Review: Fewer
Ever since the days when Thomas Malthus predicted that an economy’s population would starve once population growth exceeded food growth, demographics has played an important role in economics. So it makes sense for anyone interested in economics and investment to also try and understand demographics.
Most population projections predict that populations will rise to huge numbers, and that some 12 billion people will inhabit the earth. These projections are based on the fact that for the past 650 years the population has gone up. But according to Ben Wattenberg it is actually highly likely that the world population will grow to a much smaller number, after which the population will actually begin to decline. These projections are based on the total fertility rates of countries around the globe, most of which are far below the replacement level needed to sustain a population.
1. The Story of This Book
It takes 2.1 children per couple to sustain a population. Birthrates in developed economies have fallen below replacement rates, and even less developed countries have falling birthrates. Within the next few decades, populations in the developed countries will begin to fall, particularly the European countries. And thanks to the accuracy levels of population projections, you can be fairly certain that these trends will hold for a least another 20 years if things don’t change.
2. And Then There Were Many Fewer
Child or car. Cars are expensive, and babies are expensive. Thanks to modern materialism (good or bad), couples are now deciding between having more babies, or having more stuff. Out of 44 developed countries, 43 are below the replacement level. I think you know what many of them are choosing.
3. Less Developed, Less Fertility
Along with the developed countries, less developed countries have seen slowing fertility rates as well. The most drastic example is China, which saw a change from over 6 children per woman to 1.8 due to the one child policy implemented in 1979. You can chalk the slowdown in other countries up to the usual suspects of urbanization, increased education, better use of contraception, and an increasing number of women entering the work force.
4. America the Exceptional: The Baby Makers
The United States is unique because it has had huge population growth, yet it has still become the richest country in the world. Fuel is relatively cheap in the U.S., which makes suburban living a possibility. America has more single family detached housing than anywhere else in the world, which has no doubt had some impact on the number of children families can raise.
5. America the Exceptional: Immigrant Takers
Immigration is actually one of America’s competitive advantages; despite Total Fertility Rates being below the replacement level immigration has allowed the U.S. to grow larger. Unfortunately discrimination against foreigners goes back to the beginning of the country, but Wattenburg argues that immigrants are necessary for the U.S. to remain strong.
6. The Culture of Alarmism
The United Nations typically makes three population projections, including a high, medium, and low variants. There is a huge gap between the numbers, and groups with an agenda tend to use projections that suit there needs. Environmentalists, for example, tend to use the high numbers to stress the impact of population growth. Real estate agents often touted land as a good investment because a growing population will always need somewhere to live. Over time these numbers become ingrained in our heads, whether they are likely or not.
7. Why?
There are numerous reasons laid out in the book for why populations are growing. Education, contraception, urbanization, and money are the big ones. I’ll leave the rest for you to read about in the book.
8. The Graybe Boom
Better health care and new medicines are increasing life spans further and further. Coupled with falling fertility rates, this increase in ages is causing an overall increase in the population, which spells trouble for pension plans, social security, and medicare/medicaid. The author presents ideas for possible solutions, such as changing social security cost of living adjustments from a wage based index to a CPI based index. In the end it’s up to the politicians who run the programs who need to make the difficult choices, and so far no one is stepping up to the plate.
9. Business
As populations age some businesses will win and others will lose. For instance it’s probably not a good idea to invest in Baby Gap. The truth is that we don’t really know what happens when populations decline because it hasn’t happened before.
10. The Environment
Population growth has a huge impact on the environment, both through consumption of resources and pollution. Pollution levels have also been historically linked to affluence, a relationship which is explored by the book.
11. Geopolitics
Nations with larger populations are typically viewed as being stronger. Large populations lead to large militaries, and on top of that having a large military is expensive. If the population of the United States declines and another country becomes the world’s dominant force, how will that shape the global landscape?
12. Is There an Immigration Solution?
The less developed countries have too many people, while the developed countries have too many. Doesn’t it make sense to bring workers from poorer areas to countries where they have better opportunities? Ben Wattenberg argues that developed countries need to be more aggressive with immigration laws to bring in more people, both skilled and unskilled.
Increasing immigration also has secondary benefit. Migrant workers tend to send money home to their families, bypassing any corrupt government officials or organizations. So by allowing immigration we can not only better allocate skills but also wealth.
13. Numbers Matter
The final chapter reiterates the premise that past population projections are being adjusted down by the United Nations based on new fertility rates, and that less developed countries have more of a chance than ever to move ahead economically.
Recommendation:
If you are interested in macro economics, politics, or investing then Fewer is a must read. A country’s population and demographics have a huge impact on its dynamics. Even if the projections in this book turn out to not be right, it’s worth understanding the implications of a decrease in the population.
For someone simply interested in general personal finance though I don’t think it would be as useful, other than to provide background on a very important issue in this country. Social security will eventually affect us all, and population declines will likely have an effect on financial and real estate markets. If you have time to read and can find it in a library, Fewer might still be worth checking out.
