"Demographics is Destiny?"

 As a fan of Anthony Trollope, I got a smile yesterday in reading a review of The History of England’s Cathedrals in The Wall Street Journal by Benjamin Riley. The book’s author, Nicholas Orme, quotes the diarist Henry Channon who, with a few friends, sat down with Francis Underhill, bishop of Bath and Wells, in the early 1940s. Underhill, a devotee of Victorian literature, quipped: “There is nothing I like better than to lie in my bed with my favorite Trollope.”

 

With an abundance of negative news I thought re-telling the story might, too, produce a smile.

 

As for this essay, the subject is one widely discussed in think-tanks, books, academia, and the media, but it is an issue that politicians, in a commendable bi-partisan coming-together, have chosen to ignore, as addressing its consequences might affect their re-election chances.

 

Sydney M. Williams

www.swtotd.blogspot.com

 

Thought of the Day

Demographics is Destiny?

March 4, 2024

 

“If global population stops expanding and then contracts, capitalism – a system implicitly predicated

on ever burgeoning numbers of people – will likely not be able to survive in its current form.” 

                                                                                Zachary Karabell (1967-)

                                                                                Founder, Progress Network at New America

                                                                                Reviewing The Human Tide (Paul Morland) in Foreign Affairs

                                                                                September/October 2019

 

Apart from Israel, which has a TFR (Total Fertility Rate) of 2.9, no Western nation (including Japan, South Korea, and Taiwan) has a birthrate above replacement rate, which implies – barring immigration – a West that faces aging and, ultimately, declining populations. (It is only fair to point out that China, Russia, and North Korea also have declining birthrates.) 

 

As Mr. Karabell wrote in the review quoted above: “Governments worldwide have evolved to meet the challenge of managing more people, not fewer and older.” Yet the opposite is in the offing. The effect on living standards could be startling. Economic growth depends on many factors: free markets, rule of law, global and fair trade, the right to property ownership, innovation, entrepreneurship, secure borders, but also on an expanding working-age populations.

 

Or, at least, a growing population has always been a key driver for economic growth. However, in a 2019 review of Paul Morland’s The Human Tide, Jason Willick wrote: “New technology such as cloning, space travel and artificial intelligence could mean the current demographic slowdown is not an endpoint but an interregnum before another era of radical political change sweeps all before it.” That is possible, and it is also possible that artificial intelligence will forego the need for additional white-collar jobs. But there is no way to avoid an aging population, along with ever-higher costs of healthcare for the elderly. Robots and computers do not pay taxes; people do.

 

The United States is better situated than most Western nations, as it attracts migrants to offset declining birthrates, though our population continues to age. Europe, as well, attracts migrants from the Middle East and North Africa, but at a lesser rate, and with less assimilation. While birthrates have declined in developing countries, many are still positive. Nigeria, for example, with a population of 226 million and a TFR of 5.3, is projected to have a population of 550 million by 2100. According to projections both Pakistan and Nigeria will surpass the United States in terms of population by 2100. China’s population will shrink to about one half that of India, the only country predicted to have a population over one billion in 2100. 

 

The study of demographics – the statistical study of human populations, how they change through fertility, deaths and migration – has been around for a long time. The economist and Anglican cleric Thomas Malthus is famous for the prediction in his 1798 book, An Essay on the Principle of Population – that an increase in the world’s food production would lead to more births and declining living standards. What he failed to anticipate was the Industrial Revolution. While the world’s population grew eight-fold over the past two hundred years, the percentage of people living in extreme poverty shrunk from roughly 90% to about 10%.

 

The problem facing much of the planet is the opposite of the one that concerned Malthus. Population declines, at this stage, have been masked by increasing life expectancy and, in some countries, by immigration. Nevertheless, over the past three years Japan’s population has declined by 1.4 million, China’s by 700 thousand, Russia’s by 600 thousand, and Italy’s by 400 thousand. Germany has shown a small decline, while France and the UK have had modest increases, largely due to immigration. A United Nations’ study in 2022 predicted that by 2050 population declines of greater than 15% will be experienced by two Baltic nations, Lithuania and Latvia and seven eastern European countries – Bulgaria, Ukraine, Serbia, Bosnia-Herzegovina, Moldova, Hungary, and Croatia. Portugal and Italy are expected to have population declines of more than ten percent. Declining birth rates are affecting the United States as well. Here, in 2013, with a population of 316 million, there were 3.9 million births. In 2023, with a population of 334 million, there were 3.7 million births. While the number of births exceeded the estimated 3.3 million deaths in 2023, the ratio is shrinking.

 

In the recent issue of The Spectator, Paul Wood wrote of the situation in Italy, in an essay titled “Empty World.” In it he noted that Italy’s TFR is 1.24. Deaths, he pointed out, have out-numbered births “for more than thirty years.” His analysis suggests that one cause has been an increase in childless couples, that if “a couple does start a family, it is likely to be as big as in decades past.”  But couples who delay the start of a family often wait too long.  London’s left-wing The Guardian suggested that right-wing policies might be, in part, to blame, as families have had to assume some of the costs of the care for their elderly, as the State has become financially strapped. Wood quoted Giulio Meotti, a columnist for Il Foglio: “We are in serious trouble…waiting for the inevitable. It’s a slow suicide.” 

 

The immediate problem for the United States is the one of aging – the increase of those in retirement years and their increased health-related expenses, and the decrease of those of working age.  In 1960, life expectancy (70) was almost ten years less than it is today (79), while the number of working-age people per retiree (6) was twice as many as today (3). For decades politicians have successfully avoided the unpleasant task of reforming Social Security and Medicare. They won’t be able to do so much longer. According to the Social Security and Medicare Board of Trustees’ 2023 annual reports, Medicare and Social Security unfunded long-term liabilities now exceed $78 trillion, over $600,000 for every U.S. household. 

 

The question of demographics raises issues. Why does marriage seem a rite easy to postpone and why are couples having fewer children? Will retirement ages be raised? Will life expectancy continue to increase? What are the economic and social consequences of fewer children, a shrinking workforce,[1]and an increase in retirees? On the other hand, is it possible that today’s demographic Cassandra’s fail to foresee political, social, or technological changes that could alter what otherwise looks to be a bleak and costly future?

 

Is our destiny predicated on trends in demography? Certainly, at least partially. But our future well-being also depends on a vibrant democracy, sensible and legal immigration, individual innovation, education, and culture. The most harmful consequences of birthrates below replacement may not be felt for several years, but it is an issue that should be debated and addressed now.

 

 

 

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[1] In fact, and as noted by University of Amsterdam sociology professor Hein de Haas in last weekend’s edition of The Wall Street Journal, a need for lower-cost labor in industries such as hospitality, healthcare, restaurants, cleaning, and agriculture is a major reason for the migration surge at our borders.

"Sustainability"

 

Sydney M. Williams

www.swtotd.blogspot.com

 

Thought of the Day

“Sustainability”

March 18, 2023

 

“We can chart our future clearly and wisely only

when we know the path which has led to the present.”

                                                                                                                        Adlai Stevenson (1900-1965)

                                                                                                                        Speech, Richmond, VA, Sep. 20, 1952

 

Sustainability is an over-used word. Or is it? Googling the word generates over three billion hits, almost three times the number of hits generated by its parent, sustain. It is a relatively new word, first appearing in the United Nation’s 1987 Brundtland Report, which defined sustainable development as meeting “the needs of the present without compromising the ability of future generations to meet their own needs.” It generally refers to climate and the environment and what man is doing (or not to doing) to sustain it, along with racial, gender and equity issues. Wikipedia defines sustainability as “a societal goal that relates to the ability of people to safely co-exist on Earth over a long time.” (Sustain is defined: to support, uphold, or strengthen.)

 

In 2015, the United Nations adopted a collection of 17 interlinked objectives called Sustainable Development Goals (SDGs), which include: the elimination of poverty, reduced inequalities, climate, peace, justice, decent work, responsible communities, and strong institutions – all goals with which no reasonable person would disagree, but also words whose definitions are amorphous, and which can vary with user. Nevertheless, woke universities and colleges have been quick to add “Sustainability Institutes.”

 

But might the word be more inclusive? We must harbor our resources and protect the environment. But we must not constrain man’s propensity to create and adapt. It was underestimating man’s capacity to innovate that led to Thomas Malthus’ faulty prediction in 1798, that population growth would exceed resources. People need the freedom to express ideas, and the freedom to go where aspiration, ability and dedication take them. For that they need a sustainable political environment, which allows for individual freedom, functions under the rule of law, includes property rights, and provides access to free markets. 

 

As Governor Stevenson is quoted in the rubric above, we should not, in our quest for sustainable climate destroy (or ignore) the political, social, and economic paths that have brought us this far. Sustainability needs to apply to individual freedom, our system of free markets, population growth, and to a defense system that ensures the safety of our nation and its people. Freedom is at the core of our democratic society.

 

Yet, while concerns for climate, environmental, racial, equity, and gender sustainability in the U.S. have waxed, concerns about freedom and families have waned. The Human Freedom Index, an annual report that measures human freedom in 165 countries, is co-published by the Cato Institute, the Fraser Institute of Canada, and Switzerland’s Liberales Institut. It is the most comprehensive measure of freedom yet created. It assesses categories like rule of law, security and safety, religion, and freedom of expression. For 2022, in terms of personal freedom, the United States (the “land of the free”) ranked 24, just behind the Czech Republic and Italy and just ahead of Uruguay and Spain. As for family formations, a Pew Research study shows a steady decline in the rate of growth over the past forty years. 

 

 

While regional and class differences have made for uneven progress, broadly speaking Americans have, over many years, enjoyed increases in standards of living, as measured by GDP per capita and life expectancy. This has been largely due to free-market capitalism, yet a June 2021 survey by Axios and Momentive showed that only 49% of young Americans (18-34 year-olds) held a positive view of capitalism, while 51% held a positive view of socialism. This repudiation of capitalism by youth suggests ignorance of our history, and a lack of awareness that, according to the 2019 Federal Reserve’s Survey of Consumer Finance, more families than ever own, in some form, publicly traded stock – 53% versus 32% in 1989. It is troubling, as well, that labor force participation has declined from 66.3% in 2003 to 62.5% in 2023. If we cannot sustain an economic system that has benefitted so many, living standards will inevitably decline.

 

It is possible that concerns about the sustainability of climate have negatively impacted population rates, especially in the developed world. Total Fertility Rates (TFRs), which measure the average number of births to a woman over her lifetime, have been declining worldwide for several decades. The world TFR in 2000 was 2.7; today it is 2.4. (2.1 is deemed replacement rate.) most of the decline is in East Asia countries like Japan, South Korea, and China, and in Europe and North America. In 2022, the U.S. TFR was 1.64, versus 2.1 in 2000. The decline is worldwide. Forty years ago, the continent of Africa had a TFR of 6.5; today it is 4.2, and the United Nations predicts it will decline to 2.1 by 2100. Life on earth will not be sustained should populations age and shrink.

 

We can ask: Can we maintain our leadership position in the world, as a beacon of freedom and opportunity, without sustaining an educated citizenry? Reading and math scores have consistently fallen for young U.S. students on international tests. U.S. students are at or below the median for scores on reading, math, and science on PISA (Programme for International Student Assessment) rankings. The closing of schools during the pandemic accelerated a trend already in place.

 

While the United States still out-spends all other countries in terms of defense, and while the proposed budget – unadjusted for inflation – calls for the largest amount ever, we should be concerned. Over the past fifty years, with brief exceptions during the 1980s and in the aftermath of 9/11, defense spending as a percent of GDP declined from 6.5% in 1972 to just over 3% in 2022.  Today, China has the world’s largest navy and the most men and women in uniform. With rising threats from China and Russia, military spending as a percent of GDP is inadequate. Yet total federal spending, as a percent of GDP, is 20% above where it was in 2019. Transfer payments comprise most of the difference. With an unprotected southern border, a military falling short of recruits, and a navy that has half the vessels of China, is our defense sufficient? 

 

Of all the world, we are among the luckiest people. It is not because of our efforts, but because of the wisdom, fortitude, and diligence of our forebearers. The world has been, is, and always will be a risky place, as we saw this past week with the failure of SVB and other banks. Are we prepared? I would say no. Our responsibility is not just to sustain the life we have, but to build upon what we were gifted.

 

As Governor Stevenson said in the quote that heads this essay, to know where we must go, we must first understand how we got here. Yet, none of the factors – individual freedom, democracy, accountability, rule of law, capital markets, property rights, defense – which contributed to our success as a nation and a people are included in the UN’s SDGs. We should sustain them and improve them, gradually and over time. As for the sustainability of climate, science and history tell us that cannot be done by man alone. The Earth will warm, and it will cool. We can minimize its harmful effects but, ultimately, we will have to adapt.

 

Sustainability is an ill-defined and ill-used word. It should be used with care, or it should be returned to the place from which it emerged.

"Challenges"

 Yesterday was the 50^th anniversary of Earth Day, originally established to celebrate awareness of, and to help protect, our environment – still a message that resonates. Sadly, it has been usurped by politicians and other cranks who claim that climate change is caused solely by humans, like Al Gore, who used the issue to gain wealth and John Kerry, who uses it to maintain relevance.

 

Sydney M. Williams

www.swtotd.blogspot.com

 

Thought of the Day

“Challenges”

April 23, 2022

 

“If we want a society where truth can be pursued,

we need a system in which ideas can be expressed.”

                                                                                             Steven Pinker, Cognitive Psychologist, Harvard College

                                                                                             Phone interview with A.R. Hoffman, New York Sun

                                                                                              April 2022

 

In a letter to a friend in late 1777, after General Burgoyne’s loss at Saratoga, Adam Smith wrote: “There’s a great deal of ruin in a nation.” His point was that great nations can withstand defeats – that it takes a great deal of bungling to bring down a powerful and prosperous state. But he did not deny that nations, like empires, can and do collapse.

 

We face challenges, but is the United States confronting ruin that could imperil our way of life? In the April 11, 2022 issue of The Atlantic, Jonathon Haidt wrote an article titled “After Babel: How Social Media Dissolved the Mortar of Society and Made America Stupid.” “Something went terribly wrong, very suddenly. We were disoriented, unable to speak the same language or recognize the same truth. We are cut off from one another and from the past.” Mr. Haidt warned of abuses from social media, which he blamed for the lack of cohesiveness, civility and trust in society and in government, as well as being a risk to democracy. The answer, he believes, lies in three parts: “hardening” democratic institutions against extremist elements; providing more intense regulation of social media, and helping the next generation by letting children be children, encouraging more time for fun and less time on smart phones. While I agree with his suggestions about children, I have doubts as to the wisdom of “hardening” democratic institutions, and I am not a fan of more regulation. In addition, I was disappointed he did not spend more time on how social media impedes free speech, in legacy media, schools, universities and in board rooms

 

A world in a whirlwind needs an anchor to windward. For most of man’s history that was religion. Today, in the United States, just over 40% of Americans say religion plays an important role in their lives. In the past two hundred years, since the onset of Industrial Revolution, there have been unprecedented changes in the lives of our species. Life expectancy in 1800 was 43, about the same as it had been at the time of Christ. In the past two centuries, it has increased almost 100 percent, and the quality of our lives have improved in hundreds of ways: transportation, communication, agriculture, the environment, sanitation, education and healthcare. Consider improvements we take for granted – central heating, air conditioning, public transportation, on-line shopping and options in entertainment. Think of the knowledge we have access to today through the internet. For better and for worse, social media has been one of those changes. We must ask ourselves: Has innovation outstripped our species’ innate ability to adapt?

 

For thousands of years man could travel (on land) only on foot or by horse. Now there are an estimated one billion passenger cars serving a world-wide population of eight billion, and rockets take us into outer space. The world’s population has grown by a factor of eight since 1798 when Thomas Malthus published his theory that a geometric increase in population could not be sustained with an arithmetic increase in food supply. He was wrong on both counts. Birthrates declined and food production per acre increased. The average American lives longer, eats better and lives more comfortably than yesterday’s kings. Consider the changes in communication in just the past twenty years. Technological advancements have outpaced the ability of humans to evolve naturally, and religion, as a moral anchor, no longer plays the role it once did.

 

Social media challenges customs and traditions. But we also face other threats: The United States is a multiracial nation, yet we are condemned as being systemically racist by today’s progressives. In an April 18^thopinion for americagreatness.com, Victor Davis Hanson asked of America: “Can its various tribes and races unite around the Constitution?” My answers: If left alone from interfering progressives they would, but not when a cult of “social justice” drives decisions at schools, colleges and businesses. And not when we are seen as a nation of victims and victimizers. Woke progressives divide us based on race, ethnicity and gender, but not on class. Individualism has been sacrificed on an altar of collectivism. A black NBA millionaire is oppressed, while a white auto mechanic is an oppressor. A transgender cable TV anchor is a victim, while a white, cisgender nursing home aide is a victimizer. Globally, a peace-loving Israeli farmer is an aggressor, while a teenage Palestinian terrorist is a victim. Woke political correctness, with its mandate for diversity, equality and inclusion, threatens democracies.

 

In my opinion, the biggest challenge we face are threats to speech. Free speech encourages debate, thus slows decisions, an irritant for an impatient world. Social media, like Twitter, acts as a conduit, rather than an open forum. Today’s technocrats resemble H.G. Wells’ Morlocks, in their desire for control and in limiting open discussion. Opposition to free speech originated on college campuses, where professors fear offending sensitive students and where administrators see their mission as the indoctrination of students into a woke ideology, rather than providing an open-minded, liberal education. In this milieu, conservatives have been censured or cancelled. Intolerant woke ideologies have advanced in mainstream media where reporters act as editorialists, and they have infiltrated corporations where fear for one’s job prevents questioning doctrines of social justice. In Washington, what is information to one politician is labeled misinformation by another. People are not stupid. Let them hear both sides and decide for themselves.

 

There is validity to the concerns expressed by Mr. Haidt in The Atlantic, as social media attracts extremists and dregs of society; it is addictive and harmful to the vulnerable young, and much of the information that flows through its portals is garbage. But the way to handle the problem is to help users differentiate between good information and bad, to help them understand both the positive and negative aspects of what they are reading and viewing. The best way to do that is to ensure a classical, liberal education, where youth are exposed to different ideas and opinions, where they learn through debate and discussion, and where they are taught rules of moral behavior that have withstood the test of time. Religion, meditation and tradition provide moorings in an ever-changing, restless world. They restrain behavior and act as a governor on technological changes that infuse our lives. The great value of free speech is that deliberation slows the process of change by making all participants consider the consequences of their decisions.

 

Is the challenge we face enough to bring ruin to our nation? I don’t pretend to know. I hope not, but I worry.

"Corona Virus and the Economy"

Sydney M. Williams

www.swtotd.blogspot.com

Thought of the Day

“Corona Virus and the Economy”

March 14, 2020

“In general, positive Black Swans take time to show their effect,

 while negative ones happen very quickly—it is much easier and much faster to destroy than to build.”

                                                                        Nassim Nicholas Taleb (1960-)

                                                                        The Black Swan: The Impact of the Highly Improbable, 2007

What impact Covid-19 will have on the global economy no one now knows, but at least two things seem clear and will have consequences, both of which have been instrumental in keeping inflation at bay. First, the benefits of globalization and, second, the process of “just-in-time” inventory. Both bear risks.

The concept of free trade is a search for an ideal, not unlike King Arthur’s Knights’ quest for the Holy Grail. However, the reality of free trade can never be. Yet the closer we get the better all are served. Free trade is based on the concept of division of labor, popularized by Adam Smith, of labor costs, and by the availability of natural resources and of the means of shipping resources and finished goods. Theoretically, each nation should manufacture for consumption and export that which it can produce most cost-efficiently – whether the product is soybeans, oil or electronics – and import what it needs.

Easier said than done. Every country has arable land. Every country has workers skilled in multiple areas, not just in those for which they are best known. No country wants to be totally dependent on another. Exploitation and subservience are, though, unfortunately, natural conditions of man. As well, intellectual property is protected in some countries, but not in others. Rule of law does not apply evenly. Nevertheless, the goal of global trade is worthy. For one, it takes advantage of efficiencies, resources availability and labor costs. But, most important, trade requires that countries communicate and come together, and gathering is better than isolating.

Trade has reduced inflationary pressures on the price of consumables, by outsourcing manufacturing and assembly to countries with low labor costs. Medicines produced by American companies in India or China would have been more expensive if produced in New Jersey or Illinois. The same could be said of automotive parts and consumer electronic gadgets. While low prices for finished products have benefitted consumers, the losers include factory workers and lab technicians – and perhaps consumers if and when supply disruptions come. In July 2019, the U.S.–China Economic Security Review Commission invoked a Department of Commerce study that found that 97% of all antibiotics come from China. The Corona Virus, originating in Wuhan, has highlighted the disadvantage of dependency on China for something as vital as antibiotics.     

Just-in-time (JIT) inventory is a management tool that dates back to the 1970s, when it was perfected by Toyota as a means of meeting consumer demands with minimum delays. JIT means that manufacturers produce to demand, distributors carry less inventory and retailers stock less goods – all result in lower costs to consumers. With plentiful goods on store shelves, JIT has been adopted by most American consumers. We tend to not stockpile, as we know if we run out of something, like bottled water or paper towels, we simply replenish what we need. However, there are times when panic causes habits to change. The oil embargo in 1973 caused a temporary gasoline shortage. Long lines at gas stations, limited purchases and lower speed limits were a consequence. There was not a spate of road trips or the purchase of gas-guzzling SUVs. In reality, inventories, instead of being held by gasoline dealers, were held by consumers who never let their gas tanks go below half. With 125 million registered vehicles in 1973, that meant approximately 1.25 billion gallons of gasoline were squirreled away in the tanks of cars and trucks. Today, we are seeing a similar demand for products like bottled water, paper towels and toilet paper. Corona Virus has some unknown effects, but one of them does not appear to be diarrhea. Yet three grocery shelves in my area were empty of toilet tissue this morning. Why? Need has not changed. People are hoarding. It will end when consumers realize they have no need to store more toilet paper.

Richard Thaler (born in 1945) of the University of Chicago and who won the Nobel Prize for Economics in 2017 is considered the father of Behavioral Economics. But the fact is all economics relate to behavior. Economics was once considered the “Dismal Science,” a term coined by Scottish essayist Thomas Carlyle, who had in mind Thomas Malthus’ theory that population growth would outstrip the ability to produce food, thus predicting a destiny of starvation and poverty. Malthus was wrong in that he underestimated man’s creativity. In truth, we react to carrots and sticks, to encouragement and fear – to real and emotional consequences. Advertisers understand this. And, just as the gas crisis ended as suddenly as it began, so will the current shortage of toilet paper. People’s needs have not changed, just their impulses.

For anyone who tries to stay on top of the news, it is impossible to determine how bad the Corona Virus will be. No one wants to underestimate its potential harm, in part because doctors know so little about it. Schools, colleges, sports arena are driven by concern for their students and patrons, but they are also conscious of liability, for we live in a time when and where tort lawyers loom large. Has it been politicized? Of course. We are in an election year, with a President popular with millions of followers, but despised by most of mainstream media. The economy has been Mr. Trump’s strongest suit. Should it falter, the advantage will accrue to his opponents. It is understandable that he does not want people to panic (and they should not), but they should be concerned, and they should be careful. Mr. Trump’s press conference on Friday was accompanied by a thousand-point rise in the DJIA, albeit from a distressed level. There is no reason to expect the rally to continue on Monday, but there is nothing to suggest it will fall off sharply.

The Corona Virus has temporarily altered views toward borders and global trade, but my guess is that the ultimate consequence is to cause people to consider more carefully the advantages and disadvantages of both. The same is true of inventories. Black Swan events are difficult, to predict and endure; but we have successfully faced formidable challenges in the past. We will face others, as well, in the future. In 1859, at the Wisconsin Fair in Milwaukee, Abraham Lincoln spoke to the crowd: “Let us hope, rather, that by the best cultivation of the physical world, beneath and around us; and the intellectual and moral world within us, we shall secure an individual, social, and political prosperity and happiness, whose course shall be onward and upward, and which, while the earth endures, shall not pass away.” Words to ponder as we stalk the aisles looking for the elusive roll of toilet paper.