The truly important news

Forget post-election dissection and the fiscal cliff, here is the stunner:

The U.S. birthrate plunged last year to a record low, with the decline being led by immigrant women hit hard by the recession, according to a study released Thursday by the Pew Research Center.

The overall birthrate decreased by 8 percent between 2007 and 2010, with a much bigger drop of 14 percent among foreign-born women. The overall birthrate is at its lowest since 1920, the earliest year with reliable records. The 2011 figures don’t have breakdowns for immigrants yet, but the preliminary findings indicate that they will follow the same trend.

That’s the real fiscal cliff.  Yet The Washington Post reports that its most popular article today is “Starbucks’ new $7 coffee is its priciest ever.


I would love to see an economist opine on the effect of these facts, if they are connected: (1) high prices in the USA for essentially the same thing found elsewhere, (2) dollar is de facto 'reserve currency of the world' so printing more dollars does not devalue the dollar as much as if it was not the reserve currency of the world, (3) grey goods not easily allowed in the USA--or perhaps services cannot be traded. What pressures does this put on the economy in the USA? As best I can tell, it makes the USA a desirable haven for immigrants, and possibly 'hollows out' US manufacturing and possibly encourages deficit spending by US corporations and government, but I don't know...just my layman guess. How does this end? Do people suddenly lose faith in the US dollar, as they did in Citibank stock in 2007, and then there's a sudden collapse (just like C)? I'd like to think so, as doomsday is cool.

The U.S. dollar is currency; it's not like an equity share in the United States. Since it's not convertible to anything, it's not even like holding debt from the United States. Your Citibank analogy doesn't really hold. People hold dollars because they want to buy goods and services that are priced in dollars. What you're describing would have to entail lots and lots of Americans deciding that they no longer wanted dollars and that there was some better medium with which to buy and sell stuff.

There will likely come a time when it gets very expensive for the United States to issue new debt. It's not that people will lose faith in the dollar; it's that they will lose faith in U.S. Treasury securities' current status of a risk free investment. That will cause problems if we are still running large fiscal deficits. It may also force us to narrow those deficits in a hurry.

As for doomsday, there's really no such thing outside of TV and movies. I cannot think of a single precedent in recorded history of a society just collapsing overnight. Apparently, the Mayans disappeared rather quickly, but we don't know exactly how or how long.

It simply comes down to what happens if the US gov't has to pay historical interest rates compared to the damage zero rates do to the economy. Treasuries are price controlled with the Fed purchasing such a large portion. Price controls always create distortions; what are the distortions and what effect do they have?

That isn't collapse, it is an inevitable shrinking in the reach and influence of the US government within and without the US. The effects would depend on your dependence on government. Think single industry towns when the mill closes.

Sure, hyperinflation happens only on TV and in movies.

Coming soon -- 'Help pay Grandma's social security, get a visa'? Of course, the U.S. would be competing with various other wealthy, aging societies with pension problems. When the big welcome mat is finally rolled out, will the immigrants still want to come?

Slocum, Birthrate is unrelated to this problem in the short run, as it is a lagged response (ie, you do not see the one year old in the workforce until 20 years later.) Composition of age groups currently contributing in the workforce (20-60 year olds) is.

> Composition of age groups currently contributing in the workforce (20-60 year olds) is.

FWIW, immigration could be designed to help with that, for purposes of making the fiscal situation less bleak. It isn't, and I'm sure there would be side-effects if it was, but it could be designed to help. Right now, it's probably making the problem worse and not better.

So I guess this doesn't bode well for our implicate "make it up on volume" strategy to fund social security with low income nth generation latino immigrants.

I think there's plenty of non-Latinos who would be happy to come here too but somehow I imagine the public won't react to this by taking to the streets to demand liberalized immigration policies.

I would also imagine immigrants aren't taking to the streets demanding the right to pay medical bills for old, white strangers.

If that's part of the price of citizenship, many would be very happy to do exactly that.

How do you know this? Most immigrant households are net tax consuming, so the numbers already aren't adding up. Between hip replacements for old white people and pediatric care for working Latinos, I think Grandma will just have to use a wheelchair.

I don't know much about demographics, but I would be willing to guess that

A 65 year old baby boomer, and the baby boomer bulge in the US population,

Is Unlikely to Have More Babies.

This has been anticipated for some time (the only unanticipated change has been illegal immigration, which has now declined); in fact it has been so well known that those who market products involved in new home formation, those employers with a greying workforce, etc. have been thinking about this for some time.

The birthrate is calculated based on how many babies are born to 'women of childbearing age' -- a completely separate issue than an overall graying population. This is clearly explained in the article:

"The U.S. birthrate — 63.2 births per 1,000 women of childbearing age — has fallen to a little more than half of its peak"

Thanks for the correction regarding birthrate. I was talking about the total number of household formations, the number of and composition of the population, including growth of illegal immigration. The demographic statement of compostion of the population is true, and, until the great recession, for example, employers were worried how they would replace baby boomers with the fewer number of potential employees; hence, employment resource companies that specialized in employee "engagement" and "satisfaction" in order to retain what they thought would be a mismatch in retirement and labor supply. On the other side, companies that relied on new household formation--and the goods that were associated with it--ie, washing machines, lawn mowers, furniture, rugs, etc.--were also preparing for a decline in populations in the household formation category, and looking for ways to either upgrade existing customers or modify the product for the new demographic (ie, easy access washing machines for the older growing part of the population, lawnmowers you don't have to push, etc.

Businesses that rely on consumers are all very well aware of all this--and in fact, it is not a surprise, news, etc. If they were not aware of this, I would sell their stock quickly.

Steve Sailer of course has a post, with some interesting graphs on births to unmarried mothers from Pew.

So, let's see; we have over a THREE YEAR PERIOD, a lower birth rate than usual and we are all now to assume that this lower birth rate will either stay constant or continue to decrease.
What complete, total, BULLSHIT.
There simply is no way to know what will happen in the future re: birthrates. It may go down, up, stay the same, who knows?

But to extrapolate a three year trend is equivalent to saying that because the stock market has been going up over the last three months, it will keep on going up.

By the way, last night at about 6 pm or so, the sun went down and it got dark outside. Well, perhaps that is the real story because the sun may never reappear ever again.

France managed to emerge from a drop in the fertility rate. There current fertility rate hit a nadir in the early 1990's and is now at mid 1970's levels.

You could say the same thing about any apparent trend.

The Washington Wizards have much to learn from Starbucks.

Guess I better get busy filling the gap... hey, honey? The Mexican birthrate just went down, we're kind of obligated to have another baby...

Otherwise we'll all be Mormons and Amish people soon enough

What is the birth-rate that makes an economist happy? To me it seems like half the time they worry about it being too high and when it changes they worry about it being too low? China is a good example. Goldilocks?

We live on an overpopulated planet. The ecological footprint of the average American is far too high to be sustainable. A lower birthrate in the US should be celebrated. Yes, it may create some teething pains with pensions in the short run, but a combination of seniors working longer and encouragement of voluntary euthanasia should take the edge off.

We don't live on an overpopulated planet. There are still more than enough resources locked in wildlife that has no efficient use for humans. The only people who have a problem are the nature-lovers who think we can have both a sustainable global human civilization AND a planet untouched by humans. How many zebras, gnus, bears and so on are consuming energy and biomass that humans could consume instead?

The footprint size is also unproblematic - provided people have to pay for their own consumption.

I'd sure as hell rather have more Zebras and Gnus than clowns like you

Thank you for your constructive criticism. However, what you would rather have is completely irrelevant as to the question of whether this planet is "overpopulated" or not (it is not).

Whether the world is overpopulated or not, the fact remains that the world did just fine when there were only half as many of us around-- which was within living memory, the 1960s. If there are fewer of us in the future it will not mean an automatic dark age.

It's not the same forwards in time as backwards in time. Lots of youngsters + a few old people is very different from lots of old people + a few youngsters, even if the total headcount is the same.

However, this could be compensated by increased productivity and reduced inefficiency from warfare (assuming aging populations are less likely to go to war, which is plausible as long as war requires young and impressionable soldiers, but might becomes less plausible with increasing drone warfare options).

Different in the details, but not in the overall effect. Children are just like old people in that they are consumers but not producers. What matters is not the age structure of the dependent population but the ratio of dependent people to productive people. A baby boom stresses the economy in the same manner a retiree boom boom of the same magnitude does, albeit the stress points may be in different sectors.

I agree. Even though I would add my personal moral opinion that even a dark(er) age would be less problematic if it affected less people.

I'll ask again: in what way is the "what are we gonna do with all these people?" worry not fundamentally incompatible with the "where are we gonna find the people?" worry.

I don't think it's fair that people get to worry about both of these things, but I do my part to make up for it by not worrying too much about either.

...and now that I've mentioned it, what's up with the fashionable pairing of "Americans don't manufacture enough stuff" with "Americans have too much stuff"? Again, I'm doing more than my share of not caring about both of these, but I'm not sure how long I can keep it up.

Keep up the hard work! I'm just glad to know there is someone else out there helping me with this job.

I would distill those two thoughts down to: Americans have too much foreign-made stuff. However, Americans can never have enough American-made stuff.

No distilling needed in your case, since you don't adhere to the second view.

Are you proposing autakry or is this just a balance of trade thing (i.e. would you be just as happy if foreigners just bought more American stuff?)

Like you, I don't care.

I'm just trying to show that those two seemingly contradictory sentiments aren't necessarily contradictory.

Should be cross-cited with the "Made in America" post. I think if you reconceptualize ovaries as baby factories, there are interesting parallels between the decline of American and fecundity and the much-lamented decline of our manufacturing sector. (High input costs (and increasing!), recent overreliance on imports, but we still retain a certain reputation for quality).

I would hire your junior faculty from whoever is able to make a phD thesis out of that.

The analogy fails because while American manufacturing OUTPUT has never been higher, we just employ far fewer humans to do the work, thanks to automation. It would be like if the birthrate was still high but robots we're doing most of the birthing work.

I get quite tired of hearing about how America doesn't manufacture anymore. We make more stuff now than we ever have in history, we just don't employ many people doing it.

Not surprising given the trajectory of mexico's birthrate.

The associated mortality rates for newborns and young children are.. doing what?

Life expectancy for newborns is pretty much guesswork, based entirely on extrapolations from previous cohorts.

There ARE worrying signs for subgroups of kids, where early mortality experience can be gauged against prior cohorts, and it's not pretty in some cases.

Recent emerging experience among older kids and young adults is suggestive of a more pronounced "two Americas".

'That’s the real fiscal cliff.'
Or, as Dean Baker tirelessly points out, a great thing for younger workers, whose wages will necessarily increase. Something about supply and demand, I believe.

Also bearish on housing in the long term. Hopefully the price of homes will fall to yet more reasonable levels by the time we're ready to buy.

Shhh - if young people discover just how much benefit a falling birth rate means for them, they might actually be enthusiastic about it.

...until they realize that old people will vote for higher taxes on wages.

The same old people who moved entry-level jobs overseas, imported cheaper entry-level labor here, propagandized student loans, voted themselves generous pensions, exempted themselves from property taxes, sent the bill for EVERYTHING to future taxpayers?

Those old people?

The taxes will not be paid.

@gnostic: Don't forget the epic fail that were the policies that lead to '08. Hey, at least the bar for screwing up has been set high!

Isn't Japan the canary in the coal mine? How are they doing?

Annual per capita GDP growth (PPP) in Japan over the last decade: 2.4%
Annual per capita GDP growth (PPP) in Japan over the last decade: 2.6%

It's not ideal, but it's not nearly the catastrophe people think it is.

Those are backwards, my mistake. Japan's is lower. But the basic point is still there. And while fertility rates in the low 1's (like Japan) are a problem, 1.9s (U.S., Scandanavia) just aren't.

Agreed. I'd also point out that the same people who go hysterical over the possibility of slightly declining population (southern Europe is a different story, but fertility rates of 1.9 are not a catastrophe by any stretch of the imagination) are the same people who think any conceivable resource problem can be solved by the infinite possibilities of the human mind. Or, in other words, if you think vertical farming or nanotechnology or whatever will solve any problems with increasing population, why won't SENS or some such solve the "problem" of declining fertility?

We'll adapt, and we'll be fine. And given that there are in fact physical limits to growth, I see no reason not to level off now and suffer slight inconvenience rather than forced to by the Malthusian limits of the universe.

The reason is that the people not being born might otherwise research new technologies that would make people better off (in addition to increasing the market for potential new technologies).

The irony is that, if there were no more people, they (the new people) wouldn't need to be made better off. They would already be fine (not suffering, not missing anything). And the existing people could share all the world's resources among them, and care zero about sustainability.

And of course, if Chris is right, and SENS can give longevity to the existing people, they themselves can research the technologies they think they need.

Either way, no need to drag more screaming infants into a world of violence.

And yet the suicide rate for preadolescents remains about zero.


"And yet the suicide rate for preadolescents remains about zero."

I would be more impressed by that argument if preadolescents weren't taught that suicides go to hell - and if they could buy perfect suicide drugs like soda. But even then, a low suicide rate doesn't give you what I suspect you want to imply, namely that being born is either voluntary, or not harmful, or some combination thereof.

I am an intelligent competent adult, I think about suicide often, and I recognize that there are psychological, legal and physical barriers to suicide. Most people think their lives are thoroughly voluntary, but I have enough evidence to know mine isn't. I *could* pull suicide off, but it is far from trivial or painless, and it is clearly not for children.

Pretty sure we have plenty of people being born who might otherwise research new technologies that would would make people better off, and we can just as easily focus on what needs to be "otherwise" for them in order to do that, rather than focusing on the "otherwise" for the unborn.

The birthrate story is now the most popular story on WP. The power of Tyler!

Or Andrew Sullivan. Who, I believe, has a considerably larger readership than this blog. Admittedly, I don't expect either the people at the Daily Beast nor the general director of the Mercatus Center to provide accurate and granular information about their readership, though both undoubtedly collect as much information as possible on their readership.

You have a real Koch fixation.

Not really (and Koch is merely a supporter and board member of the Mercatus Center, not its general director) - I just don't expect either organization to provide reliable numbers to show who has a greater readership, or who has greater influence on related media. However, I do certainly believe that both organizations have highly developed tools to measure those metrics to their satisfaction.

This is just fundamental - my assertion that Andrew Sullivan has a greater readership can be proved or disproved, except that two organizations with accurate numbers are never going to share them with us (and neither is the Washington Post - which also knows how to read HTTP referer tags - well, OK, not from a properly configured browser, but Sea Monkey is a fairly esoteric web browser these days.)

And who knows? Maybe this blog really does have a greater readership than Sullivan's.

I guess I should have added:



I think the real stunner is that people don't know the difference between the birth rate and the fertility rate.

In 50 years or so the Hasidic Jewish and Anabaptist population will have grown enough to turn this around.

By my calculations the US population should be almost entirely Catholic by now.

Oh an with a low birth rate I see no reason to running a deficit in Government.

The conventional wisdom in D.C. has long been that illegal aliens from South of the Border and their descendants unto the seventh generation will solve all our fiscal problems real soon now, what will all the Silicon Valley startup they are founding. (They are founding Silicon Valley startups, aren't they? It would be racist to notice that they aren't, so we'll just assume they are.)

So, it was glad-tidings to learn five years ago that the Bush Administrations subprime mortgage boom had driven up the number of babies born to unwed Hispanic women by 10% just from 2005 to 2006. Meanwhile, high home prices had apparently discouraged white married women from having more babies, so their total dropped slightly from 2006 to 2006.

For an explanation of different classes respond to different financial incentives in terms of fertility, here's the most incisive documentary:

By the way, how'd that whole Subprime Bubble thing work out?

The birthrate is down only minimally among married white women, but it is down sharply among unwed illegal aliens.

I say, "Good work President Obama!"


2. More immigrants pl0x

"That’s the real fiscal cliff. Yet The Washington Post reports that its most popular article today is “Starbucks’ new $7 coffee is its priciest ever.“"

In other words, Starbucks is on the cliff to falling into bankruptcy.

Higher rates for coffee will generate less revenue.
Less revenue will result in less profit.
Less profit means plunging Starbucks share prices.
Plunging share prices mean Romney leveraged buyout and corporate bankruptcy.

Clearly, the road to higher profits is to reduce the rate on coffee, or better yet, eliminate all charges for Starbucks coffee, fire all the workers, and let customers make their own coffee.

Time to legalize, subsidize and publicize surrogacy. If children are desirable, we should be willing to pay for them.

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