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May 6, 2018 | Plunging Birth Rates Confuse Economists But Are Actually Great News

John is author or co-author of five books, including of The Money Bubble, The Collapse of the Dollar and How to Profit From It, Clean Money: Picking Winners in the Green-Tech Boom and How to Profit from the Coming Real Estate Bust. A former Wall Street analyst and featured columnist with, he currently writes for CFA Magazine.

Birth rates are plunging almost everywhere. The first chart below shows that even notoriously populous China and India have entered the same reproductive neighborhood as the US and are not that far from the assisted living center formerly known as Japan. Which is to say their populations have not only stopped increasing, they’ll actually start falling pretty soon.

birth rates China India

The thing that makes economists nervous is in the second chart, which shows how a low birth rate results in more old people relative to young. Why is this a problem for anyone other than professional sports leagues? Because (at least in the developed world) we’ve set up insanely expensive retirement plans (managed by baby boomers for baby boomers without regard for the cost to our grandkids) which require an ever-expanding herd of tax-paying worker bees to keep us in hearing aids and hip transplants. Without those wage-slaves, the alternatives dwindle to boomers working till we drop (completely unacceptable!) or our governments going bankrupt in spectacular fashion – and then requiring us to work till we drop. That’s why some economists view low birth rates as a disaster.

BUT while the above is going on, automation is claiming jobs from food service to retail to law to truck and taxi driving. So if we continue to produce millions of new workers without providing them with decent jobs, they won’t be able to support their elders in any event and global civil unrest will ensue. High birth rates, it seems, are also a disaster.

Some recent automation headlines:

Robot chefs: Hype or a sign of industry change?

Costco serves up robot-prepared pizza

Robots could replace 1.7 million American truckers

RoboCab: Driverless taxi experiment to start in Japan

Swiss bank replaces seven employees with five robots

And here’s an excerpt from an Economist article that cites a major study on the subject:

So which jobs are most vulnerable? In a widely noted study published in 2013, Carl Benedikt Frey and Michael Osborne examined the probability of computerisation for 702 occupations and found that 47% of workers in America had jobs at high risk of potential automation. In particular, they warned that most workers in transport and logistics (such as taxi and delivery drivers) and office support (such as receptionists and security guards) “are likely to be substituted by computer capital”, and that many workers in sales and services (such as cashiers, counter and rental clerks, telemarketers and accountants) also faced a high risk of computerisation. They concluded that “recent developments in machine learning will put a substantial share of employment, across a wide range of occupations, at risk in the near future.” Subsequent studies put the equivalent figure at 35% of the workforce for Britain (where more people work in creative fields less susceptible to automation) and 49% for Japan.

Luckily, in the synthesis of these two apparently-conflicting trends is a highly optimistic middle way: We continue to limit our breeding and allow populations to begin a gradual decline, which in turn allows us to scale back industrial agriculture, rampant pesticide and antibiotic use, overfishing, suburban sprawl and all the other pathologies of overpopulation, while robots and other forms of automation become our mechanical servants, extending the microwave oven/riding mower concept to most of the rest of life.

While this transition is ramping up, medical science (broadly defined to include a better understanding of nutrition and lifestyle) will make 70 the new 50, adding a couple of additional decades to the high-functioning (i.e., employable) part of most lives. That’s already happening (anecdotal example: I’m in a weekly poker game with mostly retired college professors who, in their 70s, are hunting, fishing, travelling and taking my money in games of skill and judgment. They can damn well keep working).

None of this will prevent or even delay the global financial crisis/monetary reset that’s moving from inevitable to imminent. But it’s encouraging to know that after we get that out of the way, big, ominous trends like overpopulation, climate change, mass extinction and automation-driven unrest will be bending in the right rather than wrong directions.

This is the second in a series that will look beyond the fiat currency collapse to some of the positive things that will matter when the dust clears. Here’s the first in the series:

In The World Beyond Finance, Some Great Things Are Happening

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May 6th, 2018

Posted In: Dollar

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