The Population Implosion Takes Center Stage

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The Population Implosion Takes Center Stage

Since the dramatic decline in infant mortality at the end of the 18th century, the supposed threat of over-population has dogged economic thinking. Beginning in the mid-1960s, a fear of it has been drilled into the heads of students around the world.

However, 240 years after the beginning of the Industrial Revolution and nearly 50 years since the term "population explosion" entered our vocabulary, this is turning out to be an enormously flawed theory. In fact, the United Nations now estimates that if low fertility and birth rates continue on their current path, by 2100 the Earth's population will be 6.2 billion. That's 800 million fewer than the 7 billion who inhabit the planet now.1

What to Expect When No One's Expecting

Why is this happening? Because the fertility rate has fallen by more than 40 percent since 1950.

Many who still think in Malthusian terms see lower fertility solely as a good thing. They argue that in a world with finite resources, less demand is better. But they fail to recognize the converse: Less supply is also a bad thing — and that's precisely what you get when you have fewer workers producing fewer innovations, as well as fewer goods and services.

To understand this, one only needs to look at the past 240 years of human history. Since the beginning of the Industrial Revolution, we've seen per capita GDP grow by a factor of 50 or more, even as the population has increased over seven-fold. That's because productivity due to innovation advanced far faster than population growth. While we have consumed resources at a prodigious rate, the world currently has more proven reserves of virtually every resource than at any time in history.

However, for the first time since the Black Plague swept across Europe, we're experiencing the disruption that comes with a rapidly aging and shrinking population. For the next 35 to 40 years, the global population will continue to increase at a decreasing rate. However, the population in nearly every part of the world — from China to Germany to Canada — is rapidly aging.

Furthermore, specific countries like Japan, Italy, and Estonia are already providing a picture of what a shrinking population looks like. And that's precisely what the whole world will look like after 2050. By that time, unless fertility rates have increased markedly, the global population will begin to shrink in absolute terms and whole cities will cease to exist...

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