Bernardo M. Villegas
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How to Solve Demographic Crisis (Part 1)

            Elon Musk, visionary entrepreneur and charismatic founder of PayPal (PYPL) and TESLA, as well as the founder of SpaceX, Neuralink and the Boring Company, has articulated what have been in the thoughts of many concerned leaders in China, including President Xi Jing Ping himself.  As 2021 Person of the year of Time Magazine, his words carry a lot of weight especially in the developing world who admire his revolutionizing transportation both on Earth, through electric car maker Tesla—and in space, via rocket producer SpaceX.  Last December he shocked people like Bill Gates and other proponents of population control with the statement the world’s rapidly declining birth rate is “one of the biggest risks to civilization” at a Wall Street Journal event last December 8, 2021.

           “There are not enough people,” Musk commented.  “I can’t emphasize this enough, there are not enough people.”  Low birth rates could contribute to a society collapse as Japan and a good number of East Asian countries like South Korea, Taiwan, Singapore and Thailand are already experiencing.  Musk observed that even some supposedly smart people are worrying that there are too many people in the world and that population is growing out of control.  Musk disagrees and thinks that it is completely the opposite.  He asks the population explosion mongers to look at the numbers.  “If people don’t have children, civilization is going to crumble, mark my words.”

           Practically all countries in Europe have fertility rates less than the 2.1 babies per fertile woman needed for zero population growth.  That means that their populations are shrinking year after year.  What keep their labor force growing positively is immigration.  Even in the U.S. more Americans are reluctant to have children.  The U.S. birth rate declined by 4% in 2020, but fertility rates have been at a record low even before pandemic, and a growing number of adults have recently expressed that they do not intend to ever have children.  Many people attribute their hesitation to have children to the climate crisis.  A survey conducted by tech company Morning Consult in 2020 found that one in four childless adults cited climate change as a factor in their reproductive decisions.  Analysts of investment bank Morgan Stanley wrote in a note to investors that the “movement to not have children owing to fears over climate change is growing and impacting fertility rates quicker than any preceding trend in the field of fertility decline.

           Some climate experts, though, think that reducing the global population is not necessarily the priority for addressing climate change, which requires immediate action.  Kimberley Nicolas, a Swedish professor of sustainability science, told the publication Vox that “It is true that more people will consume more resources and cause greenhouse gas emissions.  But that is not really the relevant time frame for actually stabilizing the climate, given that we have this decade to cut emissions in half.”

           What Elon Musk, who practices what he preaches by having six children, has declared jibes very much with the thinking that is now prevailing among Chinese leaders, starting from President Xi Jing Ping himself.  Over just the last five years, the Chinese Government has increased the permissible number of children from 1 (stop at one was the law strictly enforced for decades) to 2 and now to 3.  Unfortunately, there has been no success at all as we will explain why below.  They should have learned from the experience of Singapore that has been desperately trying to increase the fertility rate through all types of incentives (including hilarious matchmaking events) for more than three decades without any success.  Once the anti-birth mentality is ingrained especially among the women, no amount of economic incentives seems to work.

           As Ryan Woo and Kevin Yao reported in a recent commentary, China’s population grew at its slowest in the last decade since the 1950s as births declined, sowing doubt over the ability of Beijing to power its economy as it succumbs to the same ageing trends afflicting developed nations like Japan, Spain and Italy.  The problem with China is that it is not yet an advanced economy.  Despite is huge success liberating some 700 million of its population from dehumanizing poverty,  China is still a relatively poor nation.  It is then one of the unfortunate nations (the other is Thailand that also implemented an aggressive birth control policy in the last decade) that is growing old before becoming rich and, therefore, do not have the resources to take care of its numerous senior citizens, both manpower wise and financially.  Just consider this:  in the next twenty years, the number of Chinese who will be over 65 can represent as much as 30% of the population.  With total population at 1.4 billion, that would mean that some 420 million ageing Chinese would have to be supported by a non-existent social security system and not to mention a shrinking pool of younger workers to take care of them. The sharp deterioration in demographics has fueled pressure on Beijing to ramp  up incentives to couples to have more children—incentives that have thus far failed to offset the impact of career choices and cost-of-living challenges that couples say have deterred them from starting extended families.

           From 2016 to 2019, the annual birth rate mostly declined with the exception of 2016.  In 2020, China recorded 12 million births, sharply down from 14.65 million in 2019 and the lowest since 1961.  “It doesn’t take published census data to determine that China is facing a massive drop in births,” said Huang Wenzheng, a demography expert at the Center for China and Globalization, a Beijing-based think-tank.  According to him, even if China’s population did not decline in 2020, it will in 2021 or 2022.  The reason is easy to find.  It resides in the mindset among millennials and centennials in China.  Urban couples, particularly those born after 1990, tend to value their independence and careers more than raising a family despite parental pressure to have children.  Surging living costs in big cities, where most Chinese now live, have also deterred couples from having children.  According to a 2005 report by a state think tank, it cost 490,000 yuan ($74,838) for an ordinary family in China to raise a child.  By 2020, the cost had risen to as high as 1.99 million yuan, four times the 2005 number.  A 26-year-old professional from Shanghai was quoted to say “Having a kid is a devastating blow to career development for women at my age. You bid goodbye to freedom immediately after giving birth.”  This mentality is not unique to the Chinese in today’s materialistic culture.   You will find the same attitude in South Korea, Spain, Italy and many developed countries in Europe and Asia Pacific.

           This reluctance to have children had been aggravated by strong campaigns for birth control programs sponsored by international organizations like the United Nations and the World Bank as well as private organizations like the Rockefeller Foundation and the Bill and Melinda Gates Foundation.  In countries like China that are already ageing before becoming rich, beside adding pressure on the working-age population and weighing on productivity, a diminishing pool of working adults will also test the ability of these unfortunate nations to pay and care of an ageing population.  To be continued.