The shrinking planet

September 1, 2004

Free Market Foundation

The human population is expected to peak at 9 billion by 2070, then decline, creating a burden on many the social welfare systems of many countries due to a combination of retiring older workers and a shortage of younger workers.

According to author Phillip Longman (New America Foundation):

Russia’s population is already declining by about 750,000 people per year; Japan’s population is expected to peak in 2005 and then start to fall.

China’s labour force will start shrinking by 2020, and the current ratio of 117 boys to 100 girls means that 1 in 6 males in today’s generation will not reproduce.

Moreover, the United Nations (UN) predicts that by 2045, the entire world’s population rate will be below replacement levels. There are some short-term benefits to fewer children in the world, such as the freeing up of resources for investment and adult consumption. Unfortunately, the long-term prospects are grim, says Longman:

As the median age of the world’s population increases more resources will be consumed (older citizens consume 27 percent more, mostly in health-related expenses) and this will strain government budgets.

As the size of the work force falls, gross domestic product (GDPs) will likewise fall, unless worker productivity increases enough to keep economic growth rates stable; Italy’s work force is predicted to decline 41 percent by 2050.

Military resources will decline as parents will be less likely to sacrifice the few children they have, and defence spending will have to compete with increases in health care and elderly spending.

The United States faces less of a demographic crisis than other countries, but the International Monetary Fund (IMF) notes that the difference between what the U.S. federal government will collect in future taxes and pay in future benefits now exceeds 500 percent of GDP.

Source: Phillip Longman, The Global Baby Bust, Foreign Affairs, May/June 2004, and Global Population Projections, International Institute for Applied Systems Analysis, July 27, 2004.

For text http://www.foreignaffairs.org/20040501faessay83307/phillip-longman/the-global-baby-bust.html

For IIASA study: http://www.iiasa.ac.at/Research/POP/globalproj.html#proj2001

For more on Population Issueshttp://www.ncpa.org/iss/int/

FMF Policy Bulletin/ 24 August 2004