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.

China's birth dearth

Is the fertility rate in China only 1.3?

To keep a society sustainable, the birth rate needs to be kept around at 2.3 children per female inhabitant. But all the objective surveys, including that of the 2000 census and the 1% sampling survey of 2001, show that since the mid-1990’s the birth rate in China has been stuck around 1.3.
....
China is set to repeat Japan’s economic recession experience of the 1990s. The difference is Japan became rich before growing old, while China is growing old before even getting rich.

 Demography remains the great untold story.

Another great google graph

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

Even the New York Times recognizes that the welfare state is unsustainable

Europe is beginning to realize that it has built a Ponzi scheme, and the New York Times, of all places, is reporting it.

The reaction so far to government efforts to cut spending has been pessimism and anger, with an understanding that the current system is unsustainable.
....
Changes have now become urgent. Europe’s population is aging quickly as birthrates decline. Unemployment has risen as traditional industries have shifted to Asia. And the region lacks competitiveness in world markets.
According to the European Commission, by 2050 the percentage of Europeans older than 65 will nearly double. In the 1950s there were seven workers for every retiree in advanced economies. By 2050, the ratio in the European Union will drop to 1.3 to 1.

“The easy days are over for countries like Greece, Portugal and Spain, but for us, too,” said Laurent Cohen-Tanugi, a French lawyer who did a study of Europe in the global economy for the French government. “A lot of Europeans would not like the issue cast in these terms, but that is the storm we’re facing. We can no longer afford the old social model, and there is a real need for structural reform.”
....
Jean-Claude Meunier is 68, a retired French Navy official and headhunter, who plays bridge to “train my memory and avoid Alzheimer’s.” His main worry is pension. “For years, our political leaders acted with very little courage,” he said. “Pensions represent the failure of the leaders and the failure of the system.”
In Athens, Mr. Iordanidis, the graduate who makes 800 euros a month in a bookstore, said he saw one possible upside. “It could be a chance to overhaul the whole rancid system,” he said, “and create a state that actually works.” 

OPM or other people's money

Margaret Thatcher once said, "...Socialist governments traditionally do make a financial mess. They always run out of other people's money." Her statement has been paraphrased as, "The trouble with Socialism is that eventually you run out of other people's money."

In the past week we have watched what happened as Greece ran out of other people's money because not enough lenders will extend credit. Greece almost certainly will not be the last European country to be in this situation.

It is also worth noting that another name for systems that run out of other people's money is "Ponzi Scheme." Ponzi schemes are often very popular in their early stages and people who get caught in them are very resistant to any warnings that what seems to be too good to be true usually is. Too few people realize that the social welfare systems of the West are Ponzi schemes that depend on ever-increasing population growth. They are not sustainable with the low fertility rates of the industrialized world. Everyone who looks at the data recognizes this, but no politician dares to act on it.

European socialism

The New York Times reports on the decline of the socialists parties of Europe, though it also notes what the conservative parties are conserving are existing socialist policies. The article notes:

The internecine squabbling in France and elsewhere has done little to position Socialist parties to answer the question of the moment: how to preserve the welfare state amid slower growth and rising deficits. The Socialists have, in this contest, become conservatives, fighting to preserve systems that voters think need to be improved, though not abandoned.

What the article and Europe do not recognize is that the welfare state is not sustainable when a country goes into demographic decline--a decline that the welfare state encourages. The European Union has a fertility rate of 1.51--they will gradually fade away.

Going green is the new socialism:

Mr. Winock, the historian, said, “I think the left and Socialism in Europe still have work to do; they have a raison d’être, and they will have to rely more on environment issues.” Combined with continuing efforts to reduce income disparity, he said, “going green” may give the left more life.

Iranian fertility

I found an article several weeks old--Sex, Drugs, and Islam--by Spengler in the Asian Times that makes some fascinating statements about Iran.

Iran is dying. The collapse of Iran's birth rate during the past 20 years is the fastest recorded in any country, ever.

A better explanation of Iran's population implosion is that the country has undergone an existential crisis comparable to encounters of Amazon or Inuit tribes with modernity. Traditional society demands submission to the collective. Once the external constraints are removed, its members can shift from the most extreme forms of modesty to the other extreme of sexual license. Khomeini's revolution attempted to retard the disintegration of Persian society, but it appears to have accelerated the process.

Theocracy subjects religion to a political test; it is hard for Iranians to repudiate the regime and remain pious, for religious piety and support for political Islam are inseparable, as a recent academic study documented from survey data.

Europe's future, and maybe our own

From Spenglers new blog, a link to an article in the Daily Telegraph that looks at the problems of high deficits and an aging population. It is generous of Europe to blaze the trail for us. Maybe we can change direction if the road they (and we) are on leads to disaster.

The EU "dependency ratio" will soar: there will be two workers to support each person over 65, compared to four today. It will be worse if Europe fails to attract enough immigrants, all too likely given the catch-up under way in the developing world.

Faced with this future, Britain and Europe need to slash debt and salt away investment wealth in the rising East. Instead, public debt is exploding. Brussels has laid it bare: we will need hair-shirt discipline once we emerge from this recession. It may be our last chance.

What are the odds that they will be able to sustain "hair-shirt discipline?"

Update: Here is a long article on fertility and population predictions from Wilsoncenter.org:

A similar upturn is under way in the United States, where the fertility rate has climbed to its highest level since 1971, reaching 2.1 in 2006, according to the National Center for Health Statistics. New projections by the Pew Research Center suggest that if current trends continue, the population of the United States will rise from today’s total of some 300 million to 438 million in 2050. Eighty-two percent of that increase will be produced by new immigrants and their U.S.-born descendants.

By contrast, the downward population trends for southern and eastern Europe show little sign of reversal. Ukraine, for example, now has a population of 46 million; if maintained, its low fertility rate will whittle its population down by nearly 50 percent by mid-century. The Czech Republic, Italy, and Poland face declines almost as drastic.

And Mark Steyn responds, arguing that Europe will become Muslim.

If you have a million people, 90 per cent of whom are ethnic European and 10 per cent immigrant - and the 90 per cent have a fertility rate of 1.3 kids per couple (the Euro average) and the ten per cent have a fertility rate of 3.5 (the Euro-Muslim estimate), the 90 per cent will have 380,250 grandkids and the 10 per cent will have 306,250.

Demographic-economic catastrophe

From Mark Steyn, a very talented writer:

And just to clarify: for Japan, Russia and Europe, we're no longer talking about demographic-economic catastrophe just beyond the horizon - say, mid-century - but within ten years. If you're not talking about this, you're not serious. Which is why the O-man and the G-20 aren't serious.