September 2012


Not much needs to be said about the demographic evolution of the developed countries. Basically, in order to have a stable population that maintains itself over time, fertility rates (the number of children each woman has in average throughout her lifetime) need to be slightly above 2 (applicable only for the developed countries). For values below 2, the population is contracting over time, eventually disappearing altogether. For values above 2, the population is expanding, putting pressure on the environment. Right now, these fertility rates are around 1.25- 1.5 (source) in most developed countries.

These fertility rates are not country specific, but rather group specific. For instance in the US, the white population has a fertility rate of 1.8, while the black population has a fertility rate of 2.0 and the Hispanic population a fertility rate of 2.4. (source) In other words, the low fertility rates are a characteristic of White populations (and also Asian).

Taking the case of the US into consideration, this means that over time, the white population will eventually mix and disappear into other groups; groups that will become the dominant ones within society.

But this is only half of the story, another interesting evolution is that immigrants tend to make a lot of kids (above 3), when they arrive  in a developed country. However, their offspring tend to make significantly less kids. By the time these immigrants reach the third generation, they usually have fertility rates well below 2.5. Also, in the past decades, other less developed countries had witnessed sharp declines in their fertility rates, most likely due to much better means for contraception (source).

So what is happening?

Simple, people now have access to efficient means of birth control and they do just that, control the number of kids they want to have, the moment they want to have them and with whom they want to have them.

The problem?

The problem is that until now, nature sort of tricked us until into having kids. We loved each other, had sex, and as a wanted or unwanted consequence, sometimes this led to pregnancy and eventually childbirth. This is not a very happy situation for many people, since having kids requires responsibility and financial sacrifices: one must give up on a part of himself/herself for the benefit of his/hers children. Today many people don’t feel ready for this until they feel they achieved financial stability. In previous times, without birth control, the entire institution of marriage emerged. Its purpose was to regulate the way people of opposite sex enter into relationships so that unwanted pregnancies are avoided and children have some guarantee that someone will take care of them.

Our modern society allows us to decide very much on the whole child-making issue, we are no longer at the hands of nature or stigmatised if we have kids outside marriage, we can pretty much do what we want. Unfortunately, in a highly individualistic society, where the most cherished achievement is individual self-realisation, the result is predicable: kids fall on the second place.

Why a problem?

This is a problem because the above behaviour leads to extinction.

Let’s take the case of Japan with fertility rates of 1.39. Assuming all kids survive into adulthood (which never happens), then the population of Japan of 127.8 million will be reduced to 20 million in about 400 years and to 3 million in 800 years from now. To some this sounds like a lot, but in real, historical terms, this is a very short time, for instance the Roman Empire lasted for about 500 years.

If our behaviour leads to our own extinction, then one must conclude that current social values and behaviours (especially in the developed countries) are at odds with some fundamental biological characteristics of human nature and for that matter, of any other living organism. This is a matter of further debate and research, but it is without doubt an issue that requires further investigation.

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P.S. A friend of mine once told me that he doesn’t care much about kids, because what he really wants to do, is to become a great writer and have his books read by many people. I asked him: “If you are not interested in kids, then who will be left to read your books after you are dead?”

 In the past decades, the media has often been sprinkled by debates regarding the future of the pensions system. Almost every time, the debates revolve around the unsustainability of current system and the need for reform. There are a few ideas on how to deal with this problem, like reducing the value of pensions, increasing the retirement age or moving towards private pension schemes. Unfortunately, these are temporary solutions that don’t solve the deeper problem which created this situation, which is the accelerated population decline of the developed countries.

How does the pension system work?

The pension system works like a loan between generations and is highly social in nature. To understand it, divide the population into 3 groups:

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What you are being told

You are paying a contribution to a large, government controlled fund, which then redistributes your contribution to those who are retired.

How it really works

The public system

In a nutshell: The active population is paying for the education of the young population so that when the young become active, they will be able to support themselves, their family, have a better life and a decent income. In turn, the young population when it turns into active population returns the favour by paying for the pension of the former active population, which has now turned into a retired population. This scheme has sometimes been called – a loan between generations.

The private system

Your pension contribution is largely invested in government bonds, since they’re the safest bet for maintaining the value of your contribution. Also, a small percentage of your contribution is used for financial investments. These investments can take many forms, but it’s not uncommon to be gambles on the stock market. The result is that your contribution is kept at a relatively fair value so that when you retire, you can get a good pension. The downside is that the company that invested your pension may go bankrupt and you are left with no pension or have your pension drastically reduced. This has actually happened in Argentine (2001) or with some pension schemes in the US and UK: example.

The mixed system

Throughout your life the state takes a certain percentage of your monthly salary and uses it for long term investments. These investments maintain the value of your initial contribution over long periods of time. After you retire, your contribution is returned to you in the form of pension. The value of your pension is calculated depending on the overall value of your contribution.

So what’s the problem?

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 The problem is related to how the overall social and economic system works. The above pyramids highlight the 3 areas of the population: the young, the active and the retired.

 In the developed countries, up to the 1970s, the distribution of the population was similar to the one in Angola: a small peak representing the retired population, a large middle section representing the active population and a large base representing the young population. Today, in the EU and in the US, the peak is becoming larger and larger, while the middle and bottom sections are gradually becoming smaller. As a consequence, the middle section is having a hard time coping with the (financial and economic) pressure exerted by the upper section.

One of the long term solutions is to de-couple the retired population from the active one by developing pensions schemes (be they private or public), which act like saving accounts for the population. Unfortunately, in the large scheme of things, it doesn’t really matter how you package the pension, since the economic and financial needs of the retired population still need to be fulfilled one way or another by the active population. The retired population is (in theory) a pure consumer, it doesn’t generate wealth and thus the state still needs to support itself from the active population (which is becoming smaller and smaller). In the same way, the interest generated by private pension funds is also highly depended on how well the active population is doing. The private pension funds generate their income and profit by investing in the activities of the active population and thus are depended on it for maintaining the value of your pension.

As a consequence, regardless of how you look at the problem, the current pension system is in difficulty, because the active population is unable to generate the economic wealth and financial resources needed to support the retired population at current levels. The short-term solution is to adjust these levels, either by reducing the value of pensions or by increasing the retirement age, thus reducing the number of people retiring every year.

Another quick way out of this situation is to increase the pool of the active population through immigration. Additionally, in developed countries, immigrants have the tendency of making far more kids than the local population (source), further strengthening the bottom sections of the population pyramid. This is a fair and decent solution for the survivability of the country, but it also marks a turning point in its society, because basically what is happening is that the local population is slowly being replaced by a new, foreign population.

The ideal solution?

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The ideal long-term solution is when the population remains stable over-time. This means that every year, the number of people who die must be almost equal to the number of new-borns. Thus, the population doesn’t change fundamentally over-time and it’s able to sustain itself. To have a stable population, a country requires that the local population has a fertility rate of 2 (basically each woman has to have 2 kids in her life-time). By comparison, in most developed countries fertility rates are very low, in Japan for instance, the fertility rate is 1.39. There is no indication that fertility rates will increase in the foreseeable future, and most of the current increase in fertility rates is the result of immigration, since immigrants usually have a fertility rate between 2.25 and 2.5.

P.S. Another (but far-fetched) solution is to discover means to increase the life-span of the population and maintain its youth for much longer periods of time. Sci-fi as it may seem, it does make the entire argument regarding pensions and population distribution entirely mute, since in world where everyone is young and eternal, such an argument is meaningless.

Evelyn Waugh wrote in his book ‘Robbery Under Law’ in 1938 just before WWII:

‘Civilization has no force of its own beyond what is given it from within. It is under constant assault and it takes most of the energies of civilised man to keep going at all. There are criminal ideas and a criminal class in every nation and the first action of every revolution, figuratively and literally, is to open the prisons. Barbarism is never finally defeated; given propitious circumstances, men and women who seem quite orderly, will commit every conceivable atrocity. The danger does not come from merely habitual hooligans; we are all potential recruits for anarchy. Unremitting effort is needed to keep men living together at peace; there is only a margin of energy left over for experiment however beneficent. Once the prisons of the mind have been opened, the orgy is on.’

In stark contrast to the “civilisation” of the developed world, there are some places in Central Africa where people, living in stricken poverty, kill each other with untold savagery, where rape is common and cannibalism is still on the menu. Our tendency here, in the so called “West”, is to sweep these things away, feeling compassionate about the people living in those conditions, but at the same time distancing ourselves from them. We tend to think… we are not like them. But five hundred years ago, us, the same peoples of Europe who are now the pinnacle of social evolution, developed some of the most horrifying means of torture, regularly conducted public executions, and developed means of human exploitation which formed the basis of an entire economic system. To some this has the sound of a bad dream, but it was all very real.

Going back in time a few more millennia, we can find that the same people of Europe used to kill each other with fascinating savagery, conducted human sacrifices and partook in cannibalism.

Thus, the difference between Central Africa and our “Civilised” World is not space, but time.

The greatest danger right now is it to think that our savagery has been defeated and it will never re-emerge again. Nothing could be further from the truth. In the past few centuries we’ve managed to cage our savagery in the basement of our mind, under hard locks and steel doors. But, without vigilance, without a constant reminder of how we got to our present state, the danger of spiralling back into anarchy is very real. Paradoxically, it is our thirst for more and more freedom that weakens our self-imposed chains.