Demographics

Our children are our future and the number of children is dependent on the birthrate.  Is there an optimal population and have we exceeded it?  Two articles present very different views of the future of our country and the world based on birth rate.  They both address the Malthusian conclusion that mankind faces an economically bleak future because population growth will outpace economic development.  Hunger, disease and war are positive checks that limit population growth to the world’s resource base.  A slightly more modern version paints the world as a spaceship with limited resources.  The more people that inhabit the spaceship, the fewer resources per person.  The problem with the theory is that it is not supported by empirical facts.  The world has never been economically better off.  Scarcity has caused innovation and the world is richer than at any time in the past.  While there must be an optimal maximum population, we have not reached it.

The first, “Let’s Talk About Sex: Why More Babies Means More Economic Growth,” is by Jerry Bowyer who believes that many countries face economic and political decline because their birthrates are well below replacement levels.  Germany, France, Italy, Japan, the United States and China, just to name a few prominent countries all have birthrates below the replacement level.

Bowyer makes one mistake of style rather than substance when he writes

Let’s start with a few propositions to get things started:

By definition the economic output of a country has to be a result of two factors…the output per person, and the number of persons.

If you don’t increase the output per person and you don’t increase the number of people, you cannot increase the overall output.

Few economists care about growth through population expansion.  We care about wealth accumulation; the suggestion that GDP growth through population expansion rankles.  Bowyers makes a redeeming observation in his next paragraph.

Even if you increase output per person, but decrease the number of persons, you are likely to have stagnant or even shrinking output. Don’t believe me, ask Japan. The world can, and does, have fertility recessions.

Population growth might cause wealth creation might be linked and the opposite might also be true, declining population might cause declining wealth.  We should know the answer in twenty to forty years.  Until that time, I see at least one causal link.  For a declining population to enjoy increasing prosperity, economic growth must be sufficiently robust for working households to pay for retired households and still maintain an increasing standard of living. Other things equal, the incentives to produce are higher when ten workers must pay the benefits of one retired person than when that ratio falls to two to one.  Western nations are beset with problems funding the social safety net as the working age population declines as a percent of total population. 

The second article, “Don't Be Fruitful and Multiply,” by Roy Speckhardt is more problematic starting with the observation that the religious have higher birthrates than non-religious and makes a false conclusion based on this initial observation.  He writes

This religious emphasis on constant reproduction is having drastic impacts on the local economy, environment, and health of families. Obviously, countries with high birth rates have a hard time educating and providing governmental support for all of those new people, and every new person born will leave their carbon footprint and contribute to environmental degradation.

Religion is not having a “drastic impact on the local economy, environment, and health of families.” Political and economic institutions are.  These institutions are centuries in the making and explain the distribution of wealth in the world today.  Very simply stated, countries can be divided into those with extractive institutions or those with inclusive institutions.  Extractive institutions are created by and run for a small minority to extract wealth from the majority.  Inclusive institutions are created by a majority of a country for the benefit of broad segments of society.  The interested reader can visit the blog Why Nations Fail or read the book with the same name for details.  Countries with extractive institutions are relatively poor and those with inclusive institutions are relatively rich.

Although the religious may have more children now how long has that been true?  My bet is that before the advent of the birth control pill, religious and non-religious people families had about the same number of children.  I’ll place a second bet.  Religious people today have fewer children than non-religious people had in the 1950’s. 

Speckhardt blames the higher birthrate of the religious for a greater “carbon footprint” and “environmental degradation.”  Like John Denver, he may consider more people to be “scars upon the land” but I like them!  Other things equal, more people of any type produce more pollution, but I would promote change differently.  Rather than blame religion and birthrates, I will fall back on blaming extractive institutions.  While I am in a betting mood, I’ll bet dollars to doughnuts that countries with extractive institutions experience more environmental degradation than countries with inclusive institutions regardless of their relative religiosity. 

If you want to reduce birthrates, increase inclusive institutions.  In countries with inclusive institutions, as Bowyer noted, children are expensive.  They suck up resources for twenty years before becoming productive.  Any group, religious or not, will avoid expense if not to the same degree.