A Missed Opportunity
China and Japan have been in the news recently for the same reason. They both have shrinking, and aging, populations. The reactions of both countries have been similar, too. They are looking for ways to increase their populations. Since neither country is immigration friendly, they are trying to do it through increased births.
China’s population has fallen for the first time since 1961. They had just 6.77 births per 10,000 people last year. The US had over 11. Xi Jinping, China’s leader, says that boosting birth rates is a priority for the country. Japan’s population has fallen from 128 million people in 2017 to 125 million people now. The whole country had only 800,000 births last year. Japan’s Prime Minister, Fumio Kishida, says, “Japan is standing on the verge of whether we can continue to function as a society. Focusing attention on policies regarding children and child-rearing is an issue that cannot wait and cannot be postponed.”
The reason both countries are worried is because of the conventional wisdom regarding declining and aging populations. People say that a country needs more workers to continue to grow. They also say that the current workers are the ones who support the elderly who have left the workforce. Without enough young workers, the social security system collapses. That’s not even getting into the shrinking tax base. The government will be forced to shrink as less revenue comes in due to the smaller population. That all makes it sound very bad.
The shrinking and aging populations should not have been a surprise to either country. Demographers have been talking about it for decades. It’s one of those human oddities where as a society gets richer, its birth rate falls. The world population is expected to shrink, too. We will top out sometime in this century and it will start falling after that.
If the conventional wisdom is right, we’re in for a world of hurt. If we think we’re going to fix things by encouraging more births, I have a hunch we’re going to be disappointed. Rather than trying to reverse the demographics, China and Japan should be searching for ways to overturn the conventional wisdom.
We have reached a technological point where this should be possible. (I’ve talked about this a bit here and here.) All it takes is some unconventional thinking. (I probably shouldn’t say “all it takes” since people tend to be bad at unconventional thinking.) For so long, we’ve had a steadily growing population. We need to think seriously about what to do as things change. The answers can’t come from the same old economic playbook. We’ve never planned for a shrinking economy before, but that’s what China and Japan have to do now.
I’m going to refrain from specific policy proposals here. I’m not an economist or social scientist. I’m just some schmo with a blog. All I know for certain is that making more babies isn’t the way to go. At best, it’s delaying the inevitable. It’s avoiding the problem. This should be seen as an opportunity to experiment. If only Japan and China and the rest of the world have the courage to try something new, shrinking and aging populations won’t have to lead to a crisis.