Demography is Destiny Laura Fallon

In a bid to find something that is not Covid-19 related to talk about there have been a number of articles in the press recently about a future world in which population will shrink rather than grow. This creeping change will have a profound affect on all of us including the local authorities that educate the young, care for the old and help raise taxes. ‘Peak People’ is expected to occur around 2064 with the population reaching a high of around £9.7 billion. After this the population will begin a sustained fall: something which humanity has never experienced before.

A lot of this is a good news story: women throughout the world are able to choose to have smaller families because they are well educated and have access to contraception. Reduced childhood mortality and welfare states have reduced the need to have large families to provide an insurance policy. Less people avoids the Mathusian catastrophe of exceeding what the Earth’s resources can take: it means less global warming, less rubbish filling up landfills and less destruction of wild habitats.

Unfortunately what is good for the environment, and parents (or non-parents!), is less good for governments both local and national who have to work out how to fund more expensive public services from a dwindling supply of people of working age. It works like this. To start with countries tend to have high birth rates and lots of children, but not many old people. This creates something of a burden on the economy because children can’t work yet and you have to pay for their education. This is where most of sub-Saharan Africa is now. Then people start having smaller families so you have less children to pay for but you also don’t have many old people yet; this creates a golden period known as the ‘demographic dividend’ when societies really benefit from lots of working taxpayers and not many young or old to look after. This period can have huge economic and political ramifications and has played a major part in phenomena such as post war success of Japan, the rise of China, the Celtic tiger of the 1990s and the Arab Spring of the 2010s.

Eventually however this glut of working age people grow old and you have an aging population who aren’t working and need increased medical and social care. This is where Europe, South Korea and Japan are now and China is teetering on the edge of. Whilst most ‘aging’ countries remain wealthy,  these developments in demographics has inevitably put huge pressures on them and is likely to have contributed to the stagnation of economics seen since the financial crisis (and in Japan since long before then). Whilst this affect is most acute when the birth rate reduced quickly (the birth rate in Iran was 6.5 children per women in 1982 and 1.8 in 2007), if birth rates are set to be perpetually below the replacement level of 2.1 this ‘more old people than working age people’ affect will continue forever as there are always less people being born than the previous generation.

Most developed countries now at least to some extent pursue pro-natalist policies of trying to encourage families to have more children – from the Japanese government running dating events to Sweden’s famed generosity for paid parental leave and subsidised childcare. Whilst this may help it remains difficult to persuade or bribe people into having more children. Even Sweden has only managed to boost the number of children born per women to 1.9 from 1.6 in 2000 – still not enough to prevent the population shrinking.

The other general solutions are immigration and higher taxes. Countries like Britain have so far got around this problem by importing people and are still seeing the population rise overall because of this. The large number of immigrants employed in our health and social care sector for whom the NHS charge was scrapped during the current pandemic is just one example of this. Part of the reason an aging population in Japan has been such a problem is that immigration is still uncommon there. An obvious long term problem with this solution is that once the population of the whole world starts reducing this is no longer going to be an option. In Britain probably this is too far off for our lifetimes: the already mentioned sub-Saharan Africa’s population is set to treble in size by 2100 and provided we remain a safe and prosperous country people will want to come here. Eventually however Africa’s population is expected to start shrinking to and our grandchildren may not have this ready solution in their arsenal.

Finally tax rises across the world are probably inevitable and will indeed be a continuation of a huge increase in taxation and the role of the state seen across nations since the first and second world wars. Anyone who is working can expect to see a higher proportion of their income redistributed to pay for old people’s homes and healthcare. Although this sounds like a bad thing, I think most people would agree that it’s an acceptable trade off to mean women can have the number of children that they want and avoid destroying the planet in the process. As has happened in the past developments in technology should mean we can all continue to do more with less and so support our aging population whilst still enjoying better lifestyles. It is one of our biggest challenges yet.