The Empty Cradle
While I was down in LA, I finished reading The Empty Cradle, by Phillip Longman. This is a book about the impending world crisis of declining populations – not just in Europe, Japan and the US, where the conditions are already well-known, but also in Latin America, Africa (due to AIDS as well as other factors) and, amazingly, China and Asia. Declining population growth is sometimes seen as a good thing, as a way to reduce the human burden on the physical environment and natural resources. But declining population, especially at the levels we’re seeing today, portends some cataclysmic implications for our social structure and standard of living.
Economic growth is based on two factors: how many people there are (population) and how hard they work (productivity). Over the past 50 years, dramatic increases in productivity thanks to automation, democratization, and the virtuous cycle of development (better health care, better nutrition, better sanitation, etc) have combined with the temporary effects of the postwar baby boom to create a situation of unsustainably high growth rates.
What happened in the past 35 years, however, is that the baby boom petered out all over the world, and in country after country, the current generational cohort of women is going through their child-bearing years without bearing very many children. Biological and mathematical facts dictate that, without a replacement-level fertility rate of 2.1 children per woman, you soon reach a tipping point of inexorable decline. In other words, the succeeding generation, smaller than that of its parents, will have to reproduce at an even higher rate to keep the population stable. But, according to Longman, fertility rates are continuing to decline at a rapid pace, along with the overall number of women able to bear children.
Again, if this were simply a matter of shrinking numbers, it would be one thing, But the falling population of younger people is combining with unprecedented longevity. As societies shrink in size, they grow in average age. Simply by being around longer, the older generations claim a higher and higher percentage of society’s resources as they age. Combined with state-run pension and healthcare systems, they will soon have a near monopoly on public expenditures in many countries, even as their economic productivity wanes with advancing age. This is a disaster waiting to happen.
Longman sees this macroeconomic trend as the product of misaligned incentives. He resists moral judgments on individuals who remain childless out of desire or circumstance, and instead makes a detailed and compelling economic case about the many ways in which modern society has replaced earlier incentives to have large families with powerful disincentives. Some of these are cultural – the glamorization of leisure, urban living, widespread use of birth control and paid work for women – all of which have a logic and justice to them that are more compelling on an individual case basis than the nebulous and collective benefits of reproduction. Most, however, are economic: the direct product of mass production, globalization and the consumer society.
He argues that in the past, children had direct economic benefits to parents. They could work in the house, on the farm, or in the mines or factories to increase household wealth and productivity, partly offsetting the cost of their upbringing. They could be trained in the father’s craft or trade, so that the household receives direct and exclusive returns on the investment in educating the children. They could be used for dynastic advancement through the institution of arranged marriages. And they were a built-in retirement plan when the parents became too old to work.
As each of these incentives was liquidated, usually for very good and moral reasons, the economic benefits of children accrued more and more to society at large, while the rising economic and opportunity costs remained disproportionately with the family. Longman compares this situation to a casino where the odds of winning are as poor as ever, but whenever you happen to hit a jackpot, you are required to share it with everyone else in the casino. Such a casino would very soon be out of business.
When the costs of having a family are combined with the numerous economic benefits of not having one, and the freedom to decide for oneself, the outcome is unsurprisingly lower birthrates and sub-replacement fertility rates. As the percentage of the working-age population declines compared to the elderly, those in the workforce have to work longer and harder to maintain the same levels of output, while public and private pension programs claim a larger and larger share of wealth for people no longer producing (or consuming) at a very high level.
Longman spends a fair amount of time discussing the economic implications of this, but the more interesting passages deal with the changes faced by society. He cites a statistic that, by mid-century, most adult Europeans will have no living relatives. Think about that for a second. Many populations in Europe and the Asian steppes will be significantly outnumbered in their own historical countries, without the cultural and political traditions of pluralism (as in America) to provide continuity through demographic change. And, since population decline is a result of modern economics and modern political values, the groups that are sustaining replacement-level or higher birthrates are, almost by definition, those with the least cultural, ideological or intellectual attachment to the principles of modernity.
His prescription for change is to find creative ways of offsetting the severe economic penalty that modern society places on parents. His most intriguing proposal is for a method of Social Security reform in the US that we have not yet heard discussed in the public debate over the issue. Offer parents a tax credit against the SS payroll tax for each child they have, while continuing to credit them with the maximum contribution. Each kid would be worth a 1/3 reduction through the age of 18. Families of three or more would pay no FICA until the youngest was 18. The SS credits would only apply to higher benefits if the children successfully completed a high school degree, thereby incensing parents to actively encourage education rather than peopling the earth with unemployable mouths to feed. There are other proposals as well, all creatively crafted to appeal across the divide of political and cultural ideology.
The logic here is that the funding “crisis” in Social Security (and the much more severe situations in private pensions and public and private heathcare payment systems) can be solved not only through revenue enhancement (e.g., confiscatory taxes or benefit reductions) or sustaining backbreaking levels of productivity growth, but by addressing the underlying demographic problems.
There’s more to say on this subject, including a lot of what Longman left out of his argument. But the book is worth a read, most significantly for the way Longman deftly handles such a loaded subject in a style that is unlikely to unduly offend anyone’s political or social values.
8:36:37 AM 
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