Taps Coogan – February 5th, 2024
Enjoy The Sounding Line? Click here to subscribe for free.
The following map, via Michael A. Arouet, highlights the forecasted change in working age populations around the world until 2050:
While it may not be entirely intuitive at first, as we have seen in Japan for 20 years, and more recently throughout Europe, countries with shrinking working age populations rarely experience significant real GDP growth, per-capita productivity growth, or per-capita wealth increases. There are a number of reasons for this, but chief among them is the fact that these populations are not only seeing their working age population shrink, their retired populations are also growing rapidly. That worsening dependency ratio – the ratio between the number of people working and those receiving benefits, means an ever increasing portion of society’s productive output is diverted towards entitlement programs. With that shift comes an ever increasing pressure to raise taxes on remaining workers to support wealth transfers.
The future belongs to countries with growing, youthful populations and not to the countries that have chosen not to sustain themselves into the future, which includes all of East-Asia, China, Russia, Japan, and Europe, etc…
Would you like to be notified when we publish a new article on The Sounding Line? Click here to subscribe for free.
I get it: without a growing population, the GNP is going to decline. What I don’t get is why that is a problem. The per capita GNP would likely stay relatively stable. And unless there’s some mythical total GNP maximization mandate that I am not aware, the quality of life in a declining population Nation-state would probably be stable, …..perhaps even improved. See Japan, currently a crowded place with accentuated competition for scarce resources (like housing, cropland, parking, peace and quiet). If it were a choice….I would much rather live in a less crowded Japan at 0.5X GNP, then one… Read more »
As noted in the article, the decline happens at the per-capita level too because productivity decreases. It’s not that the population is decreasing, with all age groups decreasing together (though that has problems too), it’s that the productive part of the economy is shrinking while the benefits-receiving part is growing both nominally and relative to the working part. That means that for every 100 people there are ever fewer workers AND ever more takers. That places an ever bigger burden on the workers and requires diverting more and more capital away from productive things to transfer payments, which decreases per-capita… Read more »
“it’s that the productive part of the economy is shrinking while the benefits-receiving part is growing both nominally and relative to the working part”
Then why was my entire industry destroyed and sent to China????? ~6,000,000 WEALTH PRODUCING jobs were shipped to China since 2000.
The productive part of the economy is shrinking ON PURPOSE.
AND the 8,000,000 we just imported are getting used to everything being free and will take decades to become next tax payers.
“Then why was my entire industry destroyed and sent to China?”
Because of decades of bad trade, industrial, tax, and regulatory policy (The US hasn’t had industrial policy since the 1980s). Also because it’s a bigger market, and a bigger labor market, and labor is cheaper
Which translates into a lowering of my living standard AND a reduction in the taxes I pay. Seems like a doom loop IMHO. I make less now than I did at my first job (in CA) with 3 years experience and all I needed to draft with was a piece of paper and a pencil. I’m older and I know a ton of companies that need machinist and programmers but the rub is they don’t pay enough to live in the USSA. I’d be making more as a manger at in & out than I do in my engineering job.… Read more »
It equalizes with better trade, industrial, tax, and regulatory policy and an end to the defeatist, nihilistic, un-American ‘everything is the worst ever and only capable of ever getting even worse’ attitude that infects the minds of way too many people.
Defeatism is escapism
Well yeah Taps, when everything is heading south in ones life at some point one throws in the towel.
It’s not defeatism, it’s reality.