demographics play a MAJOR role in economic growth / stability. Unfortunately for us, WE did not adjust well to a global economy, automation and technology, our educational performance is lacking, and our DEBT and underfunded liabilities are unsustainable.

    As these 78M boomers retired or draw SS (+Medicare/Medicaid) atop increased longevity WE have REAL funding problems especially when you consider the worker to retiree ratio, once 16:1 will soon be down to 2:1.

    Also, I don't think we have as great a JOB problem as we do a DEBT and DISPOSABLE INCOME problem. Adjusted for inflation, US household income has FALLEN every year since its 1995 peak. As we KNOW from the last crisis Americans resorted to DEBT to maintain their lifestyle!!

  • Report this Comment On April 28, 2014, at 3:45 PM, Kloris wrote:

    I both agree and disagree with this article.

    I agree with it because the birth rate is indeed positive in terms of comparing with other nations.

    But I disagree because as a world we should not want the population to keep on growing forever and ever. We are already overpopulated in this world and how much more people can the earth sustain before it runs out of resources?

  • Report this Comment On April 28, 2014, at 8:04 PM, kyleleeh wrote:

    <<how much more people can the earth sustain before it runs out of resources>>

    Nobody really knows, but with the exception of fossil fuels almost all of our resources are either renewable or recyclable. For example almost all of the metals that have ever been mined out of the ground in human history has been resmelted and is still in use as something today, and will probably be reused as something else in the future. So the idea of "running out" of resources is not at all accurate...the resources never really go away, they just get divided up differently.

  • Report this Comment On April 28, 2014, at 11:00 PM, gvc40 wrote:

    Lots of babies is not a reason to jump for joy if many of those having them have neither the means nor the maturity to raise them. The amount of babies born to parents who qualify for WIC has risen from 48% in 2001 to 52% by 2012. This about that for a moment. Over half the parents in the US can't afford to feed their baby!!!

    Anyone that thinks this is a bell weather for more geniuses and future Facebook CEOs is seriously mistaken. More poor babies born to Moms who aren't ready for parenthood and with absent Dads, is not a recipe for success as a nation.

  • Report this Comment On April 29, 2014, at 1:00 PM, ibuildthings wrote:

    There is a very high correlation between educational achievement (in fields that pay), new technological developments, economic growth and family wealth. Baby boomers bought the "zero population growth" and "I can be young forever" dogmas. They did not replace themselves with children whose desire for and attainment of high educational levels matched their own. Boomers became scientists, engineers, and researchers at record rates due to the space race, and pushed our economy forward to the pole position of the world. Now what?

    We need more immigration of folks who share our economic and moral values and will do the things it takes to move our economic miracle forward. But political policies hamper ready to work highly educated immigrants from countries that value education and scientific research. Instead, they make a political football out of unskilled "undocumented" immigrants as if any (or no) skillset is the same as PhD scientists.

    What about education? Isn't that the recipe for success? Sure, only if the teachers, students and parents all value it in the same way the boomers and their parents did. I don't see that happening the way it did when I was in school. We spend more today on education, both in real dollars and percent GDP than ever, and our results are worse. Our once-successful educational agenda has hijacked by union and polltical agendas, who see an infinite pile of "sacred cause" money to harvest. And our families are fractured.

    If we want this century to be as good as the last century for America, we have some work to do.

  • Report this Comment On April 30, 2014, at 8:26 AM, Chilaw wrote:

    One little point about projections--they are usually way off base, especially those with the number 2050 in them. Take the population projections with a big grain of salt.

    1. They have the capacity to self-correct at some level, right? If there is a massive labor shortage in Japan or S. Korea or Germany, wages will rise, workers will flock there and voila, working age population grows.

    2. Population policies can also help. The EU is considering long-term immigration measures that may alter the numbers over time. France and others may up the bonuses and other incentives to have children.

    Who knows, we could be way off. If China is capable of one-child policies leading to decline, why not reverse it with incentives or even requirements (less than two children by women age 35 and you must pay a tax...)? Could happen if things get extreme.

    In the end, I doubt the most extreme predictions, although mild population decline is likely to happen in some places and given the environmental issues out there, it is not the worst thing. GDP/capita benefits too from decline. Europe has grown slower overall than the US from 1990 - present, but per capita I think it has outpaced the US, due to the fact that we have to grow faster to account for all the new babies and immigrants. Just another side of the coin to consider.

  • Report this Comment On April 30, 2014, at 8:30 AM, TMFHousel wrote:

    << If there is a massive labor shortage in Japan or S. Korea or Germany, wages will rise, workers will flock there and voila, working age population grows.>>

    That assumes no constraints on immigration and visa regulations, which exists nowhere.

  • Report this Comment On April 30, 2014, at 8:32 AM, TMFHousel wrote:

    For example, imagine the headline: "Congress Decides Americans Are Earning Too Much Money, Completely Opens Up the Mexican Border."

    I'm sure no one would have an issue ....

  • Report this Comment On April 30, 2014, at 9:21 AM, pondee619 wrote:

    " These are just projections, and projections are often wrong."

    Amen to that, brother.

    In the 60's/70's the world entering into a new ice age was the fear,(now it's global warming) bomb shelters were being built in every backyard (a slight hyperbole)(the cold war ended but maybe now is restarting?), over population was going to starve the world causing food and water riots and wars, (poulation is now good). Much like the weather, if you don't like what is happening, wait, it'll change.

  • Report this Comment On April 30, 2014, at 9:39 AM, Flogiston wrote:

     

    Excellent article, as always.

    One comment though. The graph near the end of the article would be more useful if it would have shown the change in working-age population as a percentage, not as an absolute number.

     

  • Report this Comment On April 30, 2014, at 10:56 AM, gskinner75006 wrote:

    We have to change the mindset or it's not going to matter how many people we through at it. The mindset of the current generations is that of entitlement and not improvement.

  • Report this Comment On April 30, 2014, at 2:48 PM, kyleleeh wrote:

    << If there is a massive labor shortage in Japan or S. Korea or Germany, wages will rise, workers will flock there and voila, working age population grows. >>

    Fewer people also means fewer consumers, and that lack of demand causes deflation...Wages in Japan have not been skyrocketing as the workforce shrinks, because there's less domestic demand for goods and services.

  • Report this Comment On May 25, 2014, at 3:56 PM, Asamatteroffact wrote:

    I didn't see any reference to climate change in the article. In the coming decades, climate change will have a tremendous impact on the economic plight of many countries. Rising sea levels will force mass migration from many densely populated coastal areas, rising temperatures and drought will also force the migration of millions. Our grandchildren and great grandchildren might have more far more basic concerns than economic growth. That party might be over.

    Instead of the economic news, pick up a book like "The Weather Makers: How Man Is Changing the Climate and What It Means for Life on Earth".

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