The EU’s population momentum has switched from positive to negative. Even if fertility rates rose to reach replacement level, the population would continue to decline.
The article seems to imply this is a bad thing, talking about how governments can increase population etc. Why is it a bad thing? Surely there are benefits to decreasing population, such as lowered pollution, less demand on resources, etc
The only positive effect of population growth i can think of is that population growth offsets the effects of an ageing population. Hence population decline would amplify the effects of an ageing population, meaning less workers for each pensioner, which means less goods/services produced (and therefore consumed) per person.
Is this the only reason why population decline is considered a bad thing?
In Europe the problem is not with population decrease per se but with the demographic changing so that there are more old and retired people (who are at least partly supported by the state) than there are working people paying taxes to provide the money for the benefits that the elderly are recieving
Yeah thats the only reason i could think of as to why population decrease might be regarded as bad. Population increase helps to make up for an ageing population, as i mentioned above.
pretty much - although if you have continual population decline your nation would cease to exist without massive immigration - which would in turn totally change the nation.
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As the underlying demographic forces unfold, Japan will face substantially greater fiscal challenges than most other industrially advanced countries. The IMF has produced some excellent long-term simulations for its world macroeconomic model, showing Japan’s current demographics imply that the level of real GDP will fall by a cumulative 20 percent over the next century compared with a baseline simulation with a stationary population.
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Also important is WHY the populatuion is declining. Most studies of the impact of AIDS on economic growth in Africa says the disease will substantially reduce economic growth in Southern Africa. The studies found that AIDS can hit developing economies on several fronts at once, resulting in reduced savings and investment, lost production, lost labor, high health care costs, and reduced returns on investments in health and education.
I’m not saying population decrease is certainly a bad thing – none of the studies can model, say, increased productivity or future technological impacts – both of which are sure to come. Just that re the OP there are some reasonable people predicting a negative economic impact to population decrease in certain instances.
Central Europe has a real problem pertly because of the huge state subsidies and care provided to people. Elderly peole will naturally take up lots more medical care. The fewer people who are left will have to pay much more in taxes to support to older generation.
In a macroeconomic perspective, a human can be considered a productive unit (for some of its life at least). By that I mean that the human makes a positive impact on the economy. It does, after all, spend eight hours a day for forty years, doing something that an employer thinks is usefull.
Not all this work is dedicated to keeping the population fed and alive, some is also directed towards ‘the advancement of civilization’.
By reducing the able workforce, less things will be done, and consequently the overhead above and beyond sustaining the population will decrease - ergo, civilisation will not be able to ‘advance’ at the same speed.
[/overly simplistic]
Another (more cynical) view centers on the agency that published those statistics - the European governements, who will become less powerfull, and might see funding cuts, if the tax paying base withers.
The malthusian argument (that population grows faster than available resources and couses famine) has frequently been proved wrong
Think of another economic factor: prices. When supply exceeds demand, prices fall. So if there are fewer people, there should be, in theory, less demand for housing. Housing is the largest contributor to a normal “basket of goods”, the stuff economist measure to see if prices are rising or falling. If demand for housing falls a lot, prices could fall a lot. Why buy a house if might be cheaper tomorrow? Why spend a lot of money on something you might not be able to sell? (or sell at a profit, which we are used to with housing). The ripple effect could be enormous.
Of course, as mentioned by others, the first problem in Europe is the taxes to support those who are living off the social system, which in many areas is the elderly, similar to US Social Security. So if fewer people are paying in, and more people are receiving, taxes need to be raised or benefits need to be cut. Cutting benefits could be very difficult, since many Europeans have no other means. Raising taxes is difficult since taxes are already very high.
The only good short term answer to his is immigration.
Lessening population negatively impacts specific parts of the economy: housing and the real estate market; consumer products for children (babyfood, clothing, toys, etc); jobs in general as a domino effect as other parts of the economy shrink; etc.
There are areas (small towns in Kansas I am told for instance) in the US where the population declines, and you get empty buildings and vacant businesses on Main Street. The young then tend all the more to move out and get good jobs in another area.
I am puzzled at why the change in ratio of elderly non-productive population to younger productive population is seen as a government pension or Social Security issue.
If you end up with one retired per two working, that’s a big economic or real-world problem. I don’t see how a government shuffling nickels is going to fix this.
Change in immigration policy would make an obvious difference.
Currently I have an aunt and uncle, 93 and 90 years old, who just moved into an “assisted living” situation (corporate-owned). The gummint is not subsidizing this. Most of the personnel have an accent and were probably not born in the USA, but they are young to middle-aged and paying income tax and SSecurity. How would you model this without immigration, using either gummint or investment money but with the labor shortage?
If Dopers find this aspect deserving of debate, maybe we could start a thread in Great Debates…
Theoretically, a decline in population wouldn’t necessarily cause disruptions in a nation’s economy, if productivity rates per person continued to increase. At the local level, a decline in population in one region would need to be offset by the productivity gains in another region (assuming that in that region the population isn’t declining). Where problems would arise is if one has in conjunction with population decline a subsequent decline in productivity rates throughout the country (the two often go hand-in-hand, but not always).