Babies and the Great Recession
The roots of economic collapse start with demographics.
12:16 PM, Oct 25, 2012 • By JONATHAN V. LAST
If we're seeing a slowdown of technological progress, that too can be traced to demographics. Because decades of economic research suggest that innovation is a function of population.
And as for the entitlement problem Will talks about, remember that the inherent flaws in Social Security, pensions, and Medicare aren't that the promises were made by a more prosperous society. It's that they were made by a society that was creating taxpayers at a much higher rate. America isn't poorer than it was during the Baby Boom years—we're much wealthier by almost every measure. What's changed are the assumptions about our population. People don't have as many children as they used to, meaning that we're not making as many future taxpayers as we had planned to, meaning that the ratio of workers to retirees has fallen to unsustainable levels.
And it's not just us. Look around the world at countries where the population is stagnating (or contracting), and you'll see economies stagnating, too. In the 1990s, people thought Japan was experiencing a mysterious "lost decade" where growth was suddenly put on hold. But it turned out that the mystery wasn't all that hard to solve: Japan’s economy was crippled by the country's demographics. And their Lost Decade continues today.
Well soon, it's going to be Japan's "Lost Decade" everywhere, all the time.
Jonathan V. Last is a senior writer at The Weekly Standard. His book on demographics, What to Expect When No One’s Expecting, will be published in January 2013 by Encounter.