America's Baby Bust
For more than three decades, Chinese women have been subjected to their country's brutal one-child policy. As a result, Chinese women have a fertility rate of 1.54. Here in America, white, college-educated women—a good proxy for the middle class—have a fertility rate of 1.6. America has its very own one-child policy.
Forget the debt ceiling. Forget the fiscal cliff, the sequestration cliff and the entitlement cliff. Those are all just symptoms. What America really faces is a demographic cliff: The root cause of most of our problems is our declining fertility rate.
The fertility rate is the number of children an average woman bears over the course of her life. The replacement rate is 2.1.
Today, America's total fertility rate is 1.93The nation's falling fertility rate underlies many of our most difficult problems. Once a country's fertility rate falls consistently below replacement, its age profile begins to shift. You get more old people than young people. And
eventually, as the bloated cohort of old people dies off, population begins to contract. This dual problem—a population that is disproportionately old and shrinking overall—has enormous economic, political and cultural consequences.
For two generations we've been lectured about the dangers of overpopulation. But the conventional wisdom on this issue is wrong, twice. First, global population growth is slowing to a halt and will begin to shrink within 60 years. Second, as the work of economists Esther Boserups and Julian Simon demonstrated, growing populations lead to increased innovation and conservation.
Low-fertility societies don't innovate because their incentives for consumption tilt overwhelmingly toward health care. They don't invest aggressively because, with the average age skewing higher, capital shifts to preserving and extending life and then begins drawing down.
They cannot sustain social-security programs because they don't have enough workers to pay for the retirees. There has been a great deal of political talk in recent years about whether America, once regarded as the shining city on a hill, is in decline. But decline isn't about whether Democrats or Republicans hold power; it isn't about political ideology at all.
At its most basic, it's about the sustainability of human capital. Whether Barack Obama or Mitt Romney took the oath of office last month,
we would still be declining in the most important sense—demographically. It is what drives everything else.
But our fertility rate isn't going up any time soon. In fact, it's probably heading lower. Much lower.
America's fertility rate began falling almost as soon as the nation was founded. In 1800, the average white American woman had seven children. Since then, our fertility rate has floated consistently downward, with only one major moment of increase—the baby boom. In 1940, America's fertility rate was already skirting the replacement level, but after the war it jumped and remained elevated for a generation. Then, beginning in 1970, it began to sink like a stone.
By 1973, the U.S. was below the replacement rate, as was nearly every other Western country. Since then, the phenomenon of fertility collapse has spread around the globe
If you want to see what happens to a country once it hurls itself off the demographic cliff, look at Japan, with a fertility rate of 1.3.
The Japanese fertility rate began dipping beneath the replacement rate in 1960 for a number of complicated reasons (including a postwar push by the West to lower Japan's fertility rate, the soaring cost of having children and an overall decline in the marriage rate). By the 1980s, it was already clear that the country would eventually undergo a population contraction.
From 1950 to 1973, Japan's total-factor productivity—a good measure of economic dynamism—increased by an average of 5.4% per year. From 1990 to 2006, it increased by just 0.63% per year. Because of its dismal fertility rate, Japan's population peaked in 2008; it has already shrunk by a million since then. At the current fertility rate, by 2100 Japan's population will be less than half what it is now.Conservatives like to think that if we could just provide the right tax incentives for childbearing, then Americans might go back to having children the way they did 40 years ago. Liberals like to think that if we would just be more like France—offer state-run day care and other programs so women wouldn't have to choose between working and motherhood—it would solve the problem. But the evidence suggests that neither path offers more than marginal gains.
Which leaves us with outsourcing our fertility. We've received a massive influx of immigrants from south of the border since the late 1970s.
Immigration has kept America from careening over the demographic cliff. If you strip these immigrants—and their relatively high fertility rates—from our population profile,
America suddenly looks an awful lot like continental Europe, which has a fertility rate of 1.5., if not quite as demographically terminal as Japan.
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