Monday, 26 October 2015

Looking the Wrong Way

200 years ago Thomas Robert Malthusians was predicting that the population boom at the time would lead inevitably to hunger, disease and war. In 1811 the population of England was 8.7 million, by 2011 it was 53 million, according to Wikipedia. It had multiplied by 6, and yet food was cheaper and hunger less widespread than in Malthus' time, and the anniversary of the battle of Waterloo passed in June without much possibility of a rematch.

What happened in the interim was two things. Most importantly and best known is that technology and trade gave us more food, advances in medicine and general living conditions conquered many diseases and with a couple of false dawns, Europeans finally tired of slaughtering each other and decided to go on holiday and swap wines and cheese instead. The other factor, much less discussed, is that people stopped reproducing at the same rate. According to this study the Total Fertility Rate peaked at around 1820 and then simply dropped off a cliff from a high of nearly 6 children per woman, and fell below the replacement rate of 2.1 women per children by the 1930s. It briefly spiked after World War 2, giving us the baby boomer generation who are now in their 60s and 70s. However, after peaking at 2.95 in the 1960s, not a "boom" which would have impressed demographers in the 1820s, the rate fell again. It's currently hovering around 1.9, which is below the replacement rate, but far from the worst in the developed world. 

We hear a lot about over population. That is people who believe that the biggest problem we face is ever more people leading to ever greater competition for resources this will create. I've never bought this, for the same reasons Thomas Malthus was wrong originally - we tend to get more efficient at using the resources we have, extracting resources we didn't know we had and finding substitutes for resources that do become too scarce to use economically. 

What doesn't seem to get a lot of attention is the opposite problem. Densely populated and expensive as Britain is it's far from packed to bursting point, nor starving for the lack of food or other necessities. A far greater problem is our massive unfunded pension liabilities, because the burden on a much reduced working population supporting a greatly enlarged non-working population will be enormous.

And it isn't just a British problem by any means. Nor even a developed world problem.

Here's the World Bank's data on fertility

We are facing a global equivalent of what has happened in Europe and Japan. A fertility rate in freefall, an aging population which is declining and not enough people of working age to actually extract and use the resources we need.
China, Thailand and Cuba are well below the 2.1 replacement threshold.

Even much of the Arab world is hovering in the 2-3 zone and falling, and to find positive growth you have to go to sub-Saharan Africa, which dominates the top of the data. But even here it's falling dramatically.

The world as a whole is at 2.36, just above replacement.

Our current predicament in the UK of high prices for first time buyers and a large pension liability might be just a foretaste of global population decline, and the same problems on a world wide scale as billions of people live longer, work less, consume more and have fewer children. And the house prices and taxes required to cover it won't encourage people to have more children or have them younger, which might avert this.

Anyone think we're going to run out of people before we run out of oil, water, land or food?

It's not quite clear if or how this trend can be reversed. Maybe it will self correct after the baby boomers die off, freeing up resources. Maybe populations will move around according to which countries have a shortage and which have a surplus. Something that will have profound cultural implications but perhaps make the situation at least economically sustainable.