Will Demographic Trends Impede Recovery?

In America, the 1990 census showed a marked decrease in childbearing. 25% of the women between 30 and 34 were childless, while the comparable figure in 1976 was 16%. By 1985, the birthrate expected per average woman over her lifetime had fallen to 1.8, slightly below Europe’s level and below the “replacement rate”, the level needed to keep population stable, of 2.1. Europe’s birthrates have continued to fall, and now slightly below 1.4, while America’s has rebounded to 2.1.

This development blindsided demographers, who, working off 1990 data, saw a US fertility rate below replacement level and forecasted a sustained aging of the population. As the August 24, 2002 Economist noted:

America’s population should have been 275m in 2000. At least, that is what the central projection of the 1990 census predicted. The 2000 census showed it was actually 281m, higher even than the “high series” projection from 1990.

Those higher fertility rates will have a bigger impact as time goes on. By 2040, using the new census’s “middle series” projection, America’s population will overtake Europe’s. This forecast has already proved too low. On the “high-series projection”, the crossing point occurs before 2030. But if this proves correct, Europe’s population in 2050 would be 360m and falling, America’s would be over 550m and rising. Half a billion people: in other words, America would be twice the size it is now. Europe would be smaller. Obviously, straight-line projections over 50 years need to be taken with plenty of salt. All the same, the numbers are startling.

Increased fertility rates are not the only cause. Immigration in the 1990s was forecast to be between 7 and 8 million and instead was 11 million. More rigorous counting may also have led to somewhat larger results. The current view was that the 1970-1985 period witnessed women deferring, but it turns out not giving up on, having children.

Given how badly demographers were surprised, it also seems possible that a period of women postponing childbearing might have been followed by a bit of doubling up. Late baby boomer women often delaying having children until their mid-late 30s. Now, younger women appear to prefer having children in 20s, at worst early 30s.

Demographics are too often overlooked in the discussion of our current mess. Economic growth is a function of demographic growth and productivity increases. With the US economic engine flagging, immigration from Mexico has fallen sharply.

And those optimistic population growth assumptions may also have played a role in the housing boom. David Goldman (hat tip reader Paul) looks at the data and finds demographics point to a negative outlook for housing:

So is this something outside the lesson book of the Great Depression? Most officials and economists argue that, until home prices stabilize, necrosis will continue to spread through the assets of the financial system, and consumers will continue to restrict spending…All the apparatus of financial engineering is helpless beside the simple issue of household decisions about shelter…

To understand the bleeding in the housing market, then, we need to examine the population of prospective homebuyers… Families with children are the fulcrum of the housing market. Because single-parent families tend to be poor, the buying power is concentrated in two-parent families with children.

Now, consider this fact: America’s population has risen from 200 million to 300 million since 1970, while the total number of two-parent families with children is the same today as it was when Richard Nixon took office, at 25 million. In 1973, the United States had 36 million housing units with three or more bedrooms, not many more than the number of two-parent families with children—which means that the supply of family homes was roughly in line with the number of families. By 2005, the number of housing units with three or more bedrooms had doubled to 72 million, though America had the same number of two-parent families with children.

The number of two-parent families with children, the kind of household that requires and can afford a large home, has remained essentially stagnant since 1963, according to the Census Bureau. Between 1963 and 2005, to be sure, the total number of what the Census Bureau categorizes as families grew from 47 million to 77 million. But most of the increase is due to families without children, including what are sometimes rather strangely called “one-person families.”

In place of traditional two-parent families with children, America has seen enormous growth in one-parent families and childless families. The number of one-parent families with children has tripled. Dependent children formed half the U.S. population in 1960, and they add up to only 30 percent today. The dependent elderly doubled as a proportion of the population, from 15 percent in 1960 to 30 percent today.

If capital markets derive from the cycle of human life, what happens if the cycle goes wrong? Investors may be unreasonably panicked about the future, and governments can allay this panic by guaranteeing bank deposits, increasing incentives to invest, and so forth. But something different is in play when investors are reasonably panicked. What if there really is something wrong with our future—if the next generation fails to appear in sufficient numbers? The answer is that we get poorer.

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. This unwelcome and unprecedented change underlies the present global economic crisis. We are grayer, and less fecund, and as a result we are poorer, and will get poorer still—no matter what economic policies we put in place.

We could put this another way: America’s housing market collapsed because conservatives lost the culture wars even back while they were prevailing in electoral politics. During the past half century America has changed from a nation in which most households had two parents with young children. We are now a mélange of alternative arrangements in which the nuclear family is merely a niche phenomenon. By 2025, single-person households may outnumber families with children…

Housing prices are collapsing in part because single-person households are replacing families with children. The Virginia Tech economist Arthur C. Nelson has noted that households with children would fall from half to a quarter of all households by 2025. The demand of Americans will then be urban apartments for empty nesters. Demand for large-lot single family homes, Nelson calculated, will slump from 56 million today to 34 million in 2025—a reduction of 40 percent. There never will be a housing price recovery in many parts of the country. Huge tracts will become uninhabited except by vandals and rodents.
All of these trends were evident for years, and duly noted by housing economists. Why did it take until 2007 for home prices to collapse? If America were a closed economy, the housing market would have crashed years ago…

In the industrial world, there are more than 400 million people in their peak savings years, 40 to 64 years of age, and the number is growing. There are fewer than 350 million young earners in the 19-to-40-year bracket, and their number is shrinking. If savers in Japan can’t find enough young people to lend to, they will lend to the young people of other countries. Japan’s median age will rise above 60 by mid-century, and Europe’s will rise to the mid-50s….

America has roughly 120 million adults in the 19-to-44 age bracket, the prime borrowing years. That is not a large number against the 420 million prospective savers in the aging developed world as a whole.

The post is considerably longer than this, with a great deal of tooth gnashing of the ‘our wealth is our children” sort. Goldman’s conservative agenda unfortunately leads him to solutions that have a very ugly undertone. He calls for restoring “the traditional family to a central position in American life.” That sounds both anti women in the workforce amd anti gay. it also fails to acknowledge that the planet is running up against resource limits. At the Milken Conference last year, hardly a bunch of tree-huggers, quite a few session were devoted to two coming constrains: potable water and energy. In addition, emerging economies aspire to first world living standards, which increases resource demands.

There was an ugly intergenerational fight on one of Leo’s posts earlier, and that reflects the demographic issues outlined above, a large retirement population versus a not growing (and maybe shrinkng) working age cohort. The irony is that the vogue for corporate cost cutting has in many cases lead some people to retire early, when in many cases they’d have been content to stay employed to retirement age. But given the substantial prejudice against older workers, most wind up either retiring completely, taking occasional part-time gigs, or starting a business (although the failure rate of new businesses is high). If anything, we should be encouraging much greater levels of workforce participation among those over 40, and even more so for those over 60, when before the crisis, we have been witnessing the reverse. Immigration is another solution, but that is not exactly a popular idea right now.

Goldman also fails to acknowledge that historically, the result of a financial crisis is a permanent reduction in the standard of living, which he instead chooses to pin on demographics. But frankly, I don’t find his downside all that persuasive:

We are going to be poorer for a generation and perhaps longer. We will drive smaller cars and live in smaller homes, vacation in cabins by the lake rather than at Disney World, and send our children to public universities rather than private liberal-arts colleges. The baby boomers on average will work five or ten years longer before retiring on less income than they had planned, and young people will work for less money at duller jobs than they had hoped.

I don’t see the leap in logic to the duller jobs, and the rest sounds like an overdue downsizing rather than a disaster. And more demand for public schools might, mirable dictu, lead to better teaching standards. In the 1940s, City College of New York was a very good school, a stepping stone for many bright kids from modest homes. Now its not much better than a community college. We could some welcome reversals of fortune.

That’s a long winded way of saying Goldman does a service in highlighting an overlooked issue, but his religious/political agenda badly blinkers his analysis and suggestions. Demographic stresses will be an issue, but trying to turn the clock back and reinstitute 1950s America is not a viable solution.

Print Friendly, PDF & Email


  1. ndk

    By 1985, the birthrate expected per average woman over her lifetime had fallen to 1.8, slightly below Europe’s level and below the “replacement rate”, the level needed to keep population stable, of 2.1. Europe’s birthrates have continued to fall, and now slightly below 1.4, while America’s has rebounded to 2.1.They were wrong largely due to the effects of Latino immigration, something I strongly support and enjoy from my perch in Denver.

    The post is considerably longer than this, with a great deal of tooth gnashing of the ‘our wealth is our children” sort. Goldman’s conservative agenda unfortunately leads him to solutions that have a very ugly undertone. He calls for restoring “the traditional family to a central position in American life.” That sounds both anti women in the workforce amd anti gay.I work with plenty of women filling all sorts of roles in organizations, and we’d fall apart without them. A surprisingly large number of my friends are gay; it seems to be a fundamental personality aspect for the best developers. I’m very thankful for both.

    Still, speaking as a straight young man who has long dreamed of founding a family of his own — traditional gender roles not important either way — I find a lot of these trends really challenging.

    The economic pressures that forced women to marry have been destroyed. That’s a wonderful thing. The problem is, nothing has taken their place, least of which desire.

    Many of my female friends in committed relationships don’t want to have children. The women I meet domestically are interested only in fun, rather than settling down. Many women don’t want children at all anymore. More than half of the ones who do are perfectly happy to do so without participation from the father.

    Thankfully, I’ve met a wonderful foreign woman in my journeys who is interested in marriage and a family. The cultural barriers make for endless mutual amusement with a good sense of humor, though no family is likely given visa restrictions. Oh well; back to the eternal search.

    Bellyaching aside, I do think the economic effects cited by Goldman are quite plausible. The theoretical basis is strong, and one need only look at economic and pension situations in Japan and Italy for anecdotal evidence. I’d love to see something more formal and empiric, though, if another commenter has resources.

  2. Anders

    Typo: constrains => constraints

    If more children is desired, the incitements for having children should be looked into. I would think that this ought to be the first response of a conservative rather than promoting societal control over procreation – but then again I am not familiar with Goldman and his opinions.

    The benefits of raising children are shrinking for both male and female, and the penalties (social stigma etc) has certainly decreased.

  3. Carrick

    (warning, nothing especially worth reading here.. just some griping about the needless and obnoxious invocation of “culture war”)

    I can’t reconcile that someone who so wisely notes, “perhaps the world is poorer now because the present generation did not bother to rear a new generation.,” then closes out the paragraph by attributing that result, to a “culture war” lost by a wiser and more moral Conservative body. It wasn’t an imaginary “culture war” that drove the country into a divorce-‘fiending’ house-buying frenzy, it was TV/advertising and its propensity to increase desire for consumption, that has helped dissolve the family — its hard to have one when you don’t spend much time together.

    The problem with those who harp about “traditional families” is that they’re just bad communicators. Its like advocating for morality by hollering at people that they “need to go to church” — its all well-intentioned, just terribly communicated. Then parroted on down the line by increasingly neurotic and desperate folks, until it morphs into the racist, sexist, homophobic shrill indecipherable toxic baggage that lives on talk radio. (end gripe)

    Practicality is the name of the game now, and everyone my age, that I’ve talked to, is aware of and cool with it. We grew up with two parents working and the TV on in a house full of stuff.. and most don’t feel entitled to or particularly eager to have exactly what our parents did. Consumer fatigue was already setting in a decade ago when people started coming back to the cities (looking for a little more quality in exchange from the quantity), and flocking to those soulless “3rd place” coffee franchises.

    All I want is for health care to cease being a nightmare, and the US to not turn into Argentina. As long as that doesn’t happen in the course of housing rightfully returning to sane prices, I don’t mind waiting for the population increase to slowly catch up. That or waiting for science and smarter allocation/use/management of resources to bring their costs down. Just please spare me the identity politics and magic wand solutions (Poof! Return to Mayberry!”)

  4. Tiago

    Advocating increasing population numbers in a world of resource depletion?

    While the whole argument of the ratio of working (contributing) people to retired (non-contributing) makes some sense, it should be seen as minor as compared with the stress caused by increased population size to existing resources.

    Furthermore, considering that consumption per capita in the US is quite high, increased population in the US puts an even bigger stress on the planet.

    A modest proposal: All the productivity gains should not go to a further increase in the widening of inequality or more personal consumption, but to maintain a bigger share of the population inactive (i.e., supporting a bigger share of the population in retirement)

  5. Jojo

    “Perhaps the world is poorer now because the present generation did not bother to rear a new generation.”

    Evolution made it easy to make a baby, so as to be able to propagate the species, as living things have done since their first appearance on Earth. From an evolutionary perspective, all living things are born to do their best to procreate, raise their young, turn the world over to them and then wait to die. This stratagem has worked successfully for billions of years.

    Now fast forward to the modern world and we find that of living things, humans may now be beyond the dictates and control of evolution. We can now save people that would have died in other times, we are living longer and as we gather more information about genetic engineering, we will be able to leapfrog evolution.

    But from an intellectual and economic viewpoint, why should parents bring children into a world where natural resources and work/jobs are scarce?

    Animals don’t have birth control. When they breed too much, they use up their natural resources, become weak, eat their young and/or get culled by predators. Humans, OTOH, are able to make a choice as to whether to have a baby or not. If the economic prognosis is good, then humans will have more babies. If it is not, then they will tend to have fewer or none (in 1st world countries, anyway).

    Further complicating the future is the science of robotics. Great advances are being made regularly in this area which, in the not distant future, will lead to robots being able to do a lot of the work that is currently being done by at least blue-collar level workers. Thus there will be even fewer jobs and therefore, less employment for humans.

    Unfortunately, our economic system REQUIRES ever more population working at more jobs (growth) to survive. Changing our society and economic systems to something that doesn’t depend on ever more growth in population and jobs might not be possible without significant dislocation.

    If you enjoy science fiction, there is an author, Nancy Kress, whose writes about a future with genetic engineering themes. Two books well worth reading that relate to this post are Maximum Light and Beggars In Spain.

    Here are a couple of links worth reading:

    Monday, December 29, 2008
    Advances in robotics for personal assistance, medicine, and the military in 2008.

    The year in robotics===================

    They Don’t Make Homo Sapiens Like They Used To
    Our species–and individual races–have recently made big evolutionary changes to adjust to new pressures.


  6. kackermann

    We are just going to have to evolve.

    Once we find the DNA sequence responsible for the wrinkling of our brains, we can experiment in ways to increase the wrinkling, and therefore increase the surface area of the brain (neural density is greatest near the surface).

    If this indeed leads to a more advanced brain that is capable of greater perception, then it could begin a self-reinforcing active process where each revision leads to one capable of making more advanced revisions.

    We could make ourselves much smaller and more energy efficient.

    We would no longer look randomly at the stars, but would instead look at close orbital perturbations, and then run the calculations to account for outer influences, and in this way eventually infer the orbits of all planets further and further out.

    We would then encase out DNA in billions of rocks to be flung toward the unseen planets, knowing statistically how many will survive reentry onto the surface of a planet capable of supporting what is probably the rudest and most violent life form there is.

    Either that or one of those machines we made that sits on the bottom of the ocean waiting to blow up the planet might accidentally get an alfirmative signal from some 15-year-old kid from the Ukraine trying to hack into a Predator drone to take on a virtual joyride.

    The boring thing went right over my head.

  7. sangellone

    A lot more is at stake than just our standard of living when one discusses demographics.

    If you think ‘there will always be an England’ better think again if most of those being born in England are Muslim and prefer women to wear a niqab over a miniskirt.

    Can the US remain a bastion of liberal democracy and a scientific
    and cultural leader in the world when more and more of its inhabitants come from third world backwaters?

    Places like Russia and Australia may not be able to withstand the demographic pressure building up around them. The world is full of old maps that reflected a demography that no longer exists. Unfortunately changing maps tends to be done violently.

    It is a terrible conceit on the part of uppermiddleclass Westerners to imagine that their choice as to lifestyle is not without real consequence and that the consequence maybe the end of that very choice in lifestyle.

  8. joebek

    While demographic trends may be even worse than cited, it is nevertheless fallacious to argue that these caused the housing bust. The question would be what caused businessmen en masse to overestimate the housing market? And here’s a thought for those who want to bring evolution into the picture. What if there is a depopulation gene? It seems quite likely in view of the fact that human populations evolved in conditions of extreme resource scarcity in which population resizing would be quite important. So maybe this depopulation gene has been turned on and cannot be turned off until we reach the kind of a conditions that would excite a primitive hunter gather community? So all our current resource pessimism might just be a reflection brain changes from the expression of the depopulation gene. We may be getting poorer but we have many more ideas with which to be amused.

  9. dudly

    Ahh the proverbial golden ages, the generations that foiled the evil of the day. The Pre-Depression generation took on the Axis powers, that fought for their piece of the colonial pie. In victory the allies set in motion the next big confrontation by hamstring a population with servitude and admonishment.

    Then we had the big show, brought on by blockades of Japan (little 20 point paper of what one would need to accomplish before they over reacted, Japan). All done in house, at the White House with a Little help with Army Intel.

    Lets not forget the mental state of the German people and their need for food and work, umm will we react the same way if things get bad, be open to charismatic individuals or groups, grasping for the remnants of our shattered pride.

    Where am I going with this you may ask, its tradition, its roots and its application to our collective memory’s. Our traditions were built on propaganda and classical idealisms (the tools of power). Even in the telling of these collective story’s “tradition” we become blind to the reality’s that occurred out side the warm sunny glow they place in our minds. The pioneering spirit (lol just read the obituary’s from this time, head held over hole with TNT, the amount/percentage of suicides by women from towns and city’s reduced to living in tents, it was carnage, death, disease, starvation, cannibalism, happy times eh.)

    Lets try the post WWII family construct, after the hostility’s we got the Hells Angels, ex-service men returning home with the payroll saved up during time overseas and a bad case of PTDS (well they were good at cleaning up anti-war protesters later in life before the drug thing), the profiteering by Military Officers/politicians in charge rebuilding previous enemy country’s (you pay to play), the abandonment of China’s non-communist government (how the hell did that happen, and where did it lead us), an entire generation running from the horrors of war, by consumption, alcohol, prescription drugs, media paper/TV/movie/radio to fill our heads with the fantasy of the US is the only right/good government on the planet and can do no wrong and if we do its someone else’s fault. I could go on but whats the point in despoiling group approved constructs, hey Columbus was the first recognized Westerner to mistakenly find the Americas and have their history document it (intellectual rights and all).

    So here we talk about a time and place that will never reoccurs in time, for the elements that brought it about will never repeat in just the same order. But enlarge because it never really happened out side the white wash our high school history books tell us or the propaganda the powerful wish us to believe, go team!

    To go back to anything resembling the past to me is unconscionable, what we need will be new and untried before in mankind’s history. The more we consume, the greater the haste and mass our reckoning will be. This construct we live in now has got us someplace which some of is worthy of us, but like steam, whale oil, reactors and oil it seem clear a new begin is in order, transition is the biggie though as many may find it a reduction in status and is that not the real problem we face today. Individuals and groups fearing reduction of status, power or influence. To meet the demise of many other historical power brokers (religious, monarchs, leaders of all sorts) when their ideas max out, all is well speeches become repetitive, have fueled planes at the ready.

    Skippy…Historys only worth is to show us who “we were” (past tence)…its up to us to decided who “we will be”, to care after one and another would be a good start with out profit as a part of the deal.

  10. Brick

    David Goldman seems to have completely missed out on some aspects of the changes in housing demographics and as such comes to the wrong conclusion that family structure may play a part in our current problems. First he contends that Families with children are the fulcrum of the housing market on the basis that they have greater spending power. What he seems to be missing is that families have changed from the single income to dual income and it is this that focused buying power leading up to the turn of the century.

    The last five years saw a reversal of some particular trends based on house prices rises. Namely the trends that offspring leave the nest earlier and earlier, when couples split up they get separate houses, the elderly depend less on their children, young people stay single longer. These anomalies away from the trends were clear indications that things were going wrong and should have been picked up.

    The root of the problem lies in some demographics that David failed to mention. Earnings discrepancies between rich and poor with tax rules and interest rates funded a multitude of two or more house owning families. Tax rules and lending criteria also funded a wave of institutional buying squeezing those on the bottom rungs of the ladder.

    In Europe it is not perceived as a problem that populations will shrink, but there again pensions and government spending tend to be properly funded. Immigration rules are generally relaxed at times when population begins to shrink too much, so I should expect the same in the US once this period is over.

    If there is a message from David’s post it is that funding things by taxing future generations is fraught with problems. I guess at this point governments with their deficits are making things even worse. Lets kick that can down the road one more time.

  11. mdf

    sangellone: Can the US remain a bastion of liberal democracy and a scientific
    and cultural leader in the world when more and more of its inhabitants come from third world backwaters?
    Sangellone, you are an example of the conceit you despise. You desperately need to visit some of these “third world backwaters” for a little perspective. It may seem incredible, but it is true: the residents can in fact tell the difference between there and here, and they would make the rational choice … if they only could.

    It’s only the complete nutcases, and their whacked out religious and political ideological babblewhining that you hear about on a regular, drum-beat, basis — you know the ones, they regularly make the asinine soap opera called the “news”.

    Basically, your glorious republic is at extreme risk, but it’s not the “unwashed” third-worlders and their sinister “culture” (or whatever your particular boogey-man is) that is going to take you down, but your collective unwillingness, inability, or just plain don’t-give-a-damn-itis to root out the rot in the political and economic system. Freedom is not a maintenance free machine, and, ironically, it’s becoming more and more clear that people in the so-called “third world” understand this better than your average American.

  12. Ryan

    “He calls for restoring “the traditional family to a central position in American life.” That sounds both anti women in the workforce amd anti gay.”

    You lose all credibility in making this statement. So if we’re trying to get more kids to be born, which is necessary for a socially successful country, who’s going to be giving all the old people their Social Security payments after all, that’s anti-woman and anti-gay?

  13. Deborah

    The logic to duller jobs is not explained, but very true.

    But then, looking at this post, http://www.nakedcapitalism.com/2009/04/guest-post-new-generation-of-whiners.html, comments that follow really do not help and simply magnify the ignorance of how different and more challenging the economy is for the younger generation:

    “My friend Tom Naylor calls this the “new generation of whiners”. Ms. McLaren has a point, but it’s time to stop whining and get to work to fix the “abuses of the system.”

    Each one of us, poor or rich, can do our part to make this a better world. True change only comes when people take the time to properly inform themselves of what is going on around the world and that means always questioning what you read in mainstream media.

    There is nothing that prevents you from volunteering your time to a local charity or doing your part to write on social and political issues that concern you, especially now that blogs are available to everyone who has access to a computer.”

    Chances are this generation has already done double or triple or even 10 times the amount of these kinds of strategies then the generation before them and then they repeatedly get to listen to this crap that they aren’t trying hard enough or doing enough.

  14. DownSouth

    mdf said: “Basically, your glorious republic is at extreme risk, but it’s not the ‘unwashed’ third-worlders and their sinister ‘culture’ (or whatever your particular boogey-man is) that is going to take you down, but your collective unwillingness, inability, or just plain don’t-give-a-damn-itis to root out the rot in the political and economic system.”

    Well said.

    Blame the immigrants, blame spendthrift mom and dad, blame the ungrateful children, blame the gays, women, whoever; just don’t blame the people most responsible for getting us into this mess.

    I’m about half way through Reinhold Niebuhr’s Moral Man & Immoral Society. It was written in 1932 when our country was suffering through difficult economic times. Niebuhr was the leading theologian of his day and had inordinate influence on Martin Luther King, informing both his politics and his philosophy. The book is without parallel in its ability to help focus the mind and facilitate clear thinking. Some excerpts:

    Society will probably never be sufficiently intelligent to bring all power under its control. The stupidity of the average man will permit the oligarch, whether economic or political, to hide his real purposes from the scrutiny of his fellows and withdraw his activities from effective control…

    Whenever men hold unequal power in society, they will strive to maintain it. They will use whatever means are most convenient to that end and will seek to justify these by the most plausible arguments they are able to devise.Niebuhr levels blunt criticisms against overly optimistic religionists, overly pessimistic religionists and overly optimistic rationalists. One must recall that 1932 was before postmodernism and the concept of an uncontrollable id gained wide acceptance, so there is no criticism leveled against overly pessimistic rationalists. But he did not fail to anticipate them:

    Reason may check egoism in order to fit it harmoniously into a total body of social impulse. But the same force of reason is bound to justify the egoism of the individual as a legitimate element in the total body of vital capacities, which society seeks to harmonise. It is difficult to prevent such social justifications of self-assertion from being made prematurely and from destroying the check upon selfish impulse which reason has established from the inner perspective. Rationalism in morals may persuade men in one moment that their selfishness is a peril to society and in the next moment it may condone their egoism as a neccessary and inevitable element in the total social harmony. The egoistic impulses are so powerful and insistent that they will be quick to take advantage of any such justifications.

  15. Mannwich

    For many, the economics of having many (or any) children simply don’t make sense, especially in this country. That’s the harsh reality.

  16. hexagram

    The comment about CCNY as a community college is way out of date. City College has again assumed its role as a route to academic success and wider opportunity for New York City’s immigrant and lower-middle-class communities. It’s students are winning a disproportionate share of national scholarships and fellowships and its faculty are wining grants ad research awards at an impressive rate. The College is once again validating the concept of public education and academic excellence in a single institution.

  17. John Booke

    Don’t count on “baby boomers” staying on the job for “longer” than normal. Right now Social Security retirements are spiking as they always seem to do during rising unemployment. But now there may extra lift for the jump in retirements – the leading edge of “baby boomers” are turning 62 this year the minimum age to qualify for Social Security retirement benefits.

  18. Keenan

    The “growth paradigm” requires increasing availability of resources and habitat, which compelled the drive to explore and settle new frontiers. Tsilokovski understood that the terrestrial frontier was limited and that humanity eventually had to expand outward. Visionaries including the late Gerard O’Neill and Princeton colleague Freeman Dyson in the '70s proposed serious plans for large scale expansion of human habitat into near earth space, utilizing raw materials of the moon and asteroids for that purpose. Regretably, expansion of the "high frontier" has been greatly hindered by the practice of hauling material from the surface of the earth as opposed to mining it & fabricating it into out there.

    The notion of perpetual growth is simply unsustainable on this isolated planet.

  19. VG Chicago

    My two cents:

    1. Because inquiring minds’d like to know, I was curious, how was “Europe” defined? The EU? The EU + Switzerland + Norway? The EU + Switzerland + non-EU Balkans? All nations within the geographical area or Europe? Do you include the European part of Russia? Etc.

    2. Goldman would do well to snap out of his 1050s nostalgia and join the real world. Whether he likes it or not, divorce rates are likely to increase, and more children will be raised by single parents. I dare suggest that showing single families a little true “conservative compassion” would go much further than the condemnation they have gotten used to receiving from other Goldman-like channels of hypocrisy.

    3. I’d love to personally inform Goldman that the disillusionment of Americans with right-wing, politics-meddling evangelical religion is likely to increase. the Southern Baptists and the likes have not discovered “family values” or the concept of morality – such concepts have existed long before Columbus (or the Vikings) discovered America, and he may be surprised to find out there are nations (many non-Christian and certainly non-English speaking) on this planet that actually give such values far more than lip service.

    4. I suspect the real population of the US is far, far higher than official figures indicate, mainly due to illegal immigration. Does anybody here remember the illegal immigrant strike day back in 2006? Well, on that day the city of Chicago came to a stand still — the freeways were completely empty, many restaurants were closed, etc. I just can’t buy into the idea that there are only 11 or 12 million illegal immigrants in the US. Offering these people a reasonable path to becoming legal would likely cause the US population to surpass Europe’s much sooner, along with increasing IRS’ revenues to finance even more bailouts for the rich.

    5. Last but not least, considering rising unemployment, and the inability of many more families to pay heating and electric bills, I dare to predict that more American couples will spend endless hours in the sack, resulting in explosive birthrate from coast to coast. Research data forthcoming… aaaannny day now…

    Vinny GOLDberg

  20. Peripheral Visionary

    Yves, thanks for highlighting this, even if you find his views to not be in full alignment with your own. I think it’s a critical issue, and bears further examination.

    Best quote:

    “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.”Exactly. But I think the reality is even worse: we enjoyed the prosperity we have enjoyed at least in part because we did not rear a new generation; we redirected resources that would have gone to rearing the next generation toward personal consumption instead.

    Lots of comments, I’ll try and read through them. But let me just say that the implied “solution”, immigration, amounts to offshoring the rearing of the next generation, and is fraught with serious issues. I do not believe that the developing world will perpetually supply us with labor without at some point demanding payment, and the cost (material and cultural) will be far higher than we have imagined.

  21. hbl

    On a related demographic topic, I’ve wondered about the feedback loop between demographics and crisis — it’s not just that the demographics effect the crisis, the crisis also effects the demographics (via birthrate)! Studies show that people are less likely to have children during tough economic times. History seems to bear this out as the birthrate fell during the Great Depression.

    So if this crisis becomes a long stagnation like Japan’s, could it add a self-reinforcing dimension via falling population growth?

    Strangely though, Japan’s birthrate seemed to decline more slowly after 1990. So perhaps the rule doesn’t hold — does anyone know an explanation for this for Japan?

  22. DownSouth

    I had thought that with the economic situation the number of Mexican immigrants living in the U.S. might have diminished, but according to this Pew Center study the number just keeps on growing and is now at an all time high:


    ► There are 12.7 million people born in Mexico now living in the U.S.

    ► One in ten people born in Mexico now lives in the U.S.

    ► Mexicans represent 32% of all immigrants to the U.S.

    ► 55% of Mexican immigrants in the U.S. are undocumented.

    Interesting stuff.

  23. daveb

    Yves, your statement about CCNY is factually incorrect.

    CCNY was NOT delivering high-quality instruction in the 1940’s. The fact that a lot brilliant students attended the institution back then was largely an artifact of widespread anti-Semitism in college admissions policies – this was a big motivator behind the founding of Brandeis university in 1948.

    Watch the documentary “Arguing the World”, in which Nathan Glazer describes at length the abysmal quality of instruction at CCNY in those days.

  24. scepticus

    It is very gratifying to see the blogosphere slowly waking up to this issue – which is waiting for us right round the corner of this depression.

    GD1 resulted in a significant baby bust and I don’t expect it to be any different this time round. Look at recent trends and you see an uptick in births 2003-2008 – a direct result IMO of young couples being extended easy credit to get that family home.

    Kids going back to live with M+D, unemployment and bleak prospects will lower fertility rates further.

    Further, there are big political, social and economic problems associated with the immigration required to sustain population levels. Unless those immigrants can be provided with the welfare benefits they previously enjoyed (and jobs) they will stop coming.

    Finally, doubling the US population is not sensible as energy costs rise as peak oil sets in.

    Germany and japan appear to have rejected immigration and it will be very interesting to see how they structure their political economies to cope with the shrinkage that will occur as a result.

  25. VG Chicago

    Scepticus said: “Germany and japan appear to have rejected immigration and it will be very interesting to see how they structure their political economies to cope with the shrinkage that will occur as a result.

    Well, Germany is part of the European Union, and the free movement of people is central to EU law. A lot of East Europeans have moved to Germany (although their movement cannot technically be called “immigration” since they are EU citizens). In the 70s and 80s it was the the Turks ho were moving to Germany by the millions. I woudl not call Germany closed to immigration. As poverty is likely to remain high in the new EU members, moving to Germany is likely to remain an atractive option for many.

    Vinny GOLDberg

  26. Anon1

    Huh…there is clearly something wrong with conservative’s brains:

    We are going to be poorer for a generation and perhaps longer. We will drive smaller cars and live in smaller homes, vacation in cabins by the lake rather than at Disney World, and send our children to public universities rather than private liberal-arts colleges. Where is the problem here? All this sound perfectly comfortable, responsible, and even enjoyable (Oh how I love a vacation in a small cabin in the woods or by a lake! WAY better than crap like Disneyland).

    Small cars are a problem rather than a solution? Public universities are crap? I went to a public university that is actually a very good school (Colorado State University). I got my graduate degree from another really great (and beautiful) public university (University of Utah) – and it has Nobel recipients in actual science rather than faux science (economics…sorry to some of you, but really).

    Poor little babies in the GOP will have to send their kids to good public schools rather than to pretentious, overly costly, over-hyped private schools. Wah.

    To conclude, any system of economics that requires constant, even geometric growth is a broken, and guaranteed to fail, system. NOTHING can support geometric growth indefinitely. Growth in population is, ultimately, self-limiting in very ugly ways and must NOT be encouraged. Growth in business cannot continue indefinitely either as you run into finite customers, finite resources, and pollution negative regulators.

    What the hell’s wrong with stasis? A stable population (at a smaller overall level) would be ideal. A stable economy that doesn’t require boom and bust (as anything that relies on the myth of perpetual growth) would be ideal.

    Think different.

  27. scepticus

    Growth is always possible, as long as you redefine how it is measured to suit the parameters of the age, because when we talk about growth all it really boils down to is having a goal towards which to direct human activity.

    When the target is set appropriately, you can then rely on free markets and human ingenuity to do the rest.

    GDP/capita rather than GDP, and growth through efficiency savings rather than growth through new production would be a good place to start. We just need to solve the small matters of redefining money, credit and economics…

  28. Sivan M.

    It’s a shame that this is not being discussed more prominently.

    Instead of the simplistic argument that blames hedonism for the decline in child bearing, it would be better to think about the economics of raising children.

    We know that couples delay marriage and having children, but how much of this is really out of selfishness as opposed to having to compete more fiercely and therefore attain higher degrees and prolong education before entering the workforce?

    And once there, there are onerous student loans to pay off, exorbitant house prices, private education due to dysfunctional public schools, and at the end diminishing prospects for living on social security and a pension, and employment for older workers.

    All of these bear significantly on what a couple can realistically plan for. Conservatives offer nothing beyond simple moralizing. Unfortunately liberals don’t show much interest either.

    I haven’t read Leo’s inter-generational strife post but would add that the housing bubble can also be explained by the bleak prospects for retirement by other means. Current homeowners hoping to get someone to pay for their retirement and enslaving young couples to mortgages will not encourage child bearing.

    Lastly, one has to ask how will our savior immigrants generate the necessary income under the system described above.

  29. bert

    David Goldman was, for many years, the principal “economist” for the Lyndon Larouche organization. He was later affiiated with Jude Wanniski’s outfit. Now, it appears, he is writing under the banner of a right-wing Catholic group. Of course, as he moves seamlessly from one fringe, if not flake, group to another, he continues to opine with supreme self-confidence.

    Caveat emptor.

  30. Tim Josling

    Interesting post.

    A couple of comments:

    1. Relying on endless population growth to provide large numbers of young people to pay for unsustainable retirement incomes is a Ponzi scheme. It is unsustainable. No-one seems to have recognized this.

    2. While population declines or reduced growth do reduce total economic growth, the impact on per-capita income is much much lower. Compare economic growth with per capita growth and you get a very different story.

    3. Once two-income families become the norm, a one-income family is in trouble trying to compete eg to buy a house in a nice area. Once two incomes are needed, the “cost” of having children goes up enormously – you have to forgo the second full-time income for many years or pay high childcare costs.

    4. There is a more sinister demographic aspect. The costs of having children are much higher for high income people than low income people. The income lost is greater, the government subsidies for low-income people with children are generally much higher, and tax breaks for having children have generally gone down over the years. In effect the government is subsidising people wth lower levels of ability and achievement to have children and doing nothing to encourage the more able. This is having predictable results.

Comments are closed.