In addition to my sister Kim, I dedicated my 2019 book, They’re Both Wrong: A Policy Guide For Independent Thinkers, to the “alarmists of the dominant ideologies.” It’s not that there’s not a “dime’s worth of difference” between Left and Right. There are differences. Major ones. At the same time, they’re no different on the matter of alarmism. Both sides predict crisis after crisis related to a warming planet, trade deficits, acid rain, budget deficits, smartphones, television, processed foods, housing, etc. Markets mock their relentless worrying.
Take the widely held view on the right that low birthrates are a crisis for China, the U.S., surely all of Europe, and any other advanced country where birthrates are logically falling. While members of the right claim to be for limited government, they write endlessly of looming budget shortfalls borne of fewer people being born, and fewer people subsequently working. For an ideology that claims it wants government to shrink, members of the right write with great constancy about the “crisis” of allegedly reduced government revenues.
Naturally market signals mock this alarmism. Members of the right claim to love markets, but bite their nails as though they don’t exist. The good news is that actual markets DO price the future, and those markets indicate that if anything, federal revenues are set to skyrocket in the coming years, decades, and realistically centuries. Readers can confirm this by looking at the low interest rates Treasury pays to borrow thirty years out.
About the birthrates, population, and “replacement rates” that have right-leaning deep thinkers needlessly fearful about falling tax revenues in the future (see above), it’s useful to note that of the world’s population, 85 percent of it can be found in developing countries, according to Patricia Cohen at the New York Times. Yes, you read that right. It’s in the world’s poorest countries where birthrates are highest, and where populations are greatest.
Which really isn’t surprising. In poor countries and in the poorer parts of countries where farming is still a fact of life, it’s only logical that birthrates would be higher. Kids are a necessity from an extra hands perspective on farms and for the low wages they earn on the job more broadly, plus parents need their offspring to look after them when they reach infirmity.
Conversely, in the developed world, children are a choice as opposed to a necessity. They’re not needed for the farm, or for the fruits of their meager wages, rather they’re needed because they bring great joy and meaning to life. And since medicine is much more advanced in the developed world, the babies born are much more likely to live to adulthood. As for the parents and grandparents in these “aging” societies that conservatives are all worked up about, of course these societies are aging. Life expectancy is much greater where there’s enormous wealth.
The main thing is that where birthrates are lowest is also where those being born are and will be the most productive. By far. Implicit in the right’s deep fear about low birthrates is that humans are static creatures in terms of capability such that fewer babies being born will reveal itself in greatly reduced economic growth in the future. Conservatives get it backwards. Indeed, humans aren’t static creatures. Thanks to the brilliant mechanization of so much, including AI advances that will either erase old forms of work or greatly erase the worst aspects of work, those being born today in the developed world will achieve productivity per man that will make that of their parents and grandparents seem tiny by comparison.
Conservatives also miss that amid lower rich country birthrates, the world is figuratively shrinking before our eyes. It means that those born into developed-world abundance will more and more be working alongside and with the world’s humans and machines. Which means even greater productivity for the “few” being born in the developed world.
Of course, this explains why Treasury yields don’t in any way reflect conservative alarmism: if growth were set to plummet due to too few humans as conservatives contend, Treasury yields would be many times higher amid much less debt. Better yet, global investment flows would be exiting the low birthrate countries to reflect the “crisis” of low birthrates.
Except that they’re not. If only conservatives would follow the markets they claim to embrace, they then might spare us their world-is-ending fears. Alas they, like the nailbiters on the left, find crisis everywhere they look. There’s not a dime’s worth of difference between the dominant ideologies when it comes to ignoring the market signals that thoroughly reject their worry.
Republished from RealClear Markets
