Demography Isn’t Destiny

Low & Liberty ^ | 3/5/25 | Jeffery Degner & Julia R. Cartwright

[EnderWiggin1970]

Falling birth rates have governments worldwide in a state of panic. From Brussels to Tokyo to Beijing, policymakers are scrambling to reverse fertility decline, yet expensive pro-natal programs in countries such as South Korea and Hungary have delivered little results. To be clear, serious analysts do not claim that population decline mechanically produces economic collapse. But demographic aging does create real fiscal, labor-market, and growth headwinds. The more productive question is not whether demography matters, but which policy frameworks allow societies to adapt successfully to it. China and Singapore suggest that institutional design shapes how demographic pressures play out. Despite record-low birth rates among its billion-plus population, China continues to grow at roughly 5 percent, a pace most advanced economies would envy.

Decades of declining fertility have steadily reduced the flow of new workers into China’s economy, even as growth has persisted. Birth rates have continued to fall since the repeal of the one-child policy a decade ago. This fall is driven by factors including urbanization, rising living costs, delayed marriage, and changing social norms. These trends underscore that demographic decline is difficult to reverse directly, even with policy intervention. Cross-country comparisons suggest the divergence in how economies respond to population decline lies in policy choices. Comparing Singapore, China, Japan, South Korea, and the European Union reveals that economies that pursue relatively market-oriented macroeconomic policies are better able to adapt to shrinking populations by raising productivity per worker. Those that respond to demographic pressure by constraining markets instead tend to suppress growth precisely when flexibility and innovation matter most.

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TOPICS: Business/Economy; China; Constitution/Conservatism; Culture/Society; Government
KEYWORDS: ccp; china; decline; demography; jefferydegner; juliarcartwright; population; tfr

[EnderWiggin1970]

I was fascinated by how this article got things exactly backwards (IMO) regarding Julian Simon's observation that people are the ultimate resource. The authors interpret this to mean that people can find a way to overcome obstacles such as declining population to keep an economy growing.

But, contra the headline, their own article states: "Japan’s share of global nominal GDP collapsed from 17.8 percent in 1995 to just 3.6 percent in 2025, marking the culmination of its “lost decades.”" (so far...)

OTOH, they note that the Chinese economy has continued to grow, despite a shrinking and aging population. How to explain these two disparate results? I believe the answer is as follows:

I divide the human population into two groups (admittedly an oversimplification). The first population is composed of individuals that are meaningfully contributing to the global economy - whether as doctors or engineers or bureaucrats or factor workers, etc. The second population are those who are not significantly contributing - such as subsistence farmers or people strung out on drugs or alcohol or on welfare.

Every nation will have some population of the latter group, but it is much larger in less-developed nations. On the flip side, it is easier to transition people from the latter group into the productive group in developing nations. Despite great efforts, nations like the US tend to spend a lot of resources trying to rehabilitate unproductive people with little result, with someone new slipping into welfare for every person lifted out of it.

So a nation like Japan began declining once its population began shrinking, because there was no reservoir of underdeveloped workers to draw on. By contrast even today China has hundreds of millions of poor, agrarian people who are barely part of the modern economy. They are still taking the children of illiterate subsistence rice farmers and training them to be engineers or factory workers. So China can still grow - for a few more years.

But as Simon says, humans are the ultimate resource. When one human finds a better way to do something, that invention spreads throughout the world sooner or later, improving the global economy. This is why, contra Malthus, an increasing population did not lead everyone becoming a farmer out of desperation and then slowly starving; to the contrary our farming population dropped from 90% to 3% while growing so much food most people are fat, much food is simply wasted, and large amounts of agricultural output are used instead to produce non-food items like ethanol instead. As the global population tops out and then shrinks, this will slow and eventually reverse. You can't have innovations without innovators.

[frank ballenger]

RE: demography....

Maxine Waters: Unless we can get our respirations for slave days given to us we have to vote more than one time each to save our demography.

[ckilmer]

Actually, the tidal wave of ai innovation is going to work to the advantage of countries with declining populations.

[Governor Dinwiddie]

The better races make for a better country.
The lesser races make for a lesser country.

[EnderWiggin1970]

That's all I hear from the "no problem" crowd - that AI is going to be their salvation. Whereas I find AI to be the equivalent of a mentally retarded child, that constantly makes mistakes or hallucinates about even simple matters. And so I stare aghast when someone points to this "village idiot" and says, "don't worry, he's going to save us!" I very much doubt it.

I expect we're going to see companies that leap too heavily onto the AI bandwagon going bankrupt or hastily (and expensively) reversing course and trying to rehire workers after AI turns out to be a miserable performer in practice.

[EnderWiggin1970]

There is only one race - the human race. What’s with all this racist claptrap on FR lately?

[Governor Dinwiddie]

Yes, there is only one violent race which accounts for most murders and rapes.
Anyway, I don't care what you believe. It's your life. Not my problem.

[frog in a pot]

There is only one race - the human race. What’s with all this racist claptrap on FR lately?

Perhaps Governor Dinwiddie should have said lesser/better "cultures". In which case, we could use the culture that has best served humans in the last hundred years or so as the baseline.

[rlmorel]

"...The better races make for a better country. The lesser races make for a lesser country..."

I understand the way EnderWiggin1970 saw your post, but knowing you on this forum as I do, I do not believe you meant it that way.

I suspect what you intended to say is:

"...The better cultures make for a better country. The lesser cultures make for a lesser country..."

I took your post to mean how I reworded it, but if I am mistaken, just say so.

[Regulator]

India and Nigeria together can simply export 1/3 of their population to the formerly United States and turn them into just another Third World polyglot disaster zone.

There's nothing special about the dirt in the US, it ain't magic.

The success of the States United came entirely from the population that founded it and sustained it.

And the "innovation" that allowed the massive populations in the Third World came almost entirely from the First.

It may not end up being the Kaibab Experiment, but when the non-innovators end up vastly outnumbering the innovators, the party likely ends.

[frog in a pot]

At least there are two of us who agree on that point. {;^)

[nitzy]

Very interesting take.

You might be able to simplify it though. Instead of looking at how someone can transition from the unproductive group to the productive group easier in a 3rd world society like rural China, as opposed to a 1st world society like Japan, wouldn’t it just be easier to measure “social mobility”?

Regardless if your country is 1st world or 3rd world or whether you start in the productive group or in the unproductive group...

The easier it is for you to transition from one to the other, the greater growth the society will experience as there will be a greater incentive to be productive.

I’m sure there are many 3rd world countries that won’t experience any growth, not because there aren’t an abundance of unproductive people to “transition” into the productive group but rather because the ease of social mobility in that country is too difficult.

Countries with fluid social mobility (easily rising and easily falling) will experience the largest amount of growth despite whether they started as 1st world or as 3rd world.

See post WW2 America as an example of my point.

[ckilmer]

Oh man. The AI’s competency is doubling every about 3 months.

I totally agree that earlier versions had loads of problems. And current ones still have problems. But if you’re close to it on a day to day basis—you can see it steadily improving.

In the last couple weeks the improvements in the tool have become extraordinary.

[The Duke]

"Actually, the tidal wave of ai innovation is going to work to the advantage of countries with declining populations."

Not to mention mass-produced androids...

[rlmorel]

Of all the things fostered by the Left, I find “Cultural Relativism” to be among the most repugnant of them.

Close to, but not equal to “Moral Relativism”.

[bert]

No, Homo sapiens is the species in the genus Homo.

There are numerous Homo hybridizations that are the various races.

[frank ballenger]

There is only one race - the human race. What’s with all this racist claptrap on FR lately?

Sorry if satirizing Maxine Waters set this off. Two days ago I was quoting Dr. Martin Luther King on not resorting to violence.

I'm 79 and probably one of the very few here who can say "I marched with Martin Luther King." When I mentioned that before I got about a dozen retorts "Didn't you know he was a trained Communist?" and so on. No, I didn't know it back then and I didn't join any anti-war or other group, I was just in favor of EQUAL rights including voting rights, which was what that old time march was for. While at other places I was passing out leaflets at polling places for GOP candidates all along.

[bert]

Camel nose, tent

[frank ballenger]

Good warning.

In my case they didn’t get me. But I’m weird or as some people kindly put it “unique.”

[alexander_busek]

It may not end up being the Kaibab Experiment [...]

No reference in my Encyclopaedia Brittanica. Wikipedia has likewise nothing to say about that.

What gives?

Regards,