Do it for Denmark

Denmark is worried about its fertility rate, though at 1.73 it is huge compared to Poland (1.33) the Ukraine (1.30), South Korea (1.25), or Singapore (0.80). It never ceases to amaze me how little people know about fertility rates and what the implications of those rates are, but it is a narrative that the mainstream press suppresses.

Reflections on What to Expect When No One's Expecting

Published in 1968, Paul Ehrlich's The Population Bomb reignited Malthusian fears about the imminent collapse of civilization due to overpopulation. Selling over two million copies, it shaped perceptions for the past half century. Despite the fact that its alarmist predictions have been falsified by history, in the popular mind the threat of overpopulation still looms.

Jonathan Last has a very different message in What to Expect When No One's Expecting: America's Coming Demographic Disaster. He dismisses The Population Bomb as "one of the most spectacularly foolish books ever written." His concern is how nations will cope with shrinking populations. Throughout the developed world and even in some of the developing world, fertility rates have fallen below replacement. Women are averaging less than two babies in Europe, the Far East, and even parts of South American. Only in Africa and in some parts of the middle east are fertility rates still high, and even many of these have fallen.

Last faces several barriers to his message. First, many people do not understand what the fertility rate measures. The media focuses on crude birth rate or population growth, not fertility rates, and even when they discuss fertility rates, they often do not use that term. The fertility rate is an estimate of the average number of children a cohort of women will bear during their reproductive years. Because some children die before they reach adulthood, the replacement level of the fertility rate is usually given as 2.1, though it will be higher in poor countries with high child mortality. If a country maintains its fertility rate at the replacement level, it will eventually, with a long lag, stabilize population and have zero population growth. That lag is the second barrier to his message.

The relationship between fertility rates and population growth is not straightforward. Many people do not understand how population can continue to grow if the fertility rate is below replacement. To answer that question requires a bit of mathematical reasoning and math is hard for most people. Ignoring immigration and emigration, population increases when the number of births exceed the number of deaths. The people dying are mostly old people. The fertility rate tells us nothing about what old people are doing; it tells us what young women are doing. In a population that has had a high fertility rate, the number of old people will be much smaller than the number of young people. If the young people start having few babies with a fertility rate below replacement, the number of births may easily exceed the number of deaths because the old generation is small relative to the population.

However, if the fertility rate stays below replacement long enough, the age structure of the population changes and the old generation becomes large relative to the young generation. When that happens, deaths may exceed births even if the young people start having lots of babies. A change in fertility rates does not have its full effects on population growth or decline immediately, but only after a long lag. There are several countries that have had low fertility rates for so long that their populations are now declining. Japan, Germany, and Russia are examples. In the not too distant future much of Europe will join their ranks.

Third, some people who understand that population expansion is not inevitable and that many parts of the world will in coming years will face a population decline maintain that the decline will be a good thing because there are too many people today. This position focuses on the level of population and is concerned with what level of population is ideal. It ignores that the rate of change in population, regardless of what the level is, has effects that may be good or bad. Last is not concerned with the issues surrounding the level of population. He is concerned only with the issues surrounding the change. He notes that a declining population creates some serious problems for a society and that we have limited experience in anticipating or dealing with those problems.

Chief among those problems is providing support for the elderly. All societies must deal with this problem in some way. In traditional societies children take care of their parents, so in these societies to be childless is a curse. In industrial societies a combination of financial markets and government transfer programs have relieved children from the task of caring for their parents but do not relieve the young from the task of supporting the old. Resources must be transferred from the young to the old, either voluntarily via financial markets or by coercion through government transfers. What we do not know is how societies will cope as the ratio of young to old decreases to levels as low as two to one. The change will affect savings and investment, innovation, and the military power a nation can project.

Last is not an expert in demography. He is a writer who is summarizing the work of others and presenting it in an easy-to-digest form for a popular audience. Demography is a story of numbers, and to enliven the book Last mixes in observations of American culture and stories. For example, Margaret Sanger was an eugenist whose goal was to stop the poor from breeding. She teamed up with a woman who had control of the fortune made by the founder of International Harvester to fund research to develop the birth control pill. The research was successful but had consequences quite different from what Sanger envisioned. The pill seems to have depressed births among the prosperous and educated more than it has depressed births among the poor and uneducated. (The extent to which the pill contributed to other changes such as increased premarital sex and cohabitation, increased age at first marriage, and a higher divorce rate remains uncertain.)

Fertility rates have fallen to levels that no one expected back when Ehrlich was renewing Malthusian fears. In Singapore, for example, the average number of babies being born is only a little more than one per young woman. The government has tried a variety of policies to raise that level, but without success. Last points out throughout his book that in the contemporary world there are no economic benefits to having children but there are substantial costs. It is therefore not surprising that so many people opt for few or no children. Last sees no reason for low fertility rates to rise, though most estimates of what the population will be in 50 or 100 years from now assume that they bounce back to replacement levels. Eventually fertility rates will rise, but only time will reveal when and why.

Tombstone: The Great Chinese Famine

When I attended the University of Wisconsin-Madison from 1968 to 1970, I frequently encountered radical leftists who regarded Mao Zedong (or Mao Tse-tung as he was known in those days) as a hero, a great leader with a great intellect. They did not know and would not have believed that a decade earlier Mao's Great Leap Forward had caused the starvation of millions of Chinese peasants. The exact number will never be known, but estimates range from 17 million to more than 50 million.

Tombstone: The Great Chinese Famine, 1958-1962 by Yang Jisheng is a comprehensive examination of this disaster. The author was in high school when he received word that his father was dying of starvation back in his village. He rushed home but found that his father was too far gone to be helped. It would be years before the author came to understand that his father was one of millions of people who died in an unnecessary man-made disaster. His doubts about the infallibility of the Communist leadership began to form during the Cultural Revolution when many high-ranking officials were accused of corruption. Those doubts matured into skepticism when Yang became a reporter and learned how news was manipulated to indoctrinate the masses. Eventually he decided he needed to uncover the truth. His quest for truth led to this book.

The English version of Tombstone is about half as long as the original Chinese version, published in Hong Kong in 2008 and not available in Mainland China, and it also rearranges the material. Most of the detailed, province-by-province accounts of the famine have been eliminated. Remaining are accounts from a few provinces that were especially hard hit and the chapters that analyze the reasons for this disaster. The book would not have been possible if there were not high-level party officials who also believed that the truth needed to be recorded and preserved.

Unlike Chinese famines in the past, this famine was not caused by flooding, drought, or any other natural calamity. It was caused by policies that Mao Zedong set and kept in place. Mao did not intend to starve millions of people. His goal was to stay in power as the new emperor of China and to use his power to establish the utopia that is the goal of faithful Marxists. His utopian beliefs would not have had disastrous consequences if the triumph of the Chinese Communists in 1949 had not ushered in a totalitarian government.

China has a long tradition of authoritarian government and the communists adopted that authoritarianism despite their promises that they would be democratic. Society was organized as a pyramid, with each level a dictator to those below and a slave to those above. The addition of the secular religion of Marxism allowed the Chinese Communists to take the authoritarian system of the emperors to an extreme. Marxism, despite its rhetoric of egalitarianism, is an elitist belief system that confers absolute power on a privileged few. The faithful believe themselves justified in depriving everyone else of freedom and forcing them to blindly follow orders from above because these measures enable the arrival of heaven on earth.

Yang notes that the communist party relied on "'two barrels:' the gun barrel and the pen barrel; seizing and ruling its domaine relied on both." (p 492) The party controlled thought because it controlled all sources of information and also because it punished any deviation from approved thought with severe consequences. When the Communist Party gained control of China, it executed over 700,000 people (p 476) and executions continued after its power was consolidated as a means of control. Although this system of control, reaching down to shape the thoughts of peasants, was impressive, it had two related shortcomings.

Each level of the hierarchy needed to appease the level above it. Failure to meet goals could bring charges of sabotage or right-wing deviation, so there was an incentive to exaggerate what was possible and what had been accomplished. Because telling the truth about production was dangerous, the entire system ended up being based on lies and deceit. Those at the top did not have a clear idea of what was happening at the bottom.

The lack of honesty contributed to a second problem, the lack of corrective mechanisms. One of the advantages of free markets is that they provide powerful correction to those who make products that people do not want. A democracy also has corrective forces, though they are weaker. The citizens can and often do vote incompetent and corrupt officials from office. However, "[i]n trying to control the ears and eyes of ordinary people, the supreme ruler ends up blocking his own ears and eyes" (p 496) and "[i]n a monarchal political system, the supreme ruler hears only voices that conform to his own will." (p 497)

In the Great Leap Forward Mao intended to squeeze peasants to support industrialization. The government based extraction on reported harvests, but because the reports were exaggerated to curry favor with those above, the level of extraction was so high that deaths from starvation began in 1958. The author argues that there was a chance to correct the mistake at the Lushan Conference in July and August of 1959. It was missed when Mao used the conference to attack those who voiced concern over the way that the Great Leap Forward was proceeding, effectively prohibiting true reporting of the conditions in the countryside. As a result, millions more starved from 1959 to 1962.

Mao was blinded not only by bad information but also by ideology. In socialist and Marxist thought private property establishes and perpetuates inequality. Unacknowledged is the role property rights have in overcoming the problem of common ownership of scarce resources. Private property is a mechanism that makes people recognize costs of their actions. Mao enthusiastically supported the suppression of household food preparation in favor of communal kitchens because he thought there would be economies of scale and that large-scale food production would release people to do other things. He never anticipated that people given free food would overconsume, causing many kitchens to run out of food and to shut down in the winter, leaving people hungry. When households prepare their own food they consider that a consequence of eating now may mean less later. With a communal food supply, what one person consumes now has minimal effect on what that person will have later.

Similarly, when cultivating their own land, peasants have a strong incentive to make smart decisions because mistakes often have dire consequences. When decisions about what and how to produce were made high in the hierarchy, the consequences of mistakes were not borne by decision makers but by the peasants. The problem of common ownership is that people are not accountable for the consequences of their actions and as a result there is no barrier to actions that are socially destructive. Mao's Marxist ideology never let him understand why trying to abolish private property in favor of communal ownership led to repeated failures. Fortunately, reality overcame ideology for some in the leadership so that reform was possible after Mao's death.

Yang estimates that at least 36 million people starved to death from 1958 to 1962. In addition, he estimates that the shortfall in births was about 40 million; lack of food reduced births because a large number of women stopped ovulating. However, when the policies of the Great Leap Forward were relaxed after 1962 and food availability rose, births soared and made up for that shortfall.

Eventually knowledge of the scale of this disaster did reach the top. Several high officials were "charged in 1961 with directing each province to compile data on food supply and demographics. The data indicated a population loss of tens of millions. This information was reported to only two people: Premier Zhou Enlai and Mao Zedong. After reading the report, the premier contacted Zhou Boping and told him to destroy it immediately and make sure that no one else saw it." (p 406)

The author named the book Tombstone for four reasons. He wanted it to be a memorial for his father who died in the famine, for the 36 million others who died, and for himself. He also wanted it to mark the grave of the system that brought about this great tragedy.

Tombstone is an important documentation of one of the great calamities of 20th century socialism. It gives details and names names. However, there are so many names in the book that the reader can not make sense of them all. The book describes an event so horrific and large that it is beyond human comprehension. Books that put the event into story form, focusing on how it affected a small group of people, will have a larger audience and a greater impact. There is truth to the quote, often attributed to Stalin, that "the death of one man is a tragedy, the death of millions is a statistic."

Here is the review of the book in the Wall Street Journal and here is one from the New York Review of Books.

Froma Harrop on incentives

Froma Harrop, a columnist who often writes about economics, opines:

"The most insidious effect of the Social Security and Medicare regimes is that they actually shift economic incentives away from having children," Jonathan V. Last, a writer for the conservative Weekly Standard, says in his book, "What to Expect When No One's Expecting: America's Coming Demographic Disaster ."

Here's a counter-argument: These programs reassure parents bearing the considerable expense of raising children that they won't be destitute if they can't save enough for their old age.

Ms Harrop has a strange notion of how incentives work: If you have children, you get state-funded retirement payments. If you do not have children, you get state-funded retirement payments. Therefore state-funded retirement payments encourage you to have children.

Economists have studied savings and fertility for many years and, as far as I know, none have seriously proposed what Harrop is suggesting. On the contrary, they expect social security programs to reduce the incentive to have children because they are alternative ways of providing income when people get old and are no longer productive.

There are three ways to prepare for old age. The only one available in primitive societies is to have children who will support you when you get old. In these societies being childless is a curse. In some of them, only male children support their parents, and in these societies there is a strong preference for male offspring.

When societies get financial markets and the rule of law, a new way, savings, becomes important. However, many people have self control problems when it comes to budgeting, so various sorts of pension funds, which force patience, develop. When this alternative way to prepare for old age becomes an option, having children becomes less important and we can expect fertility rates to fall.

A final way to provide for the old is for the government to tax the young and give the money to the old. This is what social security programs of welfare states do, though they may disguise what is going on by pretending it is a retirement plan similar to those offered outside of government. Because social security programs offer a third way to provide for old age, we can expect their existence will cause people to rely less on the other two ways, having children and private savings.

All three ways transfer income from the young to the old. With children the transfer is within the family. With private saving it is a voluntary exchange; assets that the old acquire are sold to the young. With government tax and transfer, it is a coerced transaction.

The emergence of articles like this from Harrop may indicate that the decline of fertility is finally attracting notice beyond a narrow slice of academic specialists. Demography is destiny, but math is hard.

See also Jonathan Last's reaction.

Leaving Greenland

What happened to the Vikings who settled in Greenland? Did they starve or leave? New evidence suggests that they did adapt to hunting seafood so that they did not starve. Rather, they could not preserve the way of life that they preferred so they left:

"But, without trade, they couldn't survive in the long run."

And

In the final phase, it was young people of child-bearing age in particular who saw no future for themselves on the island. The excavators found hardly any skeletons of young women on a cemetery from the late period.
"The situation was presumably similar to the way it is today, when young Greeks and Spaniards are leaving their countries to seek greener pastures in areas that are more promising economically," Lynnerup says. "It's always the young and the strong who go, leaving the old behind."

The piece is from SpiegelOnline.

Another great google graph

Found at the The Busniess Insider, another great Google graph.

Steyn on Greece

Mark Steyn has written one of those columns that only Mark Steyn can write, pointing out why Greece is in trouble and asking why Obama and the Democrats want us to follow their example:

What’s happening in the developed world today isn’t so very hard to understand: The 20th-century Bismarckian welfare state has run out of people to stick it to. In America, the feckless, insatiable boobs in Washington, Sacramento, Albany, and elsewhere are screwing over our kids and grandkids. In Europe, they’ve reached the next stage in social-democratic evolution: There are no kids or grandkids to screw over.
....
So you can’t borrow against the future because, in the most basic sense, you don’t have one. Greeks in the public sector retire at 58, which sounds great. But, when ten grandparents have four grandchildren, who pays for you to spend the last third of your adult life loafing around?
....
We hard-hearted small-government guys are often damned as selfish types who care nothing for the general welfare. But, as the Greek protests make plain, nothing makes an individual more selfish than the socially equitable communitarianism of big government: Once a chap’s enjoying the fruits of government health care, government-paid vacation, government-funded early retirement, and all the rest, he couldn’t give a hoot about the general societal interest; he’s got his, and to hell with everyone else. People’s sense of entitlement endures long after the entitlement has ceased to make sense.
....
The problem is there are never enough of “the rich” to fund the entitlement state, because in the end it disincentivizes everything from wealth creation to self-reliance to the basic survival instinct, as represented by the fertility rate. 

The Welfare State is a giant Ponzi scheme and it only stays afloat as long as people have plenty of children. The authors of the welfare state probably never considered the possibility of demographic decline, just as those who gave us the housing bubble never considered the possibility that housing prices could decline. And as in the housing bust in the U.S., where bailouts of irresponsible financial institutions did not solve the underlying problems, bailing out entitlement states merely postpones the inevitable.

Only one, please

Reacting to an opinion article in a Canadian publication suggesting that the world needs a one-child policy, a post at the Volokh conspiracy notes:

A welfare state is in one sense a big Ponzi scheme. Without increasing numbers of people entering the scheme, there is no money to pay the people receiving the money.

Do people who fret about overpopulation have any idea of what fertility rates are in the developed world and what they tell us about the future?
China, meanwhile, is worried about its one-child policy and is finding that people do not want a second child:

Even one child makes huge demands on parents' time, he said. "A mother has to give up at least two years of her social life." Then there are the space issues -- "You have to remodel your apartment" -- and the strategizing -- "You have to have a résumé ready by the time the child is 9 months old for the best preschools."
Most of his friends are willing to deal with this once, Chen said, but not twice.
"Ours is the first generation with higher living standards," he said. "We do not want to make too many sacrifices."

For a previous post on this, see here.

Trends in world GDPs

Mark Perry has a graph on Carpe Diem that shows that the US has produced about 25% of the world GDP from 1969 until the present. Europe's share has fallen, while the share due to Asia has rise, and both are also closing in to 25%.

Europe will become increasingly less important in the world, while Asia will grow in importance, at least for much of the next century. Why? Demography.

China steps back

China steps back from its one child policy, but is it too late?

For the first time in 30 years, officials in the country’s economic capital have urged eligible parents to plan for a second child. The move was prompted by the growing demographic imbalance in the city and fears that the younger generation will not be able to support the ageing population. The one-child system, where all pregnancies are monitored and sometimes terminated by order, was enforced to control a population that is the largest in the world at more than 1.3 billion.
....
One couple in Beijing with a two-year-old son, who are entitled to a second child, said that they preferred to forgo the privilege. “It costs more than 35,000 yuan (£3,500) a year just to leave our baby in a kindergarten. Why spend this amount of money on a second?” one of the parents said. Many young couples are willing to have one child to continue the family line, but they let the grandparents raise it so that they can go to bars and restaurants and go shopping and travelling without being restricted by the responsibilities of children.

Aborting the Old

Peter Hitchens says it is only a matter of time until we start killing the old because they are a burden:

These hard cases and emotional scenes are the equivalent of the old argument for abortion, that if you didn’t fully legalise it people would go to dangerous amateurs and die horribly.

....

And as soon as it was replaced by a more liberal law, the present annual massacre began, and continued to grow. The same will happen to the old and unwanted. It will start with a few dozen annual trips to Zurich, urged on by ‘compassionate’ relatives and complaisant doctors. It will end with our hospitals switching on the morphine pump earlier and earlier.

Any one who does not understand that a "right" to die will quickly become an obligation to die has his head in the sand.

Doom and gloom

Mark Steyn notes that the message of sub-replacement fertility rates seems to be slowly spreading. He is such an optimist:

For much of the developed world, the "credit crunch", the debt burden, and the rest are not part of a cyclical economic downturn but the first manifestations of an existential crisis.

Joseph Schumpeter argued that even though capitalism is economically successful, it might not be socially successful. However, his story of decline does not seem to be what is happening. If we wanted to re-make his story for the decline of capitalism, we could argue that only a heavy reliance on markets creates wealth, but once people are wealthy, they increasingly worry about risk. To some extent private markets, including insurance markets and financial markets, allow them to reduce risk, but people also use the political process to try to reduce risk, which creates the welfare state. Wealth plus the welfare state then create the incentives that reduce fertility rates below replacement, making the welfare state, and perhaps wealth itself, unsustainable in the long run.

Why aren't people more worried about the long-run demographic trends? Why are there people still running around worrying about overpopulation in the developed world? My guess is that one reason, but an important reason, is that part of the intellectual elite is unable to process numerical data, that is, they do not "get" numbers. It is mastery of verbal skills, not of numerical skills, that makes one a member of the intellectual elite. I have met enough Ph.D.s in the humanities who have a hard time reading a graph to make me suspect that a lot of people we think are very intelligent are lost when it comes to anything involving interpretation of numbers.

(Related--people judge the intelligence of politicians largely on their verbal skill. George Bush was judged a bozo and Barack Obama a genius because of the way they spoke. I wonder what they and other politicians would look like if we could see them trying to do a variety of numerical tasks.)

Peter Pan and the recession

In the Asia Times the always interesting Spengler (David Goldman) connects Michael Jackson and the current economic downturn:

They forgave Jackson his dysmorphia and even his alleged pedophilia, for Jackson only expressed in extreme form his generation's refusal to age. In his self-disfigurement and eventual self-destruction, this fey child-man fought madly against maturity with a reckless abandon that his fans secretly admired. They loved him, not in spite of his personality failures, but because of them.
....
Something astonishing had happened, compared to which the tulip bulb craze and the South Sea bubble seem like models of sobriety. The eternal adolescence that Michael Jackson so ably represented in fantasy turned into the foundation for the great investing wave of the 1990s
....
Youth culture disoriented the entrepreneurs of America so thoroughly that conventional wisdom - including that of the Vatican and the Barack Obama administration - now ignores the entrepreneur as a source of economic growth.
....
The hangover from America's obsession with perpetual youth will last for a decade or more. Judging from the rock-star adulation accorded to Obama, Americans haven't yet learned their lesson, which is: after a certain age, no, you can't.

A fading bear

A look at Russian demographics at the American Enterprise Institute blog shows why Russia is a waning power.

President Obama may think he can quickly “reset” the faltering U.S.-Russia relationship, but there is no “reset” button for the demographic woes that afflict Russia today. Demographic realities are unforgiving—and even under the best of circumstances, they change only slowly and gradually. For the next generation, Russia’s prospects—social, economic, and geopolitical—will be compromised by the tragic conditions we have described in these past five posts. Much as we may wish it were otherwise, a rapid turnaround in Russia’s dismal demographics does not look to be in the cards any time soon.

First things

From First Things, an argument that demographics is behind the current economic crisis:

The declining demographics of the traditional American family raise a dismal possibility: Perhaps the world is poorer now because the present generation did not bother to rear a new generation. All else is bookkeeping and ultimately trivial.

Our children are our wealth. Too few of them are seated around America’s common table, and it is their absence that makes us poor.

Tigerhawk reveals that the new associate editor of First Things is Spengler for the Asia Times.

Update: The full story is here.

Russia's future

George Will reflects on an article by Nicholas Eberstadt, Drunken Nation: Russia’s Depopulation Bomb.

The symmetry is striking: in the last sixteen years of the Communist era, births exceeded deaths in Russia by 11.4 million; in the first sixteen years of the post-Soviet era, deaths exceeded births by 12.4 million.

Not enough people are paying attention to demography. Russia does not have a future as a world power. It may not have a future at all.

Update: Then there is China's future. China may become the world's super power by mid century, but demography suggests it will not be the world's superpower by the end of the century.