Population Growth and the Economy.

[Piscivore]

What do you reckon would happen to the economy if population growth in the US were to drop off by a quarter or a third within one generation?

[Piscivore]

Anybody?

[Michael Redman]

It would hurt. Bad. But I don't see how this could happen, absent some serious change in the world that would likely completely change the economy anyway.

[Piscivore]

Evil mad scientist puts sterility drug in cheap domestic beer.

How bad?

[Michael Redman]

I don't claim any economic expertise. I don't know how bad, but if today's workers continue to age and retire (but not die) and aren't replaced, it seems to me that the burden on the remaining workers will increase. Less and less of teh population will be productive.

We don't need any natural population increase. We increase primarily through immigration. If we have a serious labor shortage, immigration will increase (no matter what immigration policy we pursue nationally).

[Jimbo07]

I don't claim any economic expertise. I don't know how bad, but if today's workers continue to age and retire (but not die) and aren't replaced, it seems to me that the burden on the remaining workers will increase. Less and less of teh population will be productive.


Yep, the boomer bump will be passing, both in Canada and the U.S. Within a couple of decades we'll be able to test/see the results of Piscivore's OP.

ETA: Put another way, the OP is a real (not hypothetical) problem...

[Michael Redman]

Population growth in the US isn't slowing, as far as I know.

As long as the US has a better economy than most of the world, and a demand for more labor, people will come from outside to meet that demand. (The question for us is whether we want them to sneak in, or whether we want a reasonable immigration policy that allows us to keep track of who we're letting in.)

[sphenisc]

What do you reckon would happen to the economy if population growth in the US were to drop off by a quarter or a third within one generation?

https://www.cia.gov/library/publications/the-world-factbook/print/us.html

Current population growth rate is 0.894%
A drop of a third puts at 0.6%

You wouldn't notice the difference.

[Michael Redman]

I would think that depends on how tight the labor market is. That translates to 890,000 fewer people a year, or 74,000 per month. 40,000 or 50,000 fewer workers each month might have an impact on growth.

According to the link, I was wrong about the source of population increase. It looks like only 18% of population growth is due to migration. We would be increasing even with no immigration.

[Amapola]

Well, after the Black Death in Europe, there were FAR fewer people and what happened was this:

Since there were hardly ANY worker to till the fields, harvest crops etc. the life of the serf improved (over what it had been, which was not great) because the rich people who lived in the castles were willing to pay just about anything to have the work get done. Suddenly the average worker was a desired and valued commodity.

The economy staggered for a bit and then was OK. There was money but it almost sort of equalized in who had it, since rich people preferred to share money rather than starve. According to Barbara Tuchman it may have been the start of the middle class.

If it happened in this day and age, the rich people of our day would stop worrying about whether they got to play golf, or which luxury car they were going to buy, and would start thinking about stuff like growing vegetables instead of flowers, and maybe about raising calves on their lawn instead of mowing it. I think a lot of things would be harder to get, and in some instances those things would be more valued, in others, people would decide they just weren't worth it. The economy would adjust (after a bit) and I think you would see another change in the structure of how we get things done. I do think it would start out with hardships though.

[drkitten]

https://www.cia.gov/library/publications/the-world-factbook/print/us.html

Current population growth rate is 0.894%
A drop of a third puts at 0.6%

You wouldn't notice the difference.

I think you're answering the wrong question (more accurately, the OP phrased the question badly.) The relevant quantity isn't really "population growth", but birthrate.

Current US birthrate is 14.16 births/1,000 population (2007 est.) Current US population is
301,139,947 (July 2007 est.), which works out to about 4,264,000 births per year. Cutting that by a third means only 2,843,000 births/year, or a net loss of about 1,421,000 people per year.

That's enough of a loss to give the USA an overall population decline each year, even including immigration at the present rate. I think the economic consequences of such a change could be substantial....

[Piscivore]

I think you're answering the wrong question (more accurately, the OP phrased the question badly.) The relevant quantity isn't really "population growth", but birthrate.

Current US birthrate is 14.16 births/1,000 population (2007 est.) Current US population is
301,139,947 (July 2007 est.), which works out to about 4,264,000 births per year. Cutting that by a third means only 2,843,000 births/year, or a net loss of about 1,421,000 people per year.

That's enough of a loss to give the USA an overall population decline each year, even including immigration at the present rate. I think the economic consequences of such a change could be substantial....

Like what?

[drkitten]

Like what?

Well, an immediate and obvious consequence is the collapse of the education "industry." Many school systems are already suffering from excess capacity (and the related problem of cost inflation, because they have so much infrastructure to run). We could expect a cycle of runaway costs before about 1/3 of the schools and colleges collapse for lack of clients.

More generally, entry- and low-skill positions will find increased difficulty in finding any people to fill them at all; the idea of a "minimum wage" job will end up disappearing when it costs more to hire a cashier at Burger Hut than it does to hire a manager. And, of course, with a smaller working population, fixed costs such as vet benefits, retirement benefits, and Medicaid will take an increasingly large share of the budget.

Google "greying" and "economics" for more articles than you could possibly read on this subject....

[Jimbo07]

More generally, entry- and low-skill positions will find increased difficulty in finding any people to fill them at all; the idea of a "minimum wage" job will end up disappearing when it costs more to hire a cashier at Burger Hut than it does to hire a manager.

You've been to Alberta then!

:D

[Piscivore]

Do you think Amapola's prognosis is plausible?

Would the chaos caused be unrecoverable (In other words, "America" ceases to exist, devolving into anarchy and subsitence economy, or gets absorbed/bought out/conquered by a culture with a stronger economy)?

[UserGoogol]

I'm optimistic. If the birth rate were to go down significantly, then the labor supply will go down and that's certainly a detriment to our economy, (and the average age increases etc) but I also think that in a generation's time technology would (and will) advance to the point that we don't really need the same amount of labor to sustain the same levels of economic development. Hell, I think that "eventually" we won't need any labor, because technology will advance to the point that everything people do will be replaceable by machines.

[Michael Redman]

Europe had no outside labor pool to draw from when its population was decimated by the Black Death. We do. We won't have any serious economic collapse due to a lack of native labor, because there are tens, if not hundreds of millions of people around the world who will gladly fill the void.

[Piscivore]

technology will advance to the point that everything people do will be replaceable by machines.

Meh, the encyclopedias I had as a child in the Sixties promised that the most signifigant problem we'd be facing this century would be ennui because of the universal prosperity robot labour would bring.

I'm still waiting for my flying car, too.

[Piscivore]

Europe had no outside labor pool to draw from when its population was decimated by the Black Death. We do. We won't have any serious economic collapse due to a lack of native labor, because there are tens, if not hundreds of millions of people around the world who will gladly fill the void.

But if our economy goes in the toilet, and those of other countries, say China's, stay about as they are or keep growing, won't we see the flow start moving the other way?

[Jimbo07]

the universal prosperity robot labour would bring.

I want a universal prosperity robot, but I'm not willing to labour for it!

:D

[Piscivore]

I want a universal prosperity robot

Unfortunately, just before they were set to be delivered, Maggie Thatcher's Conservatives got elected. They all ended up loaded full of explosives and dropped on the Falklands.

Tony Blair would have built more, but he left the plans unattended during a White House visit and G.W. ah... flushed them.

[athon]

I think it's the small details which would make the big differences. Such as 'which parts of the population would drop?', and 'which regions would be affected?'. If mostly older people were removed, it would be a far different story than if it was all children, and again if it was all adolescents. If it was restricted to a single demographic or class it would also make a difference. I find it hard to picture a completely unbiased form of population reduction (even diseases strike some demographics and regions with some selection).

Athon

[Amapola]

I think it's the small details which would make the big differences. Such as 'which parts of the population would drop?', and 'which regions would be affected?'. If mostly older people were removed, it would be a far different story than if it was all children, and again if it was all adolescents. If it was restricted to a single demographic or class it would also make a difference. I find it hard to picture a completely unbiased form of population reduction (even diseases strike some demographics and regions with some selection).

Athon

This is a good point, and in my reply I was thinking of something that caused the entire population of the earth to be 1/4 to 1/3 less than it is now, with all groups being affected equally. I was not thinking of something like a vastly reduced birth rate.

[Michael Redman]

But if our economy goes in the toilet, and those of other countries, say China's, stay about as they are or keep growing, won't we see the flow start moving the other way?If our economy goes into the toilet, China's will too.

Anyway, my original answer was qualified with "absent some serious change in the world that would likely completely change the economy anyway". That's what you're describing. No one can reasonably be expected to predict the impact of a minor change in population growth in the US in a hypothetical world where the US can't find immigrant labor because it's all going to China. Far too much would have to be very different than it is now.

[Cain]

I'm optimistic. If the birth rate were to go down significantly, then the labor supply will go down and that's certainly a detriment to our economy, (and the average age increases etc) but I also think that in a generation's time technology would (and will) advance to the point that we don't really need the same amount of labor to sustain the same levels of economic development. Hell, I think that "eventually" we won't need any labor, because technology will advance to the point that everything people do will be replaceable by machines.

Pssssht. I wish robots could do all (or the vast majority) of labor in the world, but if the system is capitalist rather than socialist then the rich robot owners and their heirs would displace a lot of non-owners.

Anyway, yes the consequences of zero population increase would be terrible. Today, actually, is "National Conception Day" in Russia. The country is trying to give people incentives to pro-create.

[Michael Redman]

Pssssht. I wish robots could do all (or the vast majority) of labor in the world, but if the system is capitalist rather than socialist then the rich robot owners and their heirs would displace a lot of non-owners. Some degree of socialism would be unavoidable. If we eliminate labor with technology, we will have to either provide other gainful employment for everyone to do, or put everyone on the dole to a degree that they're fairly comfortable.

[Puppycow]

What do you reckon would happen to the economy if population growth in the US were to drop off by a quarter or a third within one generation?

Not necessarily so bad, IMO. Replace workers with robots. Use technology to improve productivity.

As an example, I read a statistic that says something like (I don't remember the exact figures) while the US steel industry only employs about half as many workers as in the early 80's, it produces more steel.

Another example: one man with a backhoe can dig more dirt than 20 with shovels.

Also: Really it's the GNP per capita that we should worry about, not the total. If GNP grow by 5% but population grows by 6%, that's bad. If it falls by 5% but the population falls by 6%, that's good.

[Puppycow]

One more thing: Watch Japan from now on, and you will find the answer because that is exactly what is about to happen here. Population peak was in ca. 2005.

[sphenisc]

Anyway, yes the consequences of zero population increase would be terrible.

More terrible than continual population growth?

[Puppycow]

I think it would be best from a natural resources perspective, and environmental perspective, and long-term sustainabilty perspective, if people volutarily chose to limit their children to 1 or 2 so that the world population would gradually fall to around a billion or 2.

There might be some economic and social adjustments with a demographic shift to an older population, but I think it wouldn't be a disaster. Look, work is increasingly less and less physical. All my work is done on a computer. If people are living longer, they can work longer. If they save enough to retire, more power to them.

[Broes]

House prices will drop...

[boooeee]

Some degree of socialism would be unavoidable. If we eliminate labor with technology, we will have to either provide other gainful employment for everyone to do, or put everyone on the dole to a degree that they're fairly comfortable.


Really? We've been eliminating labor with technology for over a hundred years now. It doesn't seem to have affected employment levels.

[Michael Redman]

Really? We've been eliminating labor with technology for over a hundred years now. It doesn't seem to have affected employment levels.Not at all comparable. The conjecture we're talking about is that "in a generation's time . . . everything people do will be replaceable by machines".

[Puppycow]

Not at all comparable. The conjecture we're talking about is that "in a generation's time . . . everything people do will be replaceable by machines".

Everyone could become artists or novelists or scientists or porn stars or theologians or whatever they have a talent for.

But, if that turns out to be impossible, then a bit of socialism probably won't hurt. If society is rich enough, it can afford to have a decent safety net.

:D

[YoPopa]

Everyone could become artists or novelists or scientists or porn stars or theologians or whatever they have a talent for.

But, if that turns out to be impossible, then a bit of socialism probably won't hurt. If society is rich enough, it can afford to have a decent safety net.

:D
That sounds a lot like what Karl Marx predicted. Marx correctly saw the future as being filled with prosperity. He just got everything else completely screwed up.

Perhaps tomorrow holds the promise of even greater prosperity but if "decent safety net" means that you give more of the wealth to the people who are not producing any of it, then I have my doubts.

But I don't see how that could follow from the OP. A drop in the population will equal a drop in productivity growth if not a drop in total productivity.

[Puppycow]

Perhaps tomorrow holds the promise of even greater prosperity but if "decent safety net" means that you give more of the wealth to the people who are not producing any of it, then I have my doubts.

Only once technology is so advanced that there are truly no jobs left for unskilled labor. This means that all human talent could be used on high-level creative activities. and even if most people don't contribute anything, there's still plenty of resources for everyone to live comfortably. I don't think we are close to that yet, but if productivity growth continues, it seems that such a day will eventually arrive.

I believe that per capita productivity growth is a function of technology, not population. I think there are many dirt-poor countries with very high rates of population growth.

[YoPopa]

Only once technology is so advanced that there are truly no jobs left for unskilled labor.
Is this not zero sum thinking? You can't blame the Luddites for having such fears but almost 200 years later? It's ironic that the Luddites were fearing the loss of skilled jobs. It's also ironic that I know someone who has a rewarding occupation as a weaver. Her hand woven product is treasured as having much higher value than anything a textile factory can produce.

This means that all human talent could be used on high-level creative activities. and even if most people don't contribute anything, there's still plenty of resources for everyone to live comfortably. I don't think we are close to that yet, but if productivity growth continues, it seems that such a day will eventually arrive. If you want to enlarge the class of people who "don't contribute anything" then go ahead and subsidize them, they will multiply beyond your wildest dreams.

You could possibly be right when you include "eventually". The far distant future will hold surprises. But the foreseeable future (an oxymoron) is more likely to be a continuation of trends we can observe today. The trend I see is that new job opportunities have been created apace with the creation of wealth & prosperity.



I believe that per capita productivity growth is a function of technology, not population. I think there are many dirt-poor countries with very high rates of population growth.I agree that per capita productivity growth is largely a function of technology, but it is also related to other complex factors and separating cause from effect is complicated beyond my ability. One possibility, as related to the OP, is that a decrease in population creates a labor shortage that scares off investment capital which results in recession which frees up labor.

Excuse me, my brain hurts.:boggled: