The Wall Street Journal posted a very interesting article talking about “America’s Baby Bust” by Jonathan V. Last. The one sentence summary is that America (along with other developed nations) is headed for economic disaster because of decreasing birth rates unless we encourage more Americans to have babies. I think this article highlights an important ailment that befalls all developed countries but prescribes the wrong cure. The answer is not to create economic policies to encourage Americans to have more babies but instead to encourage immigrants to come to America to have more babies.
A few decades later, it has become clear that not only is the world population as a whole not starving to death (obesity is a much greater problem for developed nations) but also that the average U.S. birth rate is decreasing, at least among white American women. Minorities and immigrants tend to have higher birth rates, which has led to xenophobic cries that America is being “outbred” by **fill in the name** of whoever is blamed for the most recent population boom. These fears and concerns completely ignore the fact that America is a land of immigrants (with the notable exception of Native American Indians) and that immigrants coming to the U.S. for the most part do become American citizens and bear the next generation of future American citizens, all of whom contribute to the economy through labor, taxes, purchases, and investment.
There is a another, similar video by Mr. Rosling video on the Wall Street Journal’s website, at this link.
As Mr. Rosling visualizes, reduced child mortality is clearly related to lower birth rates, which allows greater focus upon each child, which in turn allows more children to get a higher education and enjoy a higher quality of life. Thus the lower birth rate leads to less people, but happier people.
There is also some thought, as put forth by Carl Bialik, that the fertility figures themselves are skewed by the tendency of women in developed countries to have children later in their lives.
So, back to the Baby Bust, the question must be considered as to why we should change the clear trend in any developed country to have less people who lead happier lives? Why should we either encourage people to have more babies or encourage higher immigration rates to increase the population rather than following the apparently natural course of developing societies?
Quite simply, the answer is survival of the nation. Without a population that produces a higher birth rate than that at which developing nations historically have stabilized, the reduced working youth employee base cannot support the ever increasing aging population.
One factor mitigating this trend is that in developing nations people live healthier, longer lives and therefore can work much longer, increasing their lifetime economic contributions. In addition, with modern technologies and the emphasis on information as a method of currency, people can work in information and knowledge jobs much longer than they could in factory or other manual labor jobs, and can do so from their homes. As long as entitlement programs designed with an assumption of frailty and inability to produce are adjusted to accommodate these trends, this becomes a large mitigation factor for the smaller youthful employee base providing for a larger elderly non-working demographic. Combined with an aggressive immigration strategy, this will allow America to be the nation of choice for entrepreneurs and wealth creators for decades to come. I propose increased immigration as an alternative towards encouraging the current population to have more children out of simple practicality. The idea of trying to encourage an existing population that clearly has negative incentives to have more children (assuming they have the choice to have more children, the fact that they choose not to indicates they perceive significant negative incentives associated with that choice) is not promising. In addition, if such a strategy were effective, it would be assumed that other nations that face a similar problem would have tried and had success with this approach.
America can and should attempt to attract the best and brightest young people from other nations, who will both benefit from the egalitarian, entrepreneurial environment and will in turn contribute to our economy. Reuben Navarette recently wrote a cogent article on this topic in the Mercury News as well.
There is significant research on how immigrants are more likely than native born Americans to start their own business and be successful. This is a very good thing for the entire country because of the jobs, wealth, and tax contributions that these businesses create, and the obvious desire would be to encourage more entrepreneurial-minded immigrants to come and stay. We need to seek out these future American success stories, encourage them to come, and encourage them to stay and open businesses here.
For this to happen, however, some things must take place:
- Entitlements must change – if people can contribute to the economy until they are 70 or eventually 80, they should. The age to receive social security should be raised in accordance with the average national age, with another metric, the “average national productivity age” also factored in. The latter metric should reflect the % of jobs available that are knowledge based vs. manual.
- The U.S. must follow a sensible immigration policy, without any trace of xenophobia, but with an emphasis on attracting the best and brightest to our country. We need to aggressively pursue and recruit those who will contribute to the country, but be firm in requiring those who are allowed entry to work and contribute to the tax base. Another metric would be useful here, the “average contribution per person”, measuring the monetary contribution towards society of an individual over a lifetime, minus the withdrawals from society in terms of entitlements. Another interesting metric would be the “average contribution per family”, which would average the withdrawals from a single mother on welfare with the contributions of her children whom she put through college, as an example.
- America needs to pursue business friendly policies that encourage the startup and growth of businesses, rather than seeing businesses that grow much larger than a corner restaurant as evil capitalist entities that must be taxed into submission.
The polarized ideologies that seem to drive our current immigration discussions (i.e. a world of open borders vs. xenophobic reactions) both ignore the fact that immigrants are key to the future success of America but that as the world’s greatest immigrant nation we have the right, and the obligation, to choose who to let into our country.
Right on, Eric. You are quickly emerging from the “would be” philosopher category, I think.
Thanks Bob! I subscribe to the “always a student” approach. That way you don’t miss out on the good classes…
The point is we need to keep money flowing in so we can support boomers retiring and collecting USG paid or supplemented entitlements; abuse of the welfare system; a massive 50 State infrastructure; and an unknown number of illegals collecting benefits and using our medical facilities for free. Your point on legal immigration is a good solution, but needs to be supplemented with politicians who reduce the tax payer’s cost through proper legislation and governance.
I agree Steve. We need enough government to serve the basic functions of government, but government shouldn’t exist as a self-licking ice cream cone. Removal of the ability of government employees to unionize and use the collected union funds to raise taxes to fund more government should be eliminated. France’s >10% unemployment rate is a perfect example of what can happen when expansion of government becomes the focus of society rather than economic growth. There was a time when both U.S. political parties recognized this fact, but unfortunately only the Republican party now advocates for smaller government. You can look at California to see what happens when one party that believes in large government governs unbalanced. The $52B gas tax was passed without voter approval pushing California further into the realm of the most highly taxed states in the union. It runs against the liberal Newspeak, however, to even insinuate that higher taxes result in people leaving for other, lower taxed states, as obvious as that would seem to be to even an unsophisticated observer.