The “Growth is Good” Lie

I’m going to comment on the article “The doom-loop of a falling fertility rate” by Damon Linker in The Week.

Growth is good. On that, most of us agree.

What a ridiculous premise. Our out of control population growth has long been seen to be unsustainable. Science tells us that unending growth in a closed system will eventually destroy the system. Growth is only good when there is capacity to grow.

Sure, there are some agrarian localists on the right and antimodern environmentalists on the left who pine for a smaller, simpler world in which we make do with less as well as fewer — fewer cars, fewer smokestacks, fewer cities, fewer carbon dioxide molecules, and yes, even fewer people. But they are very much in the minority.

What evidence is there to back up this claim? Reducing carbon dioxide emissions is overwhelmingly popular. Those who want growth no matter the cost to the environment are surely the minority.

Most of the rest of us consider growth — economic as well as demographic — incredibly important, if perhaps for somewhat different reasons. Nationalists believe in greatness for the political community, and they view growth of all kinds as a means to that end.

No one except politicians gives two shits about the political community. No one believes that the political community and greatness have anything to do with one another.

Mainstream environmentalists understand that combatting climate change will have to involve advances in technology that are driven by a mixture of growth-fueled economic dynamism and public investments paid for, in part, with revenue generated by economic growth.

Do they, or do they look for simple solutions like replacing fossil fuels with renewable energy and taxing emissions?

And liberals recognize the crucially important role that economic growth plays in making possible a rising standard of living — and how giving people at all levels of the economic hierarchy hope for personal, familial, and community betterment diminishes the allure of antiliberal political movements on the far left and far right.

And yet current liberal governments in Canada and the US are pumping the economy with deficit spending, which will eventually lead to the need for austerity.

That’s why the recent news that declines in the U.S. fertility rate over the past decade and a half are continuing, and may even be accelerating, is so distressing.

Only to the rich, who rely on growth to allow them to live off the proceeds of their investments. The average person doesn’t care.

Replacement-level fertility — the number of babies each woman, on average, needs to have in order for the country’s population to hold steady — is 2.1 births per woman. As recently as 15 years ago, the U.S. was bucking the trend of many peer nations in Europe and Asia in averaging about 2.1. But since 2007, the year before the start of the financial crisis and the extended recession that followed, we’ve fallen off a cliff. By 2019, the average number of births per woman had fallen to 1.71, and last week the CDC announced that the number dropped to 1.64 in 2020. That most recent downtick may be partly driven by the COVID-19 pandemic, but it’s not divergent enough from recent trends to suggest there will be a reversal once the pandemic passes.

I agree that the pandemic is only exacerbating the situation. So why has the birthrate fallen off?

For now, the American population continues to grow, in part because of our relatively high levels of immigration. But we’re growing at the slowest rate since World War II, and even this anemic level of growth will soon come to an end if the fertility rate doesn’t bounce back.

Current population growth is due only to momentum. There is a large cohort of people, the baby boom echo, who are having children now, though in vastly smaller numbers than their parents did. Eventually, as the boomers and then the boom echo generation X die off, the population will begin to shrink rapidly if the birth rate stays where it is.

In such a world, the median age of the population would rise over time, with fewer young people available to work relative to the increasing number of retirees. The shrinking workforce would act as a drag on productivity and economic growth, leading us at first to generate wealth at a slower rate than we’ve grown accustomed to, and eventually to grow poorer over time.

We are already living in this world. The effects, that retirement ages for government pensions are being increased and that mandatory retirement is being abolished, are widespread. Automation and innovation will counter some of the loss of productivity.

Meanwhile, fewer people would be paying into social programs (Social Security and Medicare) struggling to support ever-greater numbers of the elderly, placing those programs under increasing strain and necessitating tax increases or additional deficit spending to cover costs, with both of those possibilities adding to the economic drag. And of course, those economic struggles could further discourage people from having children.

Increasing taxes will indeed further discourage people from having children, and will lead to them having fewer children later in life. Controlling costs in government run medicare is extremely difficult.

That’s the doom-loop of a falling fertility rate — and countries around the world, from Italy and Spain to China and Japan, are in danger of falling into it, along with the United States.

Is it a doom loop, or merely a short term crisis? Why is the birth rate so low? What would have to happen for it to return to the replacement level?

The trend would be less alarming if there were obvious things we could do to reverse it. But there aren’t.

The “obvious” things governments have tried (essentially paying people to have children) have failed miserably. That doesn’t mean that there aren’t obvious things that can be done, only that we aren’t doing them. Studies have consistently shown that the desire to have more children is there.

I’m cheered by growing bipartisan support for making it easier for people to afford children, and I don’t have strong views about whether the Biden, Romney, or Hawley plans take the right approach. Any of them would be a positive improvement. But none of them is likely to do very much to increase the fertility rate. (Efforts in other countries to incentivize childrearing with pro-natalist policies have had, at best, marginally positive results.)

So why are you cheered? See Is Birthrate Decline a Bad Thing? and Birthrate or Workforce Participation: Pick One for more information on the failure of government incentives to increase birthrates.

That’s probably because the factors driving people to opt for smaller families are much more powerful than other considerations. People across the world tend to start families later and have fewer kids when they are wealthier, better educated, and have easy access to reliable birth control, and the prospect of receiving a government check or a tax break isn’t enough to act as a countervailing incentive for most people.

Wealth and education were around for centuries without leading to fertility dropping below the replacement rate. What is a relatively recent development is birth control, though industrialization, which vastly increased the size of the middle class, was likely a factor too.

This challenge leads some people, often economists, to suggest that the best, and maybe only, viable response to declining birth rates is for countries to increase levels of immigration, especially from regions of the world with a lot of excess (above replacement-level) births. If a country’s population is stagnating or declining from a lack of births, it can be increased by letting more people settle and work there. And if the immigrants’ own rates of reproduction exceed that of the native-born population, the positive demographic result might even extend beyond the first generation. (After the first or second generation, immigrants tend to assimilate to American economic and social norms in favor of smaller families. This is precisely what’s happened with Hispanic immigrants over the past several decades.)

Economists are only looking at the short term economic impact of reduced population growth. They are completely ignoring the long term negative effects of environmental degradation due to overpopulation, which are now becoming apparent all around us, as snow packs shrink, jungles and forests disappear, and the ocean acidifies and is strip mined by multinational fishing companies.

That sounds like a reasonable proposal — at least until you recall that our historic moment is marked by the rise of political movements that are passionately opposed to immigration. The left may denounce those drawn to such movements as racists, but hurling insults is unlikely to change their views. This raises the possibility that the one thing that could meaningfully produce population growth would also further catalyze the far right and potentially destabilize the country politically.

Opposition to uncontrolled immigration is not a far right position. Because the left are loud, they convince the centrists that theirs is the popular opinion. The average working class person doesn’t want a bunch of immigrants competing with them for jobs. Rather than destabilizing politics, pushing uncontrolled immigration could hand control to the right, as it did in the United Kingdom.

And so we’re left with the possibility that there may be no way to break out of our demographic decline — at least in the short-to-medium term.

And that is a good thing in the long term.

As I noted above, a declining population and rising median age will tend to drive down economic productivity and growth and could eventually make Americans poorer, in the aggregate, over time. But as I’ve also pointed out, increasing wealth tends to contribute to declining birthrates. What if declining wealth removes that disincentive toward procreation, producing a self-correcting uptick in the birth rate once again? What if, in other words, a poorer America of the future turns out to be a more fertile America, just as the the poorer America of the past tended to have much higher birth rates than we see today?

I think you overestimate the importance of wealth in curbing birth rates. The poor America of the past was a very rural America. If Americans do become poorer–and currency devaluation seems much more likely to lead to this than reduced productivity due to aging–who is to say they will have more children?

Since economic downturns tend to be correlated with declining birthrates, such a shift might never materialize. (It may be that demographic and economic growth, as well as demographic and economic decline, are each mutually reinforcing.) That wouldn’t mean we’re destined for a continuous downward slide. But it might mean that there is little or nothing that any person, party, or government can intentionally do to slow or reverse the trend.

Eventually, the age demographics will return to normal. If, in the meantime, productivity losses are prevented by automation and new technologies, why should we import masses of unskilled third world refugees? This benefits businesses, giving them a source of cheap labour, but it reduces wages and opportunities for our own unskilled workers. It will have the unwanted effect of further exacerbating wealth inequality, which automation is already doing.

A more interesting question than how we deal with our demographic winter is why is it that birthrates have declined, when most people say that they desire more children? It seems clear that birth control is the innovation that enabled people to have fewer children. What caused them to turn to it even though they profess to want more children than they’re having? Here are some possibilities:

  1. Women joined the workforce to supplement their families incomes, but over time, the economy adjusted and now two incomes are needed just to make ends meet.
  2. When a woman is pregnant, she may not be able to work, so couples never feel ready to have children.
  3. As manufacturing has been automated or off-shored, high paying jobs that could allow couples to afford to have more children have disappeared.
  4. No fault divorce and family courts that allow women to take advantage of men mean there are fewer men willing to start families.

About jimbelton

I'm a software developer, and a writer of both fiction and non-fiction, and I blog about movies, books, and philosophy. My interest in religious philosophy and the search for the truth inspires much of my writing.
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