Could UNDERpopulation Threaten Global Financial Systems?

Data from US Department of Census International Database ^ | 10.19.06 | Dangus

[cripplecreek]

Money, that's really what it's all about.

[BeHoldAPaleHorse]

A thought: in this scenario, while demand would decreasing, the labor available to meet that demand would also be decreasing.

[2banana]

Interesting.

The USA is the only one with an increasing fertility rate.

And I had no idea the county with one of the highest fertility rates is Saudi Arabia...!

[Incorrigible]

Thanks for starting this thread Dangus

Related thread:

Ignore the Downsiders -- Population Growth Is Necessary and Good [Lileks]

 

[dangus]

>> demand would decreasing, the labor available to meet that demand would also be decreasing. <<

Yes, that's what I meant by the last section: It doesn't necessarily mean economic disaster... but how do we transition from our current financial system to one which works with decreasing demand?

[BeHoldAPaleHorse]

The point I was making is that there would still be scarcity--but it would be a labor scarcity vs. a capital resource scarcity.

[Reeses]

Technology changes everything. There won't be a significant labor shortage or taxpayer shortage because robots will be doing most of the work and generating most of the wealth. But only if we invest in them now and not in expensive illegal laborers. Some investment is going on in battlefield robots but comparatively little outside of that.

[Irishguy]

if i may suggest some reading on just how perilous the situation is may i recommend mark steyns new book America Alone. it deals with the population issue in some depth, some of it is scary

[underbyte]

More wealth in fewer hands - wealth continues to grow but population declines raises the standard of living.

If people are richer they will spend more money so the scarcity issue is a moot point

[dangus]

The population of elderly will not decline until long after the population of the workforce declines. Will the elderly control the capital? Not necessarily. Under our financial system, the value of an investment is based on future profits, presumed from future increasing scarcity. All those 401K plans, social security trust funds, stock markets, real estate markets... they could all approach zero value.

Here's my advice everyone:

The only sound investments are children who love you.

[wideawake]

Interesting analysis. Of course, demand is not really static - the ability of each person on the planet to consume grows significantly each year.

There are billion people today who would be expected to live on bare subsistence who will, two decades from now, be demanding cable TV and motorized transport and multiple sets of clothes, more elaborate housing, etc.

Economic growth is predicated on two things: the appetite for goods and the capacity to creatively satisfy those appetites.

We know the appetite for goods will never slacken, so we need only incetivize ingenuity.

Economic mismanagement in the face of population growth has resulted in poverty and so will economic mismanagement in the face of population decline.

Smart, flexible thinking is the key.

[wideawake]

Perfectly put.

[wideawake]

Money is a store of value. It is not itself inherently valuable.

[GOP_1900AD]

I agree. Over the long haul, the world has gone thousands of years in growth mode. We essentially have no real experience with what will really happen economically when overall global population growth is negative. I think there are major downsides.

[wideawake]

We essentially have no real experience with what will really happen economically when overall global population growth is negative.

Ah, but we do.

Europe, which was a very closed economy at the time, lost one third of its population in a single generation in the mid-1300s due to the bubonic plague.

There is a large documentary record describing the economic aftereffects of that depopulation disaster.

[dangus]

Not thousands of years, merely about 600. Many lands in the Middle Ages achieved stable populations, and mechanisms to maintain stability. A priestly caste, the prohibition of charging interest, the investment of excess human capital into religious works and holidays, and sacramentalized sexuality helped stabilize both economic and population growth, despite a life expectancy near 50 years (and much older, if one survived childhood).

We all know (and even grossly exaggerate) the down sides, but few know that there were actually up sides.

[Scotswife]

"More wealth in fewer hands "


Less hands to create wealth.
Decreasing wealth as producers age and become unproductive.
Fewer producers to maintain everyone's standard of living.