An economy needs population growth and family formation to generate economic growth. As appealing as it is to imagine fewer people, smaller crowds and less congestion on roads and airports, The dangers of a shrinking population (like the dangers of deflation) are less advertised by doomsday writers, but equally (or even more) dangerous.
When it comes to the “total fertility rate” (TFR, the number of births per woman), Demographers say we need at least 2.1 births to maintain our current population levels. (The last 0.1 accounts for most child deaths). Last year, the overall global TFR rate was 2.24, but if you exclude Africa, the TFR rate is less than 2.0. The largest advanced industrialized countries report TFR rates below 2.0 through 2025.:
No major developed (rich) nation has averaged TFR above 2.1 (replacement level). Apart from Africa, the world is shrinking. From 1950 to 1970, the richest countries in the world averaged more than 2.7 births, then The average number of births per woman since 1995 is just 1.6, with an all-time low of 1.5 from 2020-2025.
Overall, the world’s population is growing slowly—mostly in Africa and because of the longer lives of our elderly—but Asia’s two largest economies—China and Japan—are shrinking in population, which means a limited potential for economic growth. More seriously, fewer young workers in these countries cannot offset the costs of serving their long-time (and often sick) elderly forebears.
China has scrapped its longstanding “one child” policy, but the habit has stuck. Young couples these days don’t even want a child. They want more work and bigger pay, while The fruits of the one-child policy sowed the seeds of a bigger problem -Couples (pre-2010) discover the gender of their fetuses and abort the girls so they can raise a “young emperor” to support them in their old age. This has led to an alarming increase in the number of male children (118 male births per 100 females from 2002 to 2008) with fewer females to marry.
A typical household in China in 1996 had seven: four grandparents, two parents, and one spoiled, “young emperor,” on whom all six adults depended for their security in old age. This inverted demographic pyramid does not add up economically.
Europe fares worse in the fertility sweep, with an average of just 1.4 children per woman, and Europe has more generous old-age pension protection.s. That’s why Europe has delegated its defense spending to the U.S., a strategy that could backfire as President Trump insists he fund his own defense.
America is better off than Europe or Asia — in part because of our fairly rapid convergence of immigrants and high rates of family formation in more conservative areas of our country — but with the president’s new limits on immigration, while rounding up and deporting undocumented workers. I have to wonder if we have enough willing young workers to fill all these new “on-shower” factories.
Another time bomb has been planted in these charts and trends. Social Security (and Medicare) is an intergenerational compact, in which younger workers finance the urgent needs of the elderly and their rising medical costs. Unlike a 401(k) or IRA, these are not savings accounts but rather vested entitlements based on past demographic trends in birth rates. Current generations are less likely to marry and have children – plus, less likely to pursue lucrative careers rather than “gig” jobs – We will face major challenges in financing these future benefits for those unwilling to produce new Americans.