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A country with a declining population can keep a growing economy or low immigration, but not both. Some countries (the Anglophone countries, France, and Germany

by pradn 4y ago

A country with a declining population can keep a growing economy or low immigration, but not both. Some countries (the Anglophone countries, France, and Germany) are magnets for labor given their relatively high wages, standard of living, and multi-culturalism (racism and anti-immigrant politics are problems, but still). But others, like Japan (with low immigration) or Bulgaria (with low immigrant interest) can't reap the population dividend. Perhaps you can pick two of three: a stagnant economy, low immigration, non-right-wing politics. Japan picks a stagnant economy and low immigration (Shinzo Abe though a nationalist was no Marine Le Pen). France picks a somewhat growing economy and somewhat high immigration, and suffers from the growth of right-wing anti-immigrant parties (Marine Le Pen won 40% of the vote recently).

adventured 4y ago
Or you can have lots of immigration and a per capita contracting economy like France. France population 1990: 58 million | France population today: 67 million France GDP 1990: $1.2 trillion | France GDP today: $2.9 trillion ($1.2t inflation adjusted forward 32 years is $2.7 trillion) They gained 15-16% in population, and gained 6-7% in GDP. A big net drop per capita over such a duration, particularly for a major affluent economy. And if one wants to be more aggressive about how big of a failure their immigration program has been, the French economy has net contracted in real terms over the last 15 years. GDP was $2.9t at the peak in 2008, and it's still there now; except to just remain steady, it needed to climb to nearly $4 trillion to adjust for inflation. So France has gained 5% in population over ~15 years, and is missing a trillion dollars in GDP they should have just to remain flat (ie they've seen a massive per capita economic contraction over those 15 years). One might claim the decline in France would have been even worse without their hefty immigration policies. Likely a false claim given the very high unemployment rate among immigrants in France over the past two decades. The French approach to mass immigration has been a disaster (while other better controlled examples have been great successes, as in Canada). Skilled immigration is vastly better than low-skill mass immigration, especially going into the era of basic human labor coming under attack by the field of productivity robotics. It's a far better approach to focus on improving your nation per capita net via attracting highly skilled labor, in terms of productivity and incomes, than just focusing on getting as much raw immigration as you can. That's the core failure of the French approach. It's far better to be rich Canada, with a flat to very modestly increasing population, in which real per capita GDP keeps rising and they keep focused on adding high skill labor (which makes their country richer and richer over time), than to be an declining France that throws low skill labor at the problem. For one thing, the high skilled labor immediately begins contributing to the tax base in a big way, which is critical for an affluent welfare state; whereas a tilt toward low skilled labor + a welfare state is a recipe for fiscal disaster. US GDP per capita is on track to reach a doubling of the French GDP per capita, plausibly this decade ($76k vs $44k now and the gap keeps widening year after year). Meanwhile Canada is also now up to $57k (France and Canada were nearly the same on GDP per capita in 2008, now there is a $13k gap), so they're increasingly leaving France behind as well.
- pradn 4y ago
  Thanks for your detailed analysis. Do the numbers change when using PPP GDP instead?
  - adventured 4y ago
    It's unfortunately far more difficult to find long-term historical PPP figures. The bigger question is whether you put much stock into PPP. I personally don't, I consider it a very weak economic metric, poorly constructed and poorly tracked. There are is no economist army traversing the globe every year and actually accurately tracking PPP nation by nation (every nation and to the great depth required); nobody does that, they slap giant guesses on it year after year, trying to extrapolate from a small basket of signals in a given country, and starting from the base GDP figures. PPP pretends that Puerto Rico is above Portugal (and nearly on par with Spain or Estonia), Russia is on par with Greece, and China is on par with Botswana. It's a bad, unreliable joke. I think in place of PPP, it's almost always better to do a deep dive on a given country on its various quality of life metrics, even though those are also at times difficult to compare nation to nation (due to variances in how each country measures). For example, I don't think it's difficult to show that Finland has a comparable or higher quality of life than the US (I believe it's solidly higher personally, particularly at the median or lower), despite the $20k GDP per capita gap. The US is typically used as the base for PPP, so starting at $76k for the US, you then have Canada and Finland at $58k and $57k on PPP - do I really believe there is such a gap between the US and those two on PPP? I'd be very skeptical, it's another case where PPP doesn't do a very good job.
- wbsss4412 4y ago
  You can weave whatever narrative you want about French immigration policies and it’s effect on growth, but the elephant in the room is that France has tied its economic fortunes to the eurozone pretty tightly: https://data.worldbank.org/indicator/NY.GDP.MKTP.KD.ZG?locations=XC-FR https://data.worldbank.org/indicator/NY.GDP.MKTP.KD.ZG?locat...

by pradn 4y ago

adventured 4y ago

Or you can have lots of immigration and a per capita contracting economy like France. France population 1990: 58 million | France population today: 67 million France GDP 1990: $1.2 trillion | France GDP today: $2.9 trillion ($1.2t inflation adjusted forward 32 years is $2.7 trillion) They gained 15-16% in population, and gained 6-7% in GDP. A big net drop per capita over such a duration, particularly for a major affluent economy. And if one wants to be more aggressive about how big of a failure their immigration program has been, the French economy has net contracted in real terms over the last 15 years. GDP was $2.9t at the peak in 2008, and it's still there now; except to just remain steady, it needed to climb to nearly $4 trillion to adjust for inflation. So France has gained 5% in population over ~15 years, and is missing a trillion dollars in GDP they should have just to remain flat (ie they've seen a massive per capita economic contraction over those 15 years). One might claim the decline in France would have been even worse without their hefty immigration policies. Likely a false claim given the very high unemployment rate among immigrants in France over the past two decades. The French approach to mass immigration has been a disaster (while other better controlled examples have been great successes, as in Canada). Skilled immigration is vastly better than low-skill mass immigration, especially going into the era of basic human labor coming under attack by the field of productivity robotics. It's a far better approach to focus on improving your nation per capita net via attracting highly skilled labor, in terms of productivity and incomes, than just focusing on getting as much raw immigration as you can. That's the core failure of the French approach. It's far better to be rich Canada, with a flat to very modestly increasing population, in which real per capita GDP keeps rising and they keep focused on adding high skill labor (which makes their country richer and richer over time), than to be an declining France that throws low skill labor at the problem. For one thing, the high skilled labor immediately begins contributing to the tax base in a big way, which is critical for an affluent welfare state; whereas a tilt toward low skilled labor + a welfare state is a recipe for fiscal disaster. US GDP per capita is on track to reach a doubling of the French GDP per capita, plausibly this decade ($76k vs $44k now and the gap keeps widening year after year). Meanwhile Canada is also now up to $57k (France and Canada were nearly the same on GDP per capita in 2008, now there is a $13k gap), so they're increasingly leaving France behind as well.

pradn 4y ago
Thanks for your detailed analysis. Do the numbers change when using PPP GDP instead?
- adventured 4y ago
  It's unfortunately far more difficult to find long-term historical PPP figures. The bigger question is whether you put much stock into PPP. I personally don't, I consider it a very weak economic metric, poorly constructed and poorly tracked. There are is no economist army traversing the globe every year and actually accurately tracking PPP nation by nation (every nation and to the great depth required); nobody does that, they slap giant guesses on it year after year, trying to extrapolate from a small basket of signals in a given country, and starting from the base GDP figures. PPP pretends that Puerto Rico is above Portugal (and nearly on par with Spain or Estonia), Russia is on par with Greece, and China is on par with Botswana. It's a bad, unreliable joke. I think in place of PPP, it's almost always better to do a deep dive on a given country on its various quality of life metrics, even though those are also at times difficult to compare nation to nation (due to variances in how each country measures). For example, I don't think it's difficult to show that Finland has a comparable or higher quality of life than the US (I believe it's solidly higher personally, particularly at the median or lower), despite the $20k GDP per capita gap. The US is typically used as the base for PPP, so starting at $76k for the US, you then have Canada and Finland at $58k and $57k on PPP - do I really believe there is such a gap between the US and those two on PPP? I'd be very skeptical, it's another case where PPP doesn't do a very good job.
wbsss4412 4y ago
You can weave whatever narrative you want about French immigration policies and it’s effect on growth, but the elephant in the room is that France has tied its economic fortunes to the eurozone pretty tightly: https://data.worldbank.org/indicator/NY.GDP.MKTP.KD.ZG?locations=XC-FR https://data.worldbank.org/indicator/NY.GDP.MKTP.KD.ZG?locat...