Having children is the ultimate vote of confidence in the future
It's you really believe in what your opportunities are going to be going
forward, you're very certain about what your future looks like.
In this quarantine time, that's the last thing that we can say. Mothers
typically talk about the more children you had is bad for their
pocketbook. What we learned from the Great Recession is that every one
percentage point increase and the unemployment rate reduces births by one
percent. Despite speculation of a surge in quarantine babies, the U.S.
fertility rate is actually shrinking and has been for a while.
Births have been falling for the last almost 15 years now, at this point.
Millennials have less financial confidence than the generation before us.
Living through our second once in a lifetime recession has made big
financial decisions like providing for and creating a brand new human,
like my niece here Sydney, quite difficult.
Listen I've got two little kids, so I'm pretty concerned for them.
Plus, there's a prevailing ideology that large families are a drain on the
environment. The costs of ongoing economic growth, as it's currently
designed, are causing damage to planet and people.
Meanwhile, baby boomers are retiring and aging out of the system.
If you have an economy that since the end of the Second World War has grown
based on consumerism, what happens when all your consumers are old and
they have everything they want?
So is the US running out of people?
And what impact does population size have on the economy?
To maintain the current population size, every woman would need to have two
point one children.
This is known as the rate of replacement.
And the point one is because not everyone goes on to have children
themselves and there's some child mortality.
In the United States the total fertility rate, that measure is now around
one point seven. The total fertility or birth rate refers to the actual
number of children each woman is having.
Currently, there are nearly seven point eight billion people in the world,
over three hundred and thirty million in the US.
Through fertility alone, we would expect our population to start to decline
if that rate is sustained for a very long period.
People think, for example, that fertility is out of control.
Well, the truth is it isn't.
I mean, if you take a look, particularly at millennial fertility in the
United States, it's down to one now.
The American birthrate is well below replacement rate and continuing to
decline. Although declining fertility rates can be a leading indicator for
a recession, it is more often correlated with increased education and
opportunities for women.
But female workers add a lot to the bottom line.
According to one study, if women entered and stayed in the US workforce at
the same rate as they do in Norway, the U.S.
economy would be one point six trillion dollars larger.
American women now are having fewer children than our mothers.
In twenty twenty, the birth rate dropped to its lowest level in thirty
five years. There's also been a huge decline in teenage births in the US.
What's clear is that there are less unintentional births than ever before.
In addition to the decline that we've been seeing in fertility, there is
another trend that's happening underneath that, which is an increasing age
at birth. It's more like in the late 20s or 30s or something.
Now, compared to during the baby boom, it would have been 20.
It used to be, you know, uncommon to see a 40 something year
old woman who is now planning a pregnancy.
Now, that seems almost at least for us, a norm.
Women have changed the lives that they want to live.
When they have more of a decision to make about the type of family they're
the more empowered to make, the kind of decision they want to make about
their family. And when they make that decision, not for everybody, but for
most people, it's fewer kids.
So women are waiting to have their first child longer and then their
subsequent children. What's sort of remains to be seen in this area is the
extent to which the decline in fertility that we're seeing is really a
delay of births so that these declines for women in their teens and early
20s will be made up later when they're in their 30s or whether this is a
permanent reduction in their lifetime fertility.
The pandemic may have accelerated this trend as people are less likely to
have babies in uncertain financial times.
That might mean less American born workers, consumers and students.
However, that could work out well for babies like Sydney when she applies
for a job in 20 years.
At the end of the day, the fewer people you're competing with, the
easier things are for you.
There is that in terms of the upside, but, you know, I mean, who knows,
maybe one of the kids that isn't born is going to cure cancer, would have
cured cancer. Population size and fertility rates should inform how we
plan for the future and how we think about social programs.
For example, if there are less younger workers able to pay into Social
Security the way it is currently set up, the funds will run out in my
lifetime. So in particular, you hear people talk a lot about Social
Security. That's a system where current workers support current retirees.
And so as the population ages, we have more retirees but fewer births.
People are worried that that system is not going to be sustainable.
And there are other programs that face that challenge.
There are also concerns about economic growth.
You know, to continue to grow, we need innovators, inventors, workers.
And as we have fewer children, we will have fewer of those those inputs
into economic growth.
But that actually has important implications even before you get to that.
I mean, like if we have, you know, a birth decline now means five years
from now, it's probably is not the great time to be thinking about school
construction for instance.
I worry about people who would love to bring kids into the world, but just
feel like they can't that the costs are too high or that they don't feel
good enough about their economic security, their economic futures to be
able to make that decision.
If you really thought about what was happening in terms of our population
and what it looked like going forward, you change the way that you ask,
even ask questions about what the future economy is going to be.
So as we have workers who are more productive, then you can sustain more
retirees for individual for each individual worker.
Japan, which has had a falling birthrate for years, is a leader in
innovation. Japan is when it comes to things like fertility and aging
is the canary in the coal mine for all of us, the median age of Japan is
48 now. Their birth rate is down around one point for one point five,
and they lose approximately four hundred thousand people from the
population every year.
So what's the solution in Japan?
Robots, if you want to talk about industrial robots or robots of any type,
they're looking at all those types of solutions.
Why? It's not it's you know, it might make for interesting science fiction
or whatever. We might think. It's just a peculiar thing.
But the truth is, it's a necessity.
It can't be anything but bad.
And the reason that it's going to be bad is because robots don't buy don't
buy new outfits. They don't buy cars.
They don't they they don't buy things.
They're not consumers. They can help your productivity, but they can't
help they can't help the consumer situation.
You know, at the end of the day, people matter.
So the more people there are, the more economic activity there is.
If the main economic concern is finding new consumers, adjusting our
interpretation of who the consumer is can help.
For example, we can shift our focus to the aging population.
So economic growth is generated by people who are, you know, typically
something like 16 to 60 in their prime working years.
And if you ever if you get it shifted toward the top so that you have more
retirees, as is happening right now with the baby boom generation entering
into that phase, or you have fewer at the bottom that are going to be
future workers, then that upsets that balance.
Now, I think what some people are worried about is that we may have both
of those things happening at the same time.
So one of the biggest challenges that we've got going forward is to how how
we can trigger that the generational transfer of funds from the older
population by turning them into consumers.
The way we think about generational transfer of funds as we think about my
mom and dad willingness, the money, what we need it faster.
One of the biggest prejudices that we have in terms of looking
at the economy, because we only see old people as consumers.
They're sitting on all the best houses, they have all the money.
They have all the pensions, they have everything.
The single biggest power group in the economy going forward are older
women because there's a lot of them and there's more every day.
Women outlive men.
There are always more boys, boys than girls in every country except where
there's an artificial artificial intervention.
But by the age of 30, in most developed countries, there's more women than
men and then every year after that.
So it's not that old women outlive old men, which they do.
It's that women outlive men at every age category, once we get to mid-age.
The U.S. can look beyond our borders for more consumers and workers.
The easiest way to manipulate the size of the population is through
migration, immigration.
I think it's important to point out that more babies is not the only way
out of those problems.
So immigration is an obvious way where we can continue to grow our
population. First of all, immigration policies work instantly.
You want another twenty five year old worker?
You bring in another 25-year-old worker.
Fertility pro-natailist fertility policies are about, you know, 20 years
from now. And frankly, for the history of the United States, it's been the
huge American advantage.
It still has the shining city on the hill for most people in the world if
they're going to immigrate. And we do surveys that have where I see this,
the most popular place for people to immigrate in the world is still the
United States. There are still a lot of people out there looking for a new
country to call home.
The UNHCR estimates there were seventy-nine point five million forcibly
displaced people worldwide at the end of twenty nineteen.
Forty percent of those were children.
There are also twenty-six million refugees, half of whom are children.
What we're particularly concerned about is that every country in the world,
wherever possible, can enable people to move to their countries and
in particular can absorb refugees and asylum seekers.
We have to retain that compassionate capacity.
Many of those displacements are occurring because of drastic changes in the
environment. The World Bank estimates that by 2050 there will be one
hundred and forty three million additional climate migrants from just
Latin America, sub-Saharan Africa and Southeast Asia.
So there won't be a deficit any time soon.
Since the publication of the population bomb in 1968.
There's been a prevailing ideology that the world is facing a dire
overpopulation problem.
That's not true. At the moment with seven point eight billion and counting
people on the planet, we are stretching the carrying capacity of the
planet. We know that we're breaching certain boundaries, whether it's
climate, whether it's marine fisheries, whether it's fresh water, et
cetera, et cetera. Experts worry that the planet has reached its so-called
carrying capacity or the total amount of people the earth can sustain.
If you think about the global population, there are projections that
suggest the world is going to reach its max capacity sometimes within the
next 100 years.
And that's because while fertility is below replacement rate within the US
and other developed countries, it is not elsewhere.
So on net, we expect to see the world population to continue to grow for
the next several decades.
But we do know that at the moment we're overstressing our planet.
And we also know that people want to choose to have smaller families when
they have the ability, when they have the access and the choice, and
therefore we can make positive progressive moves to take the heat off the
planet, particularly in terms of climate change.
Project drawdown ranks family planning and educating girls in its top 10
solutions to climate change.
Remember, though, that people in developed nations consume more renewable
resources than those in developing nations.
The Global Footprint Network estimates that if all the people on the earth
consumed as much as Americans do, we would need 500 percent of the Earth's
natural resources to sustain the population.
For comparison, they estimate that if everyone used renewable resources at
the same rate as those in India, we would only be using 70 percent of one
Earth's renewable resources.
But, you know, we see as countries develop, fertility tends to decline.
And so we expect as development spreads around the world that that will
happen. And that's why we project that actually populations will start to
decline around the world sometime within the next hundred years.
Global population is expected to peak at nine point seven billion by twenty
sixty four and then fall back down to eight point eight billion by 2100.
And Bangladesh would be a good example where through voluntary means
without coercion, working at the community level through women's groups,
they reduced their fertility rate from seven to eight kids per woman in
the 70s and 80s, down to two-point two to near replacement now.
And that's had a really beneficial effect.
The women have become more economically active.
They're doing stuff in that community.
They're able to make choices.
They've taken the pressure off that environment.
And if you're thinking that the population is going to be 11 billion or 10
billion people by the end of the century, you've got real concerns about
that. But what if I told you that the population was probably going to be
the same as it is today or maybe even smaller?
And if we're carrying the population that we already have and technology
is going to continue to improve from everything from agriculture to
cleaning on our environment to transportation, everything that you can
imagine, then by the end of the century, I think problem probably going to
be OK.