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Could UNDERpopulation Threaten Global Financial Systems?
Data from US Department of Census International Database ^ | 10.19.06 | Dangus

Posted on 10/19/2006 12:06:39 PM PDT by dangus

The demographic situation of the world is not simply overpopulation. In many regions of the world, it is severe underpopulation. Globally, there is a mix of both. Yet the focus has been nearly exclusively on overpopulation, to the point where underpopulated groups foolishly try to reduce their own population. This could have devestating effects.

In the early 1960s, the earth's population was expanding at a rate of 2.2% per year. At that rate, it would double every 32 years. By the year 2050, the Earth's population would be over 20 billion. As recently as a decade ago, many demographers guessed the world's population would be about 12 billion by 2050. Today, the midrange guess is about 9 billion, only about 40 percent larger than it is today.

This is not the result of the UN Popularion Conference in Beijing in the early 1990s. In fact, that conference was only called after population stabilization appeared likely; the population of babies had already begun to decline.

The trick to studying population growth is that a reduction in the number of babies only causes a reduction in the number of women of childbearing years (henceforth, "fertile women," if you will excuse me using such words in such dry economic contexts) some 15 to 40 years later. The total population will continue to expand until the number of babies born drops below the death rate, which is typically similar to what the birth rate had been seventy years earlier.

Even when lowering birth rates cause a severe drop in the overall number of births, the drop typically reverses itself about 20 years later, due to growing number of fertile women from the previous generation. In the US, where this effect was very mild, this was known as the "baby boom echo," or "Generation Y." (see image) For population stablization to occur long-term, at this point, the number of births should stabilize. If it decreases again, the birth rate may have to rise sharply to account for inevitable steep declines in the number of fertile women.

Globally, the population of babies peaked in the late 1980s. Currently, the population of babies has rebounded to be roughly the same as it was 15 to 20 years ago. The United Nations, and to a slightly lesser extent, the United States Department of Census (USC), expects the population of succeeding generations to grow moderately. (US Census' data) This is based, however, on the presumption that most nations with very low fertility rates will see their rates rebound, at least to 1.7 babies per woman.

If such researchers are wrong about rebounding birth rates, massive depopulation may occur. And there is no reason to suspect the USC may be right. For instance, the USC expects the Japanese fertility rate to increase 25%. Even in China, they expect an immediate and substantial reversal in fertility. But what if these reversals do not happen?

Unless the Chinese birthrate increases, there could be 300 million fewer people in 2050 than predicted. According to my own research, between 2030 and 2090, the Chinese population could fall by about half.

Female population of various age cohorts in China, in thousands, using my estimation techniques described below

Year 0-4 5 to 9 10 to 14 15 to 19 20 to 24 25 to 29 30 to 35 36 to 40 41 to 45 All women Total Pop
2000 44127 48918 59998 49749 46472 57617 60607 50000 39465 609512 nc

2005 38382 43844 48817 59779 49381 46066 57205 60182 49571 626639 nc
2010 38024 38136 43753 48639 59337 48950 45737 56804 59666 640776 1336827
2015 36028 37781 38057 43594 48279 58818 48600 45416 56316 649865 1355789
2020 34333 35797 37703 37918 43271 47857 58398 48259 45026 654675 1365824
2025 32824 34113 35723 37565 37638 42893 47515 57988 47845 654563 1365590

2030 30265 32614 34043 35593 37287 37309 42587 47182 57491 645678 1347053
2035 27548 30071 32546 33919 35330 36961 37042 42288 46777 626924 1307928
2040 25736 27371 30009 32427 33668 35021 36697 36782 41925 605452 1263132
2045 24388 25571 27314 29899 32188 33374 34771 36440 36467 576558 1202851
2050 23092 24232 25518 27215 29678 31906 33135 34527 36127 542441 1131673

2055 21646 22943 24182 25425 27013 29419 31678 32903 34230 510371 1064768
2060 20239 21507 22896 24094 25237 26777 29209 31456 32620 482920 1007498
2065 18873 20109 21462 22813 23916 25016 26586 29004 31186 452911 944892
2070 17601 18752 20067 21384 22644 23707 24837 26399 28755 419130 874415
2075 16496 17488 18713 19994 21226 22446 23537 24663 26173 391850 817501

2080 15511 16390 17452 18645 19846 21040 22285 23372 24452 367584 766876
2085 14562 15412 16357 17389 18507 19673 20890 22129 23171 346039 721928
2090 13632 14469 15380 16297 17260 18346 19532 20743 21939 324630 677263

[Data up to present day is from US Department of Census International database. For subsequent data, I presumed that the same proportion of people at each age would die as died during the 2000-2005 period. For instance, if in 2005, the 20-24-year-old cohort was .993 times the size as the 15-19-year-old cohort was in 2000, I presumed that in 2025, the 20-24-year-old cohort would be .993 times the size as the 15-19-year-old cohort was in 2020.

[For the number of births, I measured the current ratio of births to women in their reproductive years, and multiplied it by the number of women in their reproductive years in each subsequent timeframe. Women in their reproductive years are counted as every woman between 20 and 40, and half of the women between 15 and 20, and half of the women between 40 and 45. Whether or not that actually represents the distribution of births within those years, it should at least provide a reasonable basis for comparison.

[Lastly, I extrapolated from female population to total population based on a constant ratio of women to all people. Again, this may be imprecise, but should produce reasonable results. ]

The following table shows the fertility rates of the world's most populous nations (with some extras to fairly represent all global regions). (Keep in mind, however, that China, for instance, has about 20 times the population of Iran, Egypt or Germany.) A score of 2.0 indicates that there are two babies born per woman, which would be enough to maintain the population if every baby born survived throughout childbearing years.


1990 2006

2015 2.0 reached
Bangladesh 3.8 3.1

2.95 ?
Brazil 2.56 1.9

1.75 2003
Burma 3.08 1.98

1.78 2005
China 2.19 1.73

1.85 1991
Egypt 6 3.4

2.8 ?
Germany 1.45 1.39

1.45 Early
India 3.8 2.9

2.49 2050
Indonesia 3.03 2.44

2.15 2021
Iran 5.3 1.73

1.7 1999
Japan 1.52 1.4

1.46 Early
Kenya 5.6 4.91

3.3 2040
Korea, South 1.59 1.27

1.36 Early
Malaysia 4.3 3.1

2.9 ?
Mexico 3.9 2.7

2.5 ?
Nigeria 6.43 5.49

5.16 ?
Pakistan 6.47 4.14

2.94 2050
Philippines 4.12 3.1

2.66 ?
Poland 2.06 1.26

1.34 Early
Russia 1.87 1.38

1.48 Early
Saudi Arabia 6.62 4

3.45 ?
South Africa 3.6 2.2

1.88 2010
Thailand 4.2 1.5

1.7 1996
Turkey 3.1 1.92

1.76 2003
UK 1.83 1.66

1.67 Early
USA 2.08 2.09

2.13 ?
Viet Nam 3.65 1.91

1.78 2003

Now here's the kicker!

The Global financial system is based on the presumption of ever-increasing scarcity. No matter how bad the economy gets, investment of any surplus is sensible, since any loss in the value of the investment is certain to be regained at a later date. With a growing population, even if the economic efficiency declines, demand must increase, making investing safe. Investment, then, creates greater economic efficiency. What would happen if our financial system could not depend on the certainty of increasing scarcity?

I'm not stating this as an alarmist: I purposely distinguish between finance (a system of investing) and economics (a system of fulfilling needs). If the global population shrinks, one could, on the surface, expect that there will be more product per person, not less, providing that the economy does not shrink as fast. But, if we needed to, could we build a financial system that would not result in an economic collapse if investmentment could not rely on increasing scarcity?


TOPICS: Business/Economy; Culture/Society; Foreign Affairs; Government
KEYWORDS: abortion; birthcontrol; china; chinese; communism; dangus; earth; feminazis; global; immigration; india; islam; muslims; population; poverty; prolife; un; unitednations; waronterror; world; wot

1 posted on 10/19/2006 12:06:42 PM PDT by dangus
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To: dangus

Money, that's really what it's all about.


2 posted on 10/19/2006 12:08:55 PM PDT by cripplecreek (If stupidity got us into this mess, then why can't it get us out?)
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To: dangus

A thought: in this scenario, while demand would decreasing, the labor available to meet that demand would also be decreasing.


3 posted on 10/19/2006 12:09:36 PM PDT by BeHoldAPaleHorse ( ~()):~)>)
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To: dangus
Interesting.

The USA is the only one with an increasing fertility rate.

And I had no idea the county with one of the highest fertility rates is Saudi Arabia...!
4 posted on 10/19/2006 12:09:42 PM PDT by 2banana (My common ground with terrorists - they want to die for islam and we want to kill them)
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To: dangus; wideawake
Thanks for starting this thread Dangus

Related thread:

Ignore the Downsiders -- Population Growth Is Necessary and Good [Lileks]

 

5 posted on 10/19/2006 12:09:59 PM PDT by Incorrigible (If I lead, follow me; If I pause, push me; If I retreat, kill me.)
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Comment #6 Removed by Moderator

To: BeHoldAPaleHorse

>> demand would decreasing, the labor available to meet that demand would also be decreasing. <<

Yes, that's what I meant by the last section: It doesn't necessarily mean economic disaster... but how do we transition from our current financial system to one which works with decreasing demand?


7 posted on 10/19/2006 12:13:45 PM PDT by dangus (Pope calls Islam violent; Millions of Moslems demonstrate)
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To: dangus

The point I was making is that there would still be scarcity--but it would be a labor scarcity vs. a capital resource scarcity.


8 posted on 10/19/2006 12:14:51 PM PDT by BeHoldAPaleHorse ( ~()):~)>)
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To: BeHoldAPaleHorse
Technology changes everything. There won't be a significant labor shortage or taxpayer shortage because robots will be doing most of the work and generating most of the wealth. But only if we invest in them now and not in expensive illegal laborers. Some investment is going on in battlefield robots but comparatively little outside of that.
9 posted on 10/19/2006 12:15:09 PM PDT by Reeses
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To: dangus

if i may suggest some reading on just how perilous the situation is may i recommend mark steyns new book America Alone. it deals with the population issue in some depth, some of it is scary


10 posted on 10/19/2006 12:16:05 PM PDT by Irishguy (How do ya LIKE THOSE APPLES!!!!)
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To: dangus

More wealth in fewer hands - wealth continues to grow but population declines raises the standard of living.

If people are richer they will spend more money so the scarcity issue is a moot point


11 posted on 10/19/2006 12:18:08 PM PDT by underbyte
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To: underbyte
The population of elderly will not decline until long after the population of the workforce declines. Will the elderly control the capital? Not necessarily. Under our financial system, the value of an investment is based on future profits, presumed from future increasing scarcity. All those 401K plans, social security trust funds, stock markets, real estate markets... they could all approach zero value.

Here's my advice everyone:

The only sound investments are children who love you.

12 posted on 10/19/2006 12:26:19 PM PDT by dangus (Pope calls Islam violent; Millions of Moslems demonstrate)
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To: dangus
Interesting analysis. Of course, demand is not really static - the ability of each person on the planet to consume grows significantly each year.

There are billion people today who would be expected to live on bare subsistence who will, two decades from now, be demanding cable TV and motorized transport and multiple sets of clothes, more elaborate housing, etc.

Economic growth is predicated on two things: the appetite for goods and the capacity to creatively satisfy those appetites.

We know the appetite for goods will never slacken, so we need only incetivize ingenuity.

Economic mismanagement in the face of population growth has resulted in poverty and so will economic mismanagement in the face of population decline.

Smart, flexible thinking is the key.

13 posted on 10/19/2006 12:40:44 PM PDT by wideawake ("The nation which forgets its defenders will itself be forgotten." - Calvin Coolidge)
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To: dangus
Perfectly put.
14 posted on 10/19/2006 12:41:24 PM PDT by wideawake ("The nation which forgets its defenders will itself be forgotten." - Calvin Coolidge)
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To: underbyte
Money is a store of value. It is not itself inherently valuable.
15 posted on 10/19/2006 12:42:28 PM PDT by wideawake ("The nation which forgets its defenders will itself be forgotten." - Calvin Coolidge)
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To: wideawake


16 posted on 10/19/2006 1:22:27 PM PDT by dangus (Pope calls Islam violent; Millions of Moslems demonstrate)
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To: dangus

I agree. Over the long haul, the world has gone thousands of years in growth mode. We essentially have no real experience with what will really happen economically when overall global population growth is negative. I think there are major downsides.


17 posted on 10/19/2006 1:23:46 PM PDT by GOP_1900AD (Stomping on "PC," destroying the Left, and smoking out faux "conservatives" - Take Back The GOP!)
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To: GOP_1900AD
We essentially have no real experience with what will really happen economically when overall global population growth is negative.

Ah, but we do.

Europe, which was a very closed economy at the time, lost one third of its population in a single generation in the mid-1300s due to the bubonic plague.

There is a large documentary record describing the economic aftereffects of that depopulation disaster.

18 posted on 10/19/2006 1:28:43 PM PDT by wideawake ("The nation which forgets its defenders will itself be forgotten." - Calvin Coolidge)
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To: GOP_1900AD

Not thousands of years, merely about 600. Many lands in the Middle Ages achieved stable populations, and mechanisms to maintain stability. A priestly caste, the prohibition of charging interest, the investment of excess human capital into religious works and holidays, and sacramentalized sexuality helped stabilize both economic and population growth, despite a life expectancy near 50 years (and much older, if one survived childhood).

We all know (and even grossly exaggerate) the down sides, but few know that there were actually up sides.


19 posted on 10/19/2006 1:29:52 PM PDT by dangus (Pope calls Islam violent; Millions of Moslems demonstrate)
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To: underbyte

"More wealth in fewer hands "


Less hands to create wealth.
Decreasing wealth as producers age and become unproductive.
Fewer producers to maintain everyone's standard of living.


20 posted on 10/19/2006 1:33:34 PM PDT by Scotswife
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To: dangus

Excellent points.

Thanks for taking the time to put this data together in an HTML format.


21 posted on 10/19/2006 1:51:15 PM PDT by Captain Rhino ( Dollars spent in India help a friend; dollars spent in China arm an enemy.)
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To: dangus

Like I said, in the long run. What you described was a minor anomaly and it only impacted Europe. Global population has been mostly on the upswing for 5000 years.


22 posted on 10/19/2006 1:54:57 PM PDT by GOP_1900AD (Stomping on "PC," destroying the Left, and smoking out faux "conservatives" - Take Back The GOP!)
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To: cripplecreek

depopulation = deflation


23 posted on 10/19/2006 2:01:17 PM PDT by DontBelieveAugPolls
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To: GOP_1900AD

No, what Wideawake described was short-term. What I described lasted many hundreds of years. And as far as "impacting only Europe," that's irrelevant; there was not global trade. (In fact, increased trade is partly what ended the period.) Previous to the industrialism, the world had a growth rate which averaged about 0.1% per year, which is to say, practically zero, and definitely not great enough to give any investor confidence that the law of increasing scarcity would benefit him.


24 posted on 10/19/2006 2:38:35 PM PDT by dangus (Pope calls Islam violent; Millions of Moslems demonstrate)
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To: dangus

But, if we needed to, could we build a financial system that would not result in an economic collapse if investment could not rely on increasing scarcity?

Nothing is as it seems. Not under-population. Not overpopulation. Not limited resources. Not scarcity. Abundance.

1) Technology advances exponentially. Leading the exponential explosion at the knee of the curve are nanotechnology, microbiology, genetics, robotics and AI (artificial intelligence). Building from the bottom up as opposed to from the top down puts man in control. In surgery it compares cutting with a scalpel to using a nanotechnology "blade". By comparison, scalpels cut like a chain saw.  The Law of Accelerating Returns.
"Molecular manufacturing coupled with AI could bring about a "personal manufacturing" revolution and a new era of abundance. But abundance could be highly disruptive, so we need to design a new economics of abundance so society is prepared for it...

2) "We are on the cusp of a new era that has the potential to be an era of abundance. In the coming decades, molecular manufacturing will be a reality. The Nanotechnology Glossary3 defines molecular manufacturing as "the automated building of products from the bottom up, molecule by molecule, with atomic precision. This will make products that are extremely lightweight, flexible, durable, and potentially very 'smart'." And cheap..."The (Needed) New Economics of Abundance

3) "Scientists are now talking about people staying young and not aging. Ray Kurzweil is taking it a step further: "In addition to radical life extension, we’ll also have radical life expansion. The nanobots will be able to go inside the brain and extend our mental functioning by interacting with our biological neurons..."
"Ray Kurzweil is a computer scientist, software developer, inventor, entrepreneur, philosopher, and a leading proponent of radical life extension. He is the coauthor (with Terry Grossman, M.D.) of Fantastic Voyage: Live Long Enough to Live Forever, which is one of the most intriguing and exciting books on life extension around. Kurzweil and Grossman’s approach to health and longevity combines the most current and practical medical knowledge with a soundly-based, yet awe-inspiring visionary perspective of what’s to come..." Reprogramming your Biochemistry for Immortality -- And: Living Forever

Conscious humans increasingly understand nature to increasingly control nature. Knowledge begets new knowledge. Scarcity to abundance. Mortal to immortal. Limited to limitless.

25 posted on 10/19/2006 3:43:27 PM PDT by Zon (Honesty outlives the lie, spin and deception -- It always has -- It always will.)
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To: GOP_1900AD
"no real experience....when...overall global population growth is negative"

Quite true. However on a country level I'm coming around to believing that the recent economic situation in Japan is the first recession/depression that is a result of sub-replacement fertility.

With a rate of 2.1 being neutral I wonder what our number would be if it weren't for immigration and the higher birth rates associated with immigrates.

26 posted on 10/19/2006 3:58:07 PM PDT by Proud_texan
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To: Zon

I largely agree with you, but I'm tempted to think of the Romans who lost the ability to manage the complexity of their civilization, and, the way you write, the Tower of Babel! :^D


27 posted on 10/19/2006 10:40:50 PM PDT by dangus (Pope calls Islam violent; Millions of Moslems demonstrate)
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