6 ms·

What exactly is the problem with a declining population anyways? It feels like if you have less people in your country, the resources within can be better distr

by alexb_ 4y ago

What exactly is the problem with a declining population anyways? It feels like if you have less people in your country, the resources within can be better distributed. What is the downside here - that if we have less children and less immigration, we are going to have cheaper food, cheaper housing, cheaper energy, and less poverty? Seems like a good thing to me.

aNoob7000 4y ago
If I'm not wrong, the issue is with funding government programs. Most government programs are funded by taxes and if the populations is dropping then naturally the tax base is shrinking.
- alexb_ 4y ago
  The expenses would also start shrinking though.
  - aNoob7000 4y ago
    Depends on the expense. For example with Social Security, part of the problem we have now is that there are less people paying into the program then in the past. I only see two options, increase taxes or push back retirement.
    - rs999gti 4y ago
      > push back retirement Which leads to violence and protests: https://www.nytimes.com/2023/03/16/world/europe/macron-france-pension.html https://www.nytimes.com/2023/03/16/world/europe/macron-franc...
  - xeromal 4y ago
    Not for the elderly population until they die off. More consuming than producing means there's less to give up top.
  - s1artibartfast 4y ago
    It doesn't help that the expenses are shrinking at the same rate as income if expenses are greater than income. you still need to balance work needed with work done.
nerdponx 4y ago
I strongly agree that in the long term it's better for everyone to have lower or even zero population growth, possibly with negative growth for a while. I love that more people are shedding the presumption that growth is a necessity for well-being in posterity The problem is in the short term, as the current population starts to skew older, there will be fewer working-age people supporting the increasing numbers of elderly people who retire and eventually can't support themselves even if they want to. This is both a macroeconomic problem (not enough income/production to pay for everything) and a microeconomic problem (literally not enough qualified caregivers, limiting supply of care even as demand increases, and therefore making it much more expensive). Thus we need to figure out a way to make it through the transition out of our current high-positive-growth without creating a crisis of poverty and suffering among the soon-to-be elderly. The answer probably involves nation-state governments creating a shit ton of money to make it all happen. But in the USA at least, we are already very deep in unknown zone of debt-to-GDP ratio above unity, the cost of debt service itself beginning to grow (https://fred.stlouisfed.org/series/FYOIGDA188S https://fred.stlouisfed.org/series/FYOIGDA188S), and an uncertain future around our ability to control inflation with monetary policy. Not to mention the pesky habit of large corporations and wealthy individuals to funnel money out of public expenditure in the form of economic rent. If we could actually stop being greedy for two seconds and try to plan ahead, I'm sure we could figure it out. But when has that ever happened before?
- wenc 4y ago
  If we take the simplistic assumption that 2.1 children (either through natural birth or immigration) is the replacement rate, we can surmise that for zero growth we would need to hover around that number. 0.78 YoY is negative growth and fast and one wonders if a country is able to adapt its infrastructure sufficiently quickly to this new reality in the next few decades. If you look at the projections, SK’s population will peak in 2024 and the drop after that looks quadratic, back to its 1960s population which is right after the Korean War. https://worldpopulationreview.com/countries/south-korea-population https://worldpopulationreview.com/countries/south-korea-popu...
Zak 4y ago
Most economies are built on the assumption that there will be more young people than old. If that assumption ceases to hold true without some active planning to deal with an older population there will be too many retirees and too few workers. This problem is almost certainly solvable with some planning, but humanity as a whole isn't always good at that.
Night_Thastus 4y ago
The youngest generations are what keep the economy moving. They produce the goods and services, and are the primary buyers of products. When the proportions of young to old get too skewed, each one ends up paying more and more to support the older generations - which means they can't buy as much either. It's economically very bad to have an aging population. Also: It seems in general most economies are centered around indefinite growth. That may sound absurd, but regardless a shrinking population reverses that assumption and causes problems.
rs999gti 4y ago
> What exactly is the problem with a declining population anyways? Federal social programs are all pyramids schemes. They depend on having a large tax base entering the bottom, either immigrants or young people, to constantly keep them funded. The less people at the bottom, the less funding, and now you have austerity programs that have to take effect to prevent the programs from running out of money.
- izzydata 4y ago
  I'm pretty sure the entire economy is a pyramid scheme for the same reason. We've gotten ourselves into a situation where growth is a necessity.
- bryanlarsen 4y ago
  At a societal level, money & taxes are a measure of capacity. If you don't have enough nurses to care for the elderly, it doesn't matter how much taxes and funding you have. Money is a worthless piece of paper if you can't buy what you need with it. This framing is important. People think we need austerity because social programs are running out of money. But austerity makes the problem worse. A big pile of money is useless if it can't buy what it needs. In the long run the best way to balance the books is to borrow money and spend it on childcare and child tax credits to encourage having children, spending it on nurse training, et cetera.
  - lotsofpulp 4y ago
    > In the long run the best way to balance the books is to borrow money and spend it on childcare and child tax credits to encourage having children, spending it on nurse training, et cetera. I do not know that this is possible without sufficiently high taxes and policies such that a life without kids is seen as undesirable relative to a life with kids. And that is going to be very, very politically unpopular because it is a lot of pain in the short term for long term gains unattributable to the individual. Quite an interesting problem, and I have no idea how this shakes out for my kids and their potential kids.
    - 4y ago
tiny_ta 4y ago
I think the problem is during this transition from a bottom heavy to a top heavy population distribution. Suddenly, you don't have enough of a young and robust workforce to support your aging population. Labour shortage means you can't focus enough on growing and you have to focus more on maintaining the existing infra. You see signs of this happening in Japan already [1]. On the other hand, a situation like this may be ripe for deploying automation across sectors! [1] https://www.imf.org/external/pubs/ft/fandd/2001/03/muhleise.htm https://www.imf.org/external/pubs/ft/fandd/2001/03/muhleise....
- nerdponx 4y ago
  To be clear, this is a transient problem. But it will take several decades for things to balance out, which could be problematic in the intervening period.
  - red-iron-pine 4y ago
    > But it will take several decades for things to balance out, which could be problematic in the intervening period Corporations require continued growth to drive stock prices. How do you have growth when then population is shrinking? There are literally less people to buy gas, food, cars, iPhones, etc. Large investments designed to scale and handle capacity are now losing money, not in use, etc. You handwave this like it's a simple thing, but it will shock the system and lead to massive problems. Perhaps it's necessary, but in the same way amputating a limb might be necessary -- painful and complicated.
  - s1artibartfast 4y ago
    Tt could be much longer than decades. Japan has had falling births for 50+ years and no indication of stopping. It is unclear how a country stabilizes birth rates once they start falling, because no modern country has successfully done it. Some countries supplement or offset their population losses with immigration, which comes with its own challenges.
    - nerdponx 4y ago
patrickk 4y ago
The public pension system will be unaffordable, as there will be too many retirees to workers. For highly xenophobic countries with minimal immigration, there is no obvious solution to replace the ‘missing’ workers.
- mafribe 4y ago
  There is a simple and obvious solution, rise the age of retirement.
  - AstralStorm 4y ago
    Does not work, it drains workplaces of jobs and thus availability of secure jobs and housing. That puts the demographic decline into overdrive. Plus, it is diminishing returns. More old people will be ill or otherwise unable to work.
wenc 4y ago
The problem is thinking it’s as simple as resources divided by population, so shrinking the denominator means more per capita resources right? But a country’s infrastructure is built for a certain population size assumption, and the numerator has a highly nonlinear relationship with the denominator, and the denominator is further broken down into subpopulations that affect the numerator non linearly. It’s not a simple ratio. You have to manage population shrinkage almost as carefully as growth, if not more carefully. Shrinkage almost happens in an unpredictable way and instead of ending up like Japan you might end up like Bulgaria. Also a country is not isolated — it’s subject to competitive forces in the world so if the labor force becomes uncompetitive, your economy will tailspin in a way that exceeds your proportional savings from population shrinkage. Improperly managed shrinkage in the extreme can lead to unemployment due to lack of growth, the rise of a disgruntled class which can in turn lead to lots of internal conflicts. There is a lot of system inertia in countries and lots of unpredictable effects.
ewgoforth 4y ago
As the population ages you have fewer and fewer workers supporting more and more retirees.
Longlius 4y ago
Remember how prices exploded when we had supply chain problems last year? Labor is not exempt from supply and demand, and an individual's baked-in demand for labor doesn't decline just because they retire (in fact, in a lot of ways it increases). With a slowly tapering demography, you can do a lot of neat tricks like using technology to improve productivity and make up the difference that way. When your demography falls off a cliff, there is no recourse - the cost of labor is going to massively increase. This is great for working-age people but retirees end up having to pay most of the cost (or rather - it comes out of their pensions both public and private). So a social problem is baked in with this and possibly an economic problem as well because at some point the working-age cohort is going to have to have its resources redistributed to the retiree class to support them.
HDThoreaun 4y ago
In addition to the economic problems the other comments point out, a low fertility rate is indicative of large cultural problems. People are evolutionarily programmed to want kids, whatever the reason that people have stopped is, it probably isn't a happy one.
Qem 4y ago
It's like that saying that it's not the fall that kills you, it's the sudden stop at the end. So, it's not declining population that endangers us, it's the sudden drop in fertility rates that threatens us with a world of elderly people outbidding each other into utter destitution to get basic care from the few working-age people remaining. If the replacement rates do not drop to levels too low (~< 2.1), a new equilibrium will be eventually reached, but with a lot of trouble meanwhile. It doesn't help all the productivity gains from the last decades were mostly pocketed by the super-rich, instead of shared with the workforce.
carabiner 4y ago
When it goes to zero, your country dies.
kneebonian 4y ago
Well in South Korea's case in particular it's a problem if there are more NK babies born than SK babies when those NK babies are instilled all their life to have a hatred of their cousins to the south. Doubly so when you also have several hundred million Chinese that view your continued existence as the result of Western hegemonic oppression.
ssnistfajen 4y ago
In developed or advanced developing countries, social welfare programs, including pensions and healthcare, are based on tax contribution from the working population. These systems were mostly set up during a period of high fetility where population growth projection appeared to be perpetually increasing. With a declining working population and longer life expectancy, there will eventually be more withdrawals than contributions, causing the welfare systems to run dry without additional intervention. Modern economy systems also function on the assumption of gradual inflation. A chronically deflationary society is one that's at the risk of spiralling into either stagnation or collapse. Post-1990 Japan is the only approximate example of a chronically deflationary society and they have been in almost perpetual QE since 2014 to no avail.

by alexb_ 4y ago

aNoob7000 4y ago

If I'm not wrong, the issue is with funding government programs. Most government programs are funded by taxes and if the populations is dropping then naturally the tax base is shrinking.

alexb_ 4y ago
The expenses would also start shrinking though.
- aNoob7000 4y ago
  Depends on the expense. For example with Social Security, part of the problem we have now is that there are less people paying into the program then in the past. I only see two options, increase taxes or push back retirement.
  - rs999gti 4y ago
    > push back retirement Which leads to violence and protests: https://www.nytimes.com/2023/03/16/world/europe/macron-france-pension.html https://www.nytimes.com/2023/03/16/world/europe/macron-franc...
- xeromal 4y ago
  Not for the elderly population until they die off. More consuming than producing means there's less to give up top.
- s1artibartfast 4y ago
  It doesn't help that the expenses are shrinking at the same rate as income if expenses are greater than income. you still need to balance work needed with work done.

nerdponx 4y ago

I strongly agree that in the long term it's better for everyone to have lower or even zero population growth, possibly with negative growth for a while. I love that more people are shedding the presumption that growth is a necessity for well-being in posterity The problem is in the short term, as the current population starts to skew older, there will be fewer working-age people supporting the increasing numbers of elderly people who retire and eventually can't support themselves even if they want to. This is both a macroeconomic problem (not enough income/production to pay for everything) and a microeconomic problem (literally not enough qualified caregivers, limiting supply of care even as demand increases, and therefore making it much more expensive). Thus we need to figure out a way to make it through the transition out of our current high-positive-growth without creating a crisis of poverty and suffering among the soon-to-be elderly. The answer probably involves nation-state governments creating a shit ton of money to make it all happen. But in the USA at least, we are already very deep in unknown zone of debt-to-GDP ratio above unity, the cost of debt service itself beginning to grow (https://fred.stlouisfed.org/series/FYOIGDA188S https://fred.stlouisfed.org/series/FYOIGDA188S), and an uncertain future around our ability to control inflation with monetary policy. Not to mention the pesky habit of large corporations and wealthy individuals to funnel money out of public expenditure in the form of economic rent. If we could actually stop being greedy for two seconds and try to plan ahead, I'm sure we could figure it out. But when has that ever happened before?

wenc 4y ago
If we take the simplistic assumption that 2.1 children (either through natural birth or immigration) is the replacement rate, we can surmise that for zero growth we would need to hover around that number. 0.78 YoY is negative growth and fast and one wonders if a country is able to adapt its infrastructure sufficiently quickly to this new reality in the next few decades. If you look at the projections, SK’s population will peak in 2024 and the drop after that looks quadratic, back to its 1960s population which is right after the Korean War. https://worldpopulationreview.com/countries/south-korea-population https://worldpopulationreview.com/countries/south-korea-popu...

Zak 4y ago

Most economies are built on the assumption that there will be more young people than old. If that assumption ceases to hold true without some active planning to deal with an older population there will be too many retirees and too few workers. This problem is almost certainly solvable with some planning, but humanity as a whole isn't always good at that.

Night_Thastus 4y ago

The youngest generations are what keep the economy moving. They produce the goods and services, and are the primary buyers of products. When the proportions of young to old get too skewed, each one ends up paying more and more to support the older generations - which means they can't buy as much either. It's economically very bad to have an aging population. Also: It seems in general most economies are centered around indefinite growth. That may sound absurd, but regardless a shrinking population reverses that assumption and causes problems.

rs999gti 4y ago

> What exactly is the problem with a declining population anyways? Federal social programs are all pyramids schemes. They depend on having a large tax base entering the bottom, either immigrants or young people, to constantly keep them funded. The less people at the bottom, the less funding, and now you have austerity programs that have to take effect to prevent the programs from running out of money.

izzydata 4y ago
I'm pretty sure the entire economy is a pyramid scheme for the same reason. We've gotten ourselves into a situation where growth is a necessity.
bryanlarsen 4y ago
At a societal level, money & taxes are a measure of capacity. If you don't have enough nurses to care for the elderly, it doesn't matter how much taxes and funding you have. Money is a worthless piece of paper if you can't buy what you need with it. This framing is important. People think we need austerity because social programs are running out of money. But austerity makes the problem worse. A big pile of money is useless if it can't buy what it needs. In the long run the best way to balance the books is to borrow money and spend it on childcare and child tax credits to encourage having children, spending it on nurse training, et cetera.
- lotsofpulp 4y ago
  > In the long run the best way to balance the books is to borrow money and spend it on childcare and child tax credits to encourage having children, spending it on nurse training, et cetera. I do not know that this is possible without sufficiently high taxes and policies such that a life without kids is seen as undesirable relative to a life with kids. And that is going to be very, very politically unpopular because it is a lot of pain in the short term for long term gains unattributable to the individual. Quite an interesting problem, and I have no idea how this shakes out for my kids and their potential kids.
  - 4y ago

tiny_ta 4y ago

I think the problem is during this transition from a bottom heavy to a top heavy population distribution. Suddenly, you don't have enough of a young and robust workforce to support your aging population. Labour shortage means you can't focus enough on growing and you have to focus more on maintaining the existing infra. You see signs of this happening in Japan already [1]. On the other hand, a situation like this may be ripe for deploying automation across sectors! [1] https://www.imf.org/external/pubs/ft/fandd/2001/03/muhleise.htm https://www.imf.org/external/pubs/ft/fandd/2001/03/muhleise....

nerdponx 4y ago
To be clear, this is a transient problem. But it will take several decades for things to balance out, which could be problematic in the intervening period.
- red-iron-pine 4y ago
  > But it will take several decades for things to balance out, which could be problematic in the intervening period Corporations require continued growth to drive stock prices. How do you have growth when then population is shrinking? There are literally less people to buy gas, food, cars, iPhones, etc. Large investments designed to scale and handle capacity are now losing money, not in use, etc. You handwave this like it's a simple thing, but it will shock the system and lead to massive problems. Perhaps it's necessary, but in the same way amputating a limb might be necessary -- painful and complicated.
- s1artibartfast 4y ago
  Tt could be much longer than decades. Japan has had falling births for 50+ years and no indication of stopping. It is unclear how a country stabilizes birth rates once they start falling, because no modern country has successfully done it. Some countries supplement or offset their population losses with immigration, which comes with its own challenges.
  - nerdponx 4y ago

patrickk 4y ago

The public pension system will be unaffordable, as there will be too many retirees to workers. For highly xenophobic countries with minimal immigration, there is no obvious solution to replace the ‘missing’ workers.

mafribe 4y ago
There is a simple and obvious solution, rise the age of retirement.
- AstralStorm 4y ago
  Does not work, it drains workplaces of jobs and thus availability of secure jobs and housing. That puts the demographic decline into overdrive. Plus, it is diminishing returns. More old people will be ill or otherwise unable to work.

wenc 4y ago

The problem is thinking it’s as simple as resources divided by population, so shrinking the denominator means more per capita resources right? But a country’s infrastructure is built for a certain population size assumption, and the numerator has a highly nonlinear relationship with the denominator, and the denominator is further broken down into subpopulations that affect the numerator non linearly. It’s not a simple ratio. You have to manage population shrinkage almost as carefully as growth, if not more carefully. Shrinkage almost happens in an unpredictable way and instead of ending up like Japan you might end up like Bulgaria. Also a country is not isolated — it’s subject to competitive forces in the world so if the labor force becomes uncompetitive, your economy will tailspin in a way that exceeds your proportional savings from population shrinkage. Improperly managed shrinkage in the extreme can lead to unemployment due to lack of growth, the rise of a disgruntled class which can in turn lead to lots of internal conflicts. There is a lot of system inertia in countries and lots of unpredictable effects.

ewgoforth 4y ago

As the population ages you have fewer and fewer workers supporting more and more retirees.

Longlius 4y ago

Remember how prices exploded when we had supply chain problems last year? Labor is not exempt from supply and demand, and an individual's baked-in demand for labor doesn't decline just because they retire (in fact, in a lot of ways it increases). With a slowly tapering demography, you can do a lot of neat tricks like using technology to improve productivity and make up the difference that way. When your demography falls off a cliff, there is no recourse - the cost of labor is going to massively increase. This is great for working-age people but retirees end up having to pay most of the cost (or rather - it comes out of their pensions both public and private). So a social problem is baked in with this and possibly an economic problem as well because at some point the working-age cohort is going to have to have its resources redistributed to the retiree class to support them.

HDThoreaun 4y ago

In addition to the economic problems the other comments point out, a low fertility rate is indicative of large cultural problems. People are evolutionarily programmed to want kids, whatever the reason that people have stopped is, it probably isn't a happy one.

Qem 4y ago

It's like that saying that it's not the fall that kills you, it's the sudden stop at the end. So, it's not declining population that endangers us, it's the sudden drop in fertility rates that threatens us with a world of elderly people outbidding each other into utter destitution to get basic care from the few working-age people remaining. If the replacement rates do not drop to levels too low (~< 2.1), a new equilibrium will be eventually reached, but with a lot of trouble meanwhile. It doesn't help all the productivity gains from the last decades were mostly pocketed by the super-rich, instead of shared with the workforce.

carabiner 4y ago

When it goes to zero, your country dies.

kneebonian 4y ago

Well in South Korea's case in particular it's a problem if there are more NK babies born than SK babies when those NK babies are instilled all their life to have a hatred of their cousins to the south. Doubly so when you also have several hundred million Chinese that view your continued existence as the result of Western hegemonic oppression.

ssnistfajen 4y ago

In developed or advanced developing countries, social welfare programs, including pensions and healthcare, are based on tax contribution from the working population. These systems were mostly set up during a period of high fetility where population growth projection appeared to be perpetually increasing. With a declining working population and longer life expectancy, there will eventually be more withdrawals than contributions, causing the welfare systems to run dry without additional intervention. Modern economy systems also function on the assumption of gradual inflation. A chronically deflationary society is one that's at the risk of spiralling into either stagnation or collapse. Post-1990 Japan is the only approximate example of a chronically deflationary society and they have been in almost perpetual QE since 2014 to no avail.