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The Real Population Problem

... and a false solution

June 2015

Abstract:
European populations (and some others) are aging. Pensions for the old and health care for all are draining national budgets, since there aren't enough younger tax payers to pay for them. Some countries think they have the solution: make more babies! But that's a deceptive and naïve short-term "solution" which will exacerbate their problem.
The other day I heard a commentary by the American political commentator Fareed Zakaria, a man whose views I often find to be sensible. Zakaria was speaking of a "population problem" as perceived by many European nations. It's an economic problem brought about by a combination of political folly (my words, not Zakaria's) and the changing age distribution in the society. The political folly is that governments have promised their citizens (especially the elderly) expensive welfare programs that would be economically feasible only under economic conditions that are not expected to remain achieveable. In other words, they're "betting on the come," i.e., promising that which they should know they cannot guarantee. In the case of many campaign promises, failure to deliver is just "par for the course," it's expected. But when politicians turn their promises into actual programs based on wishful thinking, they are doing their country a serious disservice, which amounts to "planning to fail."

In most European countries, the thing that has stood in the way of being able to finance what the politicians have promised is the evolving population age distribution, something the politicians apparently had failed to consider when they voted for unsupportable entitlements. In brief, the populations are aging; there are too many old people, retired or otherwise on the dole, and not enough younger people working and paying taxes. The great number of elderly comes from reductions in death rates, due to improvements in such social parameters as sanitation, nutrition, communications, and health care. The relative shortage of young people comes from the young waiting longer to start families and have children, and then having fewer children on average than in the past.

This latter phenomenon has been well-known for a long time: in more "primitive" societies, where much of the population work the soil and live from hand to mouth, women bear children at a young age and bear many children. As the society advances in technology and social organization, women wait longer with having children and bear fewer children. This development makes intuitive sense: In rural societies dependent on the family's own resources for survival, more children means more help in the fields and greater chance of the family's survival and success relative to other families. The greater death rate in such societies, especially among children, means that more children must be born in order to ensure survival of the society. In more modern and urban societies, women typically make a career outside the home, and the cost and gain of bearing and raising children are calculated very differently.

The diagrams below – we call these population pyramids – (courtesy Pearson Education, Inc.) illustrate several different types of age distributions. (The diagrams represent data from the mid-90s, but they're much the same today):


The diagram for Kenya shows a situation common to many African and Asian countries: A population where less than one in five people is over 45 years old, while half the population is under 16. Women bear children at a young age, and very many babies are born, but the death rate among the young is high. Nonetheless, Kenya has been in a high growth mode for several decades. The picture for the U.S. is very different: The population and its age structure is fairly stable. The slow growth that occurs is entirely due to immigration – mostly illegal – which also provides the slight bulge at the base of the pyramid. The Italian diagram shows a situation common in European countries which have reached a population stability that may be in the process of changing to a decline, due to low birth rates, as seen in the narrow base of the pyramid. These are the countries that are especially experiencing the welfare budget shortfalls.

Mr. Zakaria related that in Denmark the government has become sufficiently concerned over the diminishing population that it has started a program of billboards and TV commercials frankly encouraging young people to have more sex. Really. An official government program. And the purpose of this note is to point out that while having more sex may be its own reward, the effort to increase the birth rate as a funding mechanism is misguided and counterproductive. The Danish government is evidently confused about the nature of population growth – or more likely, their politicians are looking for a quick "fix" that will secure them in power for a short while with the appearance of having done something useful.

Here's the problem: The Danes want to change the structure of their population pyramid; they want a broader base in relation to the top – they want more younger people in relation to the older. But: the population structure is not determined just by the rate of birth, it's a function both of the birth rate and the death rates at each age. So unless the death rates are also increased, the problem of "too many" old people will still be there. (In fact, we expect that death rates will continue to decrease, as it has for decades. This will further increase the number of older persons.) In the end, an increase in the birth rate only serves to increase the population as a whole; only during the period of growth will it give relief to the government's budget. In order to be a solution to the "codger question" the population will therefore need to expand forever. There are actually some politicians (we have them here in America as well) who don't think that's a problem. They are what we could call "math-challenged".

Certainly, an increase of births will widen the bottom of the pyramid, and in 20-30 years that will give a positive result in tax receipts. Until then, the extra children represent significant public expenditures, such as for education, health care, family support and parental leave payments, among others. But even when the young generation has matured into the desired additional tax payers, the joy of budgetary balance, if achieved, will be short-lived: In a few more years, the tax payers will be retired and will represent the largest ever cohort of pensioners. The ratio of old to young will then again be stabilized.

I'll remind us that the problem of human overpopulation is one of the most pressing world-wide issues, perhaps only second in importance to dealing with the global climate change. So any program to actually increase population anywhere deserves to be met with deep skepticism.

Let me summarize:

  1. An increase in births will grow the population by increasing the youngest cohorts.
  2. An unending population growth is impossible.
  3. When growth stops, the same funding problem will return, on a larger scale.

The solution to funding a government's social programs does not lie in manipulating the population. It must be found within social or budgetary policies, like budgetary priorities, retirement age, tax rates, qualifications for "dole", levels of support, social "freebies" etc. These are of course already well-known to policymakers, but each of these choices would probably cost some politicians a few votes. This may explain the reported proposal of the Danish government.

© 2015 H. Paul Lillebo

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