Quatro artigos importantes sobre a redução do crescimento, uma possível recessão e as dificuldades atuais (e futuras) da economia global, inclusive no plano populacional, com meus agradecimentos enfáticos ao amigo e colega Pedro Luiz Rodrigues, que faz a seleção permanente, não apenas diária, das melhores matérias da imprensa internacional.
Paulo Roberto de Almeida
Brasília, 19 de agosto de 2019
The New York Times – 10.8.2019
What’s Wrong With the Global Economy?
The problem goes much deeper than Trump or tariffs.
Ruchir Sharma
Global markets were seized by fear last week that trade wars were slowing growth in Germany, China and the United States. But the story here is bigger than President Trump and his tariffs.
The postwar miracle is over. Since the financial crisis of 2008, the world economy has been struggling against four headwinds: deglobalization of trade, depopulation as labor forces shrink, declining productivity and a debt burden as high now as it was right before the crisis.
No major economy is growing as fast as it was before 2008. Not one is growing faster than 10 percent, the rate experienced by the Asian “miracle economies” before the crisis. In almost every country, the national discussion focuses on what must be done to revive growth and ignores the fact that the slowdown is driven by forces beyond any one government’s control. Instead of dooming ourselves to serial disappointment and fruitless stimulus campaigns, we need to redefine economic success and failure.
Germany is one of at least five major economies on the verge of a recession, which is typically defined as two consecutive quarters of negative growth. But the real issue is whether that definition still makes sense in a country with a shrinking labor force like Germany’s.
Its working population has been declining for years and is expected to fall to 47 million from 54 million by 2039. And it’s not alone in this. Forty-six countries around the world — including major powers like Japan, Russia and China — now have shrinking populations.
Demographics are usually the main driver of economic growth, so it is basically inevitable that these countries will now grow at a much slower pace. And we are not talking about minor population declines. Projections for 2040 show China’s working-age population falling by 114 million, Japan’s by 14 million. With a shrinking labor force, these economies will inevitably slow and, at times, contract. To keep calling two negative quarters in a row a “recession” implies that this outcome is somehow abnormal or unhealthy. That will no longer be the case.
To avoid overreacting, the discussion about economic health needs to shift to measures that better capture satisfaction and contentment, like per capita income growth. In countries with shrinking populations, per capita incomes can continue to grow so long as the economy is shrinking less rapidly than the population. This helps explain why, for example, Japan isn’t facing more social unrest. Its economy has grown much more slowly than that of the United States in this decade, but because the population is shrinking its per capita income has grown just as fast as America’s — around 1.5 percent per year.
Shrinking populations also help explain why unemployment is at or near multi-decade lows, even in countries with serious growth worries, like Germany and Japan. Gainfully employed Germans and Japanese won’t really feel as if their countries are in a slump until per capita G.D.P. growth turns negative — which may prove to be a more useful way to think about recessions in this new era.
The definition of success also needs to change. Many emerging countries still aspire to the double-digit growth rates experienced by what were known as the “Asian miracle economies” from the mid-1960s to the early 1990s, when populations and trade were booming. But no economy had grown so fast before then, and as population and trade surges recede, it’s unlikely any country can repeat those feats.
As growth downshifts, even little miracles are disappearing. Before the 2010s, it was common for one in every five economies to be growing at 7 percent or more annually. Now, among the world’s 200 economies, just eight, or one in 25, are on track to grow 7 percent this year. Most of those are small economies in Africa.
When the news emerged that China’s economy had slowed to just 6 percent, a new low, many investors and analysts rang the alarm bells. But the reality is that economies rarely grow as fast as 6 percent if the population is not booming too. Not only did China’s working-age population growth turn negative in 2016, but it is one of the countries hardest hit by slumping trade, declining productivity and heavy debts. If the Chinese economy really were growing at 6 percent in this environment, it would be cause for celebration, not alarm.
The benchmark for rapid growth should come down to 5 percent for emerging countries, to between and 3 and 4 percent for middle-income countries like China, and to between 1 and 2 percent for developed economies like the United States, Germany and Japan. And that should just be the start to how economists and investors redefine economic success.
This rethink is overdue. The number of countries with shrinking populations is expected to rise to 67 from 46 by 2040, and the decline in productivity growth is in many ways reinforced by heavy debt burdens and rising trade barriers. Redefining the standard of economic success could help cure many countries of irrational anxieties about “slow” growth, and make the world a calmer place.
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The New York Times – 17.8.2019
How World Leaders Ruined the Global Economy
They took the best growth picture in a decade and put us in danger of recession.
Steven Rattner
Why are so many key global leaders pursuing so many stupid economic policies?
As recently as January 2018, the International Monetary Fund issued one of its most upbeat economic forecasts in recent years, extolling “broad based” growth, with “notable upside surprises.”
By last month, the fund had sliced its forecast for expansion this year to 3.2 percent — a significant falloff from the 3.9 percent projection reiterated just six months earlier — and had pronounced the economic picture “sluggish.” American investors are more concerned; the bond market is sounding its loudest recessionary alarm since April 2007.
The deterioration in the economic picture is not the consequence of irresponsible behavior by banks or a natural disaster or an unanticipated economic shock; it’s completely self-inflicted by major world leaders who have delivered almost universally poor economic stewardship.
The trade war initiated by President Trump sits firmly atop the list of bad policies. But Brexit has tipped Britain into economic contraction. With European governments unwilling to pursue structural reforms, the continent is barely growing. President Xi Jinping of China has focused on standing up to Mr. Trump and solidifying his own power. After a promising start reforming the economy, India’s prime minister, Narendra Modi, has turned instead to oppressing his country’s Muslim minority.
And on and on.
None of this was necessary. As the January 2018 I.M.F. report indicated, the world economy was firing on all cylinders — “the broadest synchronized global growth upsurge since 2010” — as jobs were being added and inflation remained subdued.
Yes, Mr. Trump’s trade war and Brexit loomed, but amid hope that the former would prove empty and the latter would be softened.
Not so today.
Often against the recommendations of his more sensible advisers, Mr. Trump has implemented the country’s most protectionist actions since the 1930s. As a result, world trade has begun to fall for the first time in a decade, with noticeable economic impact. Last week, Goldman Sachs cut its already modest projections for fourth-quarter growth to 1.8 percent from 2 percent.
That’s a far cry from the “4, 5, 6” percent that Mr. Trump talked about just before his tax cut passed.
Nor has that been Mr. Trump’s only misstep in economic policy. Instead of nurturing growth with important investments like a robust infrastructure program, Mr. Trump deployed his political capital to secure tax cuts that disproportionately favored business and the wealthy.
The “sugar high” they produced quickly wore off. And now, instead of developing better policies, the president has chosen to attack the Federal Reserve, whose independence is cherished by investors, business people and economists.
Boris Johnson, Britain’s new prime minister, abandoned his predecessor’s notion of a “soft Brexit” that would have maintained some ties with the European Union. Instead, he reaffirmed his promise that his country would leave the E.U. on Oct. 31 with or without a deal. The pound quickly fell to its lowest level against the dollar since 1985. (It has since recovered slightly.)
Then there’s China. By virtue of both its remarkably fast industrialization and its protectionist policies, the nation has long been a trade threat. But four years ago, the government issued its “Made in China 2025” economic manifesto, which put in writing China’s plans to attain a leadership position in key new sectors, including robotics, pharmaceuticals and aerospace.
The notion of China using its state power to take on important American and European industries instead of pursuing market reforms set off alarm bells across the political spectrum and provided a concrete underpinning for Mr. Trump’s trade confrontation.
Mr. Xi, rather than acknowledging China’s protectionist practices, has proved unwilling to accept a new trade agreement with effective enforcement provisions. That has raised doubts about whether China is seriously interested in reforming its unfair trade practices — keeping key markets fully or partially closed, using state subsidies to favor its companies, forcing American companies to transfer technology to China and the like.
Of course, at least in the world’s democracies, voters bear substantial
But the world is now suffering the consequences of these poor choices. Even in China, Mr. Xi did not take power forcibly; he rose through the Chinese political system — much like the Civil Service in other countries — and was awarded the presidency by his peers.
Occasionally, good choices have been made, such as the election of President Emmanuel Macron of France. But even that has not led to progress; public support for Mr. Macron turned to opposition when he instituted the much needed policy changes that he promised.
Any chief executive officer who botched his or her job as badly as most of these leaders have would be fired. Let’s hope that voters come to that realization when given the chance.
Steven Rattner, a counselor to the Treasury secretary in the Obama administration, is a Wall Street executive and a contributing opinion writer.
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The New York Times – 17.8.2019
With Trump as President, the World Is Spiraling Into Chaos
Trump torched America’s foreign policy infrastructure. The results are becoming clear.
Michelle Goldberg
Earlier this week, Pakistan’s ambassador to the United States, Asad Majeed Khan, visited The New York Times editorial board, and I asked him about the threat of armed conflict between his country and India over Kashmir. India and Pakistan have already fought two wars over the Himalayan territory, which both countries claim, and which is mostly divided between them. India recently revoked the constitutionally guaranteed autonomy of the part of Kashmir it controls and put nearly seven million people there under virtual house arrest. Pakistan’s prime minister compared India’s leaders to Nazis and warned that they’ll target Pakistan next. It seems like there’s potential for humanitarian and geopolitical horror.
Khan’s answer was not comforting. “We are two big countries with very large militaries with nuclear capability and a history of conflict,” he said. “So I would not like to burden your imagination on that one, but obviously if things get worse, then things get worse.”
All over the world, things are getting worse. China appears to be weighing a Tiananmen Square-like crackdown in Hong Kong. After I spoke to Khan, hostilities between India and Pakistan ratcheted up further; on Thursday, fighting across the border in Kashmir left three Pakistani soldiers dead. (Pakistan also claimed that five Indian soldiers were killed, but India denied it.) Turkey is threatening to invade Northeast Syria to go after America’s Kurdish allies there, and it’s not clear if an American agreement meant to prevent such an incursion will hold.
North Korea’s nuclear program and ballistic missile testing continue apace. The prospect of a two-state solution in Israel and Palestine is more remote than it’s been in decades. Tensions between America and Iran keep escalating. Relations between Japan and South Korea have broken down. A Pentagon report warns that ISIS is “re-surging” in Syria. The U.K. could see food shortages if the country’s Trumpish prime minister, Boris Johnson, follows through on his promise to crash out of the European Union without an agreement in place for the aftermath. Oh, and the globe may be lurching towards recession.
In a world spiraling towards chaos, we can begin to see the fruits of Donald Trump’s erratic, amoral and incompetent foreign policy, his systematic undermining of alliances and hollowing out of America’s diplomatic and national security architecture. Over the last two and a half years, Trump has been playing Jenga with the world order, pulling out once piece after another. For a while, things more or less held up. But now the whole structure is teetering.
To be sure, most of these crises have causes other than Trump. Even competent American administrations can’t dictate policy to other countries, particularly powerful ones like India and China. But in one flashpoint after another, the Trump administration has either failed to act appropriately, or acted in ways that have made things worse. “Almost everything they do is the wrong move,” said Susan Thornton, who until last year was the acting assistant secretary of state for East Asian and Pacific affairs, America’s top diplomat for Asia.
Consider Trump’s role in the Kashmir crisis. In July, during a White House visit by Pakistani Prime Minister Imran Khan, Trump offered to mediate India and Pakistan’s long-running conflict over Kashmir, even suggesting that Indian Prime Minister Narendra Modi had asked him to do so. Modi’s government quickly denied this, and Trump’s words reportedly alarmed India, which has long resisted outside involvement in Kashmir. Two weeks later, India sent troops to lock Kashmir down, then stripped it of its autonomy.
Americans have grown used to ignoring Trump’s casual lies and verbal incontinence, but people in other countries have not. Thornton thinks the president’s comments were
At the same time, Modi can be confident that Trump, unlike previous American presidents, won’t even pretend to care about democratic backsliding or human rights abuses, particularly against Muslims. “There’s a cost-benefit analysis that any political leader makes,” said Ben Rhodes, a former top Obama national security aide. “If the leader of India felt like he was going to face public criticism, potential scrutiny at the United Nations,” or damage to the bilateral relationship with the United States, “that might affect his cost-benefit analysis.” Trump’s instinctive sympathy for authoritarian leaders empowers them diplomatically.
Obviously, India and Pakistan still have every interest in avoiding a nuclear holocaust. China may show restraint on Hong Kong. Wary of starting a war before the 2020 election, Trump might make a deal with Iran, though probably a worse one than the Obama agreement that he jettisoned. The global economy could slow down but not seize up. We could get through the next 17 months with a world that still looks basically recognizable.
Even then, America will emerge with a desiccated diplomatic corps, strained alliances, and a tattered reputation. It never again play the same leadership role internationally that it did before Trump.
And that’s the best-case scenario. The most powerful country in the world is being run by a sundowning demagogue whose oceanic ignorance is matched only by his gargantuan ego. The United States has been lucky that things have hung together as much as they have, save the odd government shutdown or white nationalist terrorist attack. But now, in foreign affairs as in the economy, the consequences of not having a functioning American administration are coming into focus. “No U.S. leadership is leaving a vacuum,” said Thornton. We’ll see what gets sucked into it.
Foreign Affairs, Nova Iorque- edição setembro-outubro 2019
The Population Bust
Demographic Decline and the End of Capitalism as We Know It
Zachary Karabell
For most of human history, the world’s population grew so slowly that for most people alive, it would have felt static. Between the year 1 and 1700, the human population went from about 200 million to about 600 million; by 1800, it had barely hit one billion. Then, the population exploded, first in the United Kingdom and the United States, next in much of the rest of Europe, and eventually in Asia. By the late 1920s, it had hit two billion. It reached three billion around 1960 and then four billion around 1975. It has nearly doubled since then. There are now some 7.6 billion people living on the planet.
Just as much of the world has come to see rapid population growth as normal and expected, the trends are shifting again, this time into reverse. Most parts of the world are witnessing sharp and sudden contractions in either birthrates or absolute population. The only thing preventing the population in many countries from shrinking more quickly is that death rates are also falling, because people everywhere are living longer. These oscillations are not easy for any society to manage. “Rapid population acceleration and deceleration send shockwaves around the world wherever they occur and have shaped history in ways that are rarely appreciated,” the demographer Paul Morland writes in The Human Tide, his new history of demographics. Morland does not quite believe that “demography is destiny,” as the old adage mistakenly attributed to the French philosopher Auguste Comte would have it. Nor do Darrell Bricker and John Ibbitson, the authors of Empty Planet, a new book on the rapidly shifting demographics of the twenty-first century. But demographics are clearly part of destiny. If their role first in the rise of the West and now in the rise of the rest has been underappreciated, the potential consequences of plateauing and then shrinking populations in the decades ahead are almost wholly ignored.
The mismatch between expectations of a rapidly growing global population (and all the attendant effects on climate, capitalism, and geopolitics) and the reality of both slowing growth rates and absolute contraction is so great that it will pose a considerable threat in the decades ahead. Governments worldwide have evolved to meet the challenge of managing more people, not fewer and not older. Capitalism as a system is particularly vulnerable to a world of less population expansion; a significant portion of the economic growth that has driven capitalism over the past several centuries may have been simply a derivative of more people and younger people consuming more stuff. If the world ahead has fewer people, will there be any real economic growth? We are not only unprepared to answer that question; we are not even starting to ask it.
BOMB OR BUST?
At the heart of The Human Tide and Empty Planet, as well as demography in general, is the odd yet compelling work of the eighteenth-century British scholar Thomas Malthus. Malthus’ 1798 Essay on the Principle of Populationargued that growing numbers of people were a looming threat to social and political stability. He was convinced that humans were destined to produce more people than the world could feed, dooming most of society to suffer from food scarcity while the very rich made sure their needs were met. In Malthus’ dire view, that would lead to starvation, privation, and war, which would eventually lead to population contraction, and then the depressing cycle would begin again.
Yet just as Malthus reached his conclusions, the world changed. Increased crop yields, improvements in sanitation, and accelerated urbanization led not to an endless cycle of impoverishment and contraction but to an explosion of global population in the nineteenth century. Morland provides a rigorous and detailed account of how, in the nineteenth century, global population reached its breakout from millennia of prior human history, during which the population had been stagnant, contracting, or inching forward. He starts with the observation that the population begins to grow rapidly when infant mortality declines. Eventually, fertility falls in response to lower infant mortality—but there is a considerable lag, which explains why societies in the modern world can experience such sharp and extreme surges in population. In other words, while infant mortality is high, women tend to give birth to many children, expecting at least some of them to die before reaching maturity. When infant mortality begins to drop, it takes several generations before fertility does, too. So a woman who gives birth to six children suddenly has six children who survive to adulthood instead of, say, three. Her daughters might also have six children each before the next generation of women adjusts, deciding to have smaller families.
The population bust is going global almost as quickly as the population boom did in the twentieth century.
The burgeoning of global population in the past two centuries followed almost precisely the patterns of industrialization, modernization, and, crucially, urbanization. It started in the United Kingdom at the end of the nineteenth century (hence the concerns of Malthus), before spreading to the United States and then France and Germany. The trend next hit Japan, India, and China and made its way to Latin America. It finally arrived in sub-Saharan Africa, which has seen its population surge thanks to improvements in medicine and sanitation but has not yet enjoyed the full fruits of industrialization and a rapidly growing middle class.
With the population explosion came a new wave of Malthusian fears, epitomized by the 1968 book The Population Bomb, by Paul Ehrlich, a biologist at Stanford University. Ehrlich argued that plummeting death rates had created an untenable situation of too many people who could not be fed or housed. “The battle to feed all of humanity is over,” he wrote. “In the 1970’s the world will undergo famines—hundreds of millions of people are going to starve to death in spite of any crash programs embarked on now.”
Ehrlich’s prophecy, of course, proved wrong, for reasons that Bricker and Ibbitson elegantly chart in Empty Planet. The green revolution, a series of innovations in agriculture that began in the early twentieth century, accelerated such that crop yields expanded to meet humankind’s needs. Moreover, governments around the world managed to remediate the worst effects of pollution and environmental degradation, at least in terms of daily living standards in multiple megacities, such as Beijing, Cairo, Mexico City, and New Delhi. These cities face acute challenges related to depleted water tables and industrial pollution, but there has been no crisis akin to what was anticipated.
Yet visions of dystopic population bombs remain deeply entrenched, including at the center of global population calculations: in the forecasts routinely issued by the United Nations. Today, the UN predicts that global population will reach nearly ten billion by 2050. Judging from the evidence presented in Morland’s and Bricker and Ibbitson’s books, it seems likely that this estimate is too high, perhaps substantially. It’s not that anyone is purposely inflating the numbers. Governmental and international statistical agencies do not turn on a dime; they use formulas and assumptions that took years to formalize and will take years to alter. Until very recently, the population assumptions built into most models accurately reflected what was happening. But the sudden ebb of both birthrates and absolute population growth has happened too quickly for the models to adjust in real time. As Bricker and Ibbitson explain, “The UN is employing a faulty model based on assumptions that worked in the past but that may not apply in the future.”
Population expectations aren’t merely of academic interest; they are a key element in how most societies and analysts think about the future of war and conflict. More acutely, they drive fears about climate change and environmental stability—especially as an emerging middle class numbering in the billions demands electricity, food, and all the other accoutrements of modern life and therefore produces more emissions and places greater strain on farms with nutrient-depleted soil and evaporating aquifers. Combined with warming-induced droughts, storms, and shifting weather patterns, these trends would appear to line up for some truly bad times ahead.
Except, argue Bricker and Ibbitson, those numbers and all the doomsday scenarios associated with them are likely wrong. As they write, “We do not face the challenge of a population bomb but a population bust—a relentless, generation-after-generation culling of the human herd.” Already, the signs of the coming bust are clear, at least according to the data that Bricker and Ibbitson marshal. Almost every country in Europe now has a fertility rate below the 2.1 births per woman that is needed to maintain a static population. The UN notes that in some European countries, the birthrate has increased in the past decade. But that has merely pushed the overall European birthrate up from 1.5 to 1.6, which means that the population of Europe will still grow older in the coming decades and contract as new births fail to compensate for deaths. That trend is well under way in Japan, whose population has already crested, and in Russia, where the same trends, plus high mortality rates for men, have led to a decline in the population.
What is striking is that the population bust is going global almost as quickly as the population boom did in the twentieth century. Fertility rates in China and India, which together account for nearly 40 percent of the world’s people, are now at or below replacement levels. So, too, are fertility rates in other populous countries, such as Brazil, Malaysia, Mexico, and Thailand. Sub-Saharan Africa remains an outlier in terms of demographics, as do some countries in the Middle East and South Asia, such as Pakistan, but in those places, as well, it is only a matter of time before they catch up, given that more women are becoming educated, more children are surviving their early years, and more people are moving to cities.
Morland, who, unlike Bricker and Ibbitson, is a demographer by training, is skeptical that humanity is on the cusp of a tectonic reversal in population trends. He agrees that the trends have changed, but he is less prone to the blanket certainty of Bricker and Ibbitson. This is not because he uses different data; he simply recognizes that population expectations have frequently been confounded in the past and that certainty about future trends is unreasonable. Morland rightly points out that even if fertility rates fall dramatically in Africa, there will be decades left of today’s youth bulge there. Because he is more measured in his assessment of the ambiguities and uncertainties in the data, Morland tends to be more circumspect in drawing dramatic conclusions. He suggests, for instance, that China’s population will peak short of 1.5 billion in 2030 and then stagnate, with an aging population and gradual absolute decline thereafter. Bricker and Ibbitson, on the other hand, warn that China’s fertility rate, already in free fall, could actually get much worse based on the example of Japan, which would lead China to shrink to less than 700 million people in the second half of the century. Morland does agree with Bricker and Ibbitson on one important point: when it comes to global population, the only paradigm that anyone has known for two centuries is about to change.
GREAT EXPECTATIONS
The implications of the coming population bust occupy a large portion of Bricker and Ibbitson’s book, and they should occupy a much larger portion of the collective debate about the future and how to prepare for it. The underlying drivers of capitalism, the sense that resource competition and scarcity determine the nature of international relations and domestic tensions, and the fear that climate change and environmental degradation are almost at a doomsday point—all have been shaped by the persistently ballooning population of the past two centuries. If the human population is about to decline as quickly as it increased, then all those systems and assumptions are in jeopardy.
Both books note that the demographic collapse could be a bright spot for climate change. Given that carbon emissions are a direct result of more people needing and demanding more stuff—from food and water to cars and entertainment—then it would follow that fewer people would need and demand less. What’s more, larger proportions of the planet will be aging, and the experiences of Japan and the United States are showing that people consume less as they age. A smaller, older population spells some relief from the immense environmental strain of so many people living on one finite globe.
That is the plus side of the demographic deflation. Whether the concomitant greening of the world will happen quickly enough to offset the worst-case climate scenarios is an open question—although current trends suggest that if humanity can get through the next 20 to 30 years without irreversibly damaging the ecosystem, the second half of the twenty-first century might be considerably brighter than most now assume. The downside is that a sudden population contraction will place substantial strain on the global economic system. Capitalism is, essentially, a system that maximizes more—more output, more goods, and more services. That makes sense, given that it evolved coincidentally with a population surge. The success of capitalism in providing more to more people is undeniable, as are its evident defects in providing every individual with enough. If global population stops expanding and then contracts, capitalism—a system implicitly predicated on ever-burgeoning numbers of people—will likely not be able to thrive in its current form. An aging population will consume more of certain goods, such as health care, but on the whole aging and then decreasing populations will consume less. So much of consumption occurs early in life, as people have children and buy homes, cars, and white goods. That is true not just in the more affluent parts of the world but also in any country that is seeing a middle-class surge.
The future world may be one in which capitalism at best frays and at worst breaks down completely.
But what happens when these trends halt or reverse? Think about the future cost of capital and assumptions of inflation. No capitalist economic system operates on the presumption that there will be zero or negative growth. No one deploys investment capital or loans expecting less tomorrow than today. But in a world of graying and shrinking populations, that is the most likely scenario, as Japan’s aging, graying, and shrinking absolute population now demonstrates. A world of zero to negative population growth is likely to be a world of zero to negative economic growth, because fewer and older people consume less. There is nothing inherently problematic about that, except for the fact that it will completely upend existing financial and economic systems. The future world may be one of enough food and abundant material goods relative to the population; it may also be one in which capitalism at best frays and at worst breaks down completely.
The global financial system is already exceedingly fragile, as evidenced by the 2008 financial crisis. A world with negative economic growth, industrial capacity in excess of what is needed, and trillions of dollars expecting returns when none is forthcoming could spell a series of financial crises. It could even spell the death of capitalism as we know it. As growth grinds to a halt, people may well start demanding a new and different economic system. Add in the effects of automation and artificial intelligence, which are already making millions of jobs redundant, and the result is likely a future in which capitalism is increasingly passé.
If population contraction were acknowledged as the most likely future, one could imagine policies that might preserve and even invigorate the basic contours of capitalism by setting much lower expectations of future returns and focusing society on reducing costs (which technology is already doing) rather than maximizing output. But those policies would likely be met in the short term by furious opposition from business interests, policymakers, and governments, all of whom would claim that such attitudes are defeatist and could spell an end not just to growth but to prosperity and high standards of living, too. In the absence of such policies, the danger of the coming shift will be compounded by a complete failure to plan for it.
Different countries will reach the breaking point at different times. Right now, the demographic deflation is happening in rich societies that are able to bear the costs of slower or negative growth using the accumulated store of wealth that has been built up over generations. Some societies, such as the United States and Canada, are able to temporarily offset declining population with immigration, although soon, there won’t be enough immigrants left. As for the billions of people in the developing world, the hope is that they become rich before they become old. The alternative is not likely to be pretty: without sufficient per capita affluence, it will be extremely difficult for developing countries to support aging populations.
So the demographic future could end up being a glass half full, by ameliorating the worst effects of climate change and resource depletion, or a glass half empty, by ending capitalism as we know it. Either way, the reversal of population trends is a paradigm shift of the first order and one that is almost completely unrecognized. We are vaguely prepared for a world of more people; we are utterly unprepared for a world of fewer. That is our future, and we are heading there fast.
