The demographic winter isn’t coming; it long ago arrived

What happens to labour markets when you run out of people?

Photo by A. L. on Unsplash

Mere hours after finishing my last Substack missive, I listened to a Sam Harris podcast that made me realise I’d buried the lede, as journalists used to say back when the print media still existed.

As readers with good recall will, um, recall I suggested that first-world nations might not be able to go on creaming off the human capital of developing countries for much longer. If Sam Harris’s podcast guest Peter Zeihan is to be believed, the situation is far worse than that. Zeihan argues that human capital (or the ‘human race’, as non-economists refer to it) in much of the developed AND developing world is evaporating faster than spilled cider in a British heatwave.

The self-replacement fertility rate clocks in at around 2.1 children per woman in developed countries and up to 3.4 per woman in developing countries. Here are the actual fertility rates as of 2020 (as compared to 1950).    

At the risk of stating the obvious, once a nation’s fertility rate approaches 1 each generation will be half the size of the previous one. Here are some graphical representations of how that plays out in the real world:

It’s not just China, Japan and South Korea that are picking up speed as they slide down the ageing-society slippery dip. Most Asian and European nations, along with Russia, Ukraine, the US, Canada, Australia, New Zealand and a big chunk of South America face similar challenges, as shown on the graph below.  

Children: from free labour to a luxury good

As Zeihan argues The End of the World is Just the Beginning: Mapping the Collapse of Globalisation, in pre-modern agrarian societies having lots of children makes sense. If you’re a subsistence farmer in 17th century England, or even 21st century Uganda, more kids means more free labour and less chance of starving to death when you are too old or incapacitated to work. But once industrialisation, let alone post-industrialisation, occurs, there is no reason to have children other than maternal (or, more rarely, paternal) instinct or because you believe you have a religious duty to do so.

Zeihan makes plenty of arguable points. For instance, that America’s fortunes will revive while China’s miracle economy will soon collapse due to their respective demographic profiles. But it’s difficult to argue with his basic premise. There are some outliers, such as Israel, but it’s close to a universally acknowledged truth that as societies get more technologically advanced, better educated and wealthier, women have fewer children.

That noted, low birthrates don’t necessarily mean a declining population – as long as you’re willing to import new citizens. W.E.I.R.D countries, such as Australia, Canada, New Zealand, France, Germany, Spain and Italy, as well as the US (post-1965) and the UK (post-New Labour), are unusual in being open to high levels of immigration, even from societies radically different to their own. That means, despite typically having low birthrates, creedal nations in the ‘diversity is our strength’ camp haven’t hurtled off a demographic cliff the way their ethnonationalist ‘blood and soil’ counterparts have.

Yet.

A world without migration      

Employer groups in Australia, and I presume other first-world nations, are currently screaming that the solution to short-term economic problems and the path to long-term economic growth lies in throwing open national borders, or at least the skilled migrant floodgates.

Let’s assume they are right. That still leaves the question of what happens if birth rates continue to head towards zero in developed nations and the developing world is unwilling, or simply unable, to keep sending their best.

Some reasons for profound pessimism  
Let’s start with falling birth rates in developed countries. Granted, I’m no ray of sunshine, but I struggle to imagine how even glass-half-full types could look at technological and political trends and find cause for optimism.

Technological trends: I spent much of my journalistic career writing about sex and relationships for gentlemen’s publications and have spent much of the last decade writing for and about technology companies. So, I think I have some insight into the impact of the Internet on male-female relations.

As everyone is happy to acknowledge, for solid evolutionary reasons, men are instinctively polygamous. As evolutionary biologists and sociologists rather more nervously acknowledge, for solid evolutionary reasons, women are instinctively hypergamous.

When there is frictionless access to a firehose of internet porn, many men – especially low to average status men – will be inclined to make do with an infinite variety of imaginary sexual partners rather than endure the inevitable frustrations involved in attempting to initiate then maintain a relationship with a flesh-and-blood woman. And this is just what’s happening with two-dimensional images on a screen; the trend will presumably accelerate when men can purchase sexbots.  

When internet dating sites provide access to an enormous pool of potential male partners, the large majority of women will compete among themselves for a small minority of high-status men. By the time most of those women accept the slim odds of forming a lasting relationship with a high-status male and contemplate “settling” for a lower-status one, the window of opportunity to bear children is usually narrow.  

Political trends: On the Left, the L,G,B and especially T communities are now so relentlessly valourised that even dyed-in-the-wool heterosexuals are desperate to identify as being at least ‘queer’. (You don’t have to be an unabashed heterosexual to become a parent, especially nowadays, but it does simplify matters somewhat.) Many environmentalists now argue that it's selfish to procreate. And, as even many childless, highly educated, overachieving feminists have now conceded, feminism often conveys the message that creating human life is the soft option compared to, for example, making partner at your law firm.  

Over on the ‘family values’ Right, even social conservatives have largely gone along with the free-market revolution of the last four decades. Surprisingly enough, if you unleash economic forces that push societies in a neo-feudal direction and redistribute wealth upwards from working class and middle class men to Mr Darcy/Mr Big/Christian Grey plutocrats you get a lot fewer men that women consider marriageable.

Also, if you allow property markets to become a licence to print money for baby boomers, even middle to upper-middle class Gen X/Y/Zers will have fewer children than they might have if they could buy a suburban house for 4X their annual household income, rather than 12X.        

Given the above, it’s hardly surprising there are sex recessions in societies that have never been more sexually liberated or that marriage rates have collapsed among the working class and significantly declined among the middle class in developed nations.  

Why we are more screwed than we realise

If you’re anything like me, by this point you’re probably thinking Zeihan is a hysterical alarmist. If you’re particularly cynical, you may even be wondering if he’s the mirror image of Paul Ehrlich. Ehrlich scared the bejesus out of everyone in the 1970s with a book that argued people were having too many babies. (The Population Bomb opens with the sentence, “The battle to feed humanity is over,” and goes on to explain why “hundreds of millions of people are going to starve to death.”)

Only time will tell if Zeihan’s predictions are as irresponsibly sensationalist as Ehrlich’s. But he makes some persuasive arguments for why nothing can now be done to prevent the populations of many nations going into rapid decline more abruptly than most laypeople imagine and most experts predict.

From what I’ve heard him say on podcasts and what I’ve so far read of his book, here are Zeihan’s three most disturbing claims.

1)     Developed nations will find it increasingly difficult to plunder the human capital of the developing world

When it comes to population structures, a pyramid-shaped age distribution is what you should aim for. You want a lot of kids, a fair whack of adults who are working hard and consuming enthusiastically, and as few (non-working and modestly consuming) retirees as possible.

Probably not coincidentally, this is exactly the age-distribution structure most Western nations had during the post-war boom years.

What you don’t want is a snake-that-swallowed-a-basketball structure. But that’s precisely what you end up with if, for instance, you have a baby boom followed by succeeding generations having fewer children. That’s great for a while because you’ve got a disproportionately large number of people working, paying tax, saving and buying goods and services and a disproportionately small number of ‘unproductive’ individuals who are too young or too old to be in the workforce. However, you eventually end up with a surfeit of retirees, not nearly enough working-age adults and a dearth of future workers and consumers.

Probably not coincidentally, Japan enjoyed spectacular growth from the 1960s-1990s, when it had a basketball-sized lump of its population in the prime of their working and consuming lives, then went into genteel decline after that.

If its official figures can be trusted, China still has 1.4 billion people. But, compared to 20 or even 10 years ago, far fewer of them are in the 18-35 age range. That’s an issue both for China and for nations that have gotten used to receiving a steady stream of young, healthy, highly educated and ambitious Chinese immigrants. (Sooner or later, the flinty-eyed hard men of the CCP are likely to decide that the upsides of having large diaspora populations in Western nations doesn’t adequately compensate for the downsides of losing millions of China’s best and brightest young people to the US, Canada, Australia, France, South Africa, the UK, Italy and Spain.)

Granted, for a time, rich nations will still be able to hoover up software engineers, scientists and doctors from populous nations with (currently) less dire demographic profiles, such as India and the Philippines. But Zeihan argues these countries are also well on their way to basketball-passing-through-a-snake age distributions given increasing longevity and decreasing birth rates.

Africa, the cradle of civilisation, is still in pyramid territory and may just prove to be humanity’s salvation. But even if developed nations were selfish enough to poach them, there’s not an abundance of software engineers, scientists and doctors to be found in Angola, Burkina Faso and the Democratic Republic of the Congo.

2)     We can’t automate our way out of this

Leaving aside the fact robots don’t consume anything other than electricity, they can’t simply be subbed in for all the human workers who were never born. It’s easy to replace a supermarket checkout operator with a self-checkout scanner. But we are still a long way off having self-driving trucks, or affordable Boston Dynamic robots capable of unloading those trucks then slicing open boxes and arranging jam jars on the right shelf in the right aisle.   

3)     Pro-natalist measures don’t do much       

You can offer couples who have children upfront cash payments or lower tax rates. You can lavish them with lengthy maternity and paternity leave and offer them family-friendly working arrangements. If you’re a totalitarian dictator, you can even ban abortion and/or create grand-sounding awards to raise the social status of fecund women. But, as has been proved again and again in rich, poor and middling nations, none of these policies is likely to have anything other than a marginal impact.

Listen to Elon (about this, at least)

Demographic decline is the very definition of a slow-motion car crash. The good news, such that it is, is that we still have several decades to slow, ameliorate or even potentially reverse disturbing demographic trends.

The bad news is that even the world’s smartest people haven’t come up with a strategy more sophisticated than pleading with people to study the data and act accordingly.

Father-of-ten (at the time of writing) Elon Musk has repeatedly insisted "population collapse is the biggest threat to the civilisation" and warned, “So many people, including smart people, think that there are too many people in the world and think that the population is growing out of control. It's completely the opposite. Please look at the numbers – if people don't have more children, civilisation is going to crumble."