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Most of the past century's gains in quality of life were tightly correlated with rising labor. If the population crashes, then who will do all the specialized w
by dron57 4y ago
Most of the past century's gains in quality of life were tightly correlated with rising labor. If the population crashes, then who will do all the specialized work? Another thing to think about is excess capital and investment. With a large population, excess savings become investments into new companies, technologies, etc. Without excess savings there will be no tech industry, improvements in science, infrastructure investments or much of anything interesting.
Environmentalists say that fewer people will be good for the environment. But what about investments and research into green energy and carbon removal? Those will simply not happen unless the economy is still growing.
- tuatoru 4y agoTL;DR: it's more about demand than labor supply. Same result. I don't think it is as binary as you suggest. There will be lower total saving after a delay. There will certainly be less investment more immediately. What will happen is this. If you borrow money to make and sell (say) shoes, and the population is doubling every 35 years (2% growth), then your market doubles in 35 years also. (You need money because your buildings and equipment wear out, if not for materials.) Your lenders have it relatively easy in this situation, because fewer of their borrowers go bust, so interest rates (which are partly compensation for risk) are lower. With negative population growth, your market is shrinking, so your lenders' risk of loss increases. Anyone who still has excess savings demands higher return on investment. Fewer potential investments can jump the higher hurdle. Total investment decreases, total income decreases and everything spirals down.
- rufus_foreman 4y ago>> your market doubles in 35 years also So does the number of your potential competitors.
- mattnewton 4y agoIt’s complicated, my understanding is that the current idea of the western state and middle class traces itself back to the period right after the Black Death created one of the largest population shocks in history, which effectively ended serfdom and loosened the grip of the Catholic Church. Basically the effects of population dips are not cut and dry. It’s not clear to me it would necessarily play out as people stopping all non critical work to take care of old people. Maybe it would, on a family level - People would spend more time taking care of their parents, and then maybe conclude they should have more kids to take care of them when they are older like they do in the developing world. But the modern pyramid-shaped pension program is a recent invention and not necessarily one I think would be so durable as to destroy other industries?
- imtringued 4y agoThis is a joke. Excess savings are economically pointless, they serve no purpose, excess savings mean people are saving more than they invest, leading to economic decline. >Without excess savings there will be no tech industry, improvements in science, infrastructure investments or much of anything interesting. I honestly have no idea what you are talking about. Governments borrow more and more money to artificially turn excess savings into regular savings by increasing the investment rate, any benefits you think come from excess savings actually come from turning excess savings into regular savings aka savings = investment. If savings are above investment it means aggregate demand is below aggregate supply and we are failing millions of people.
- csomar 4y agoThere is no advantage to excess savings with fractional-reserve banking; and there is even less need for any savings with MMT. We are in an MMT world now, your savings have no bearings on the economy.