The Bigger Picture
Published on April 9th in Metro Éireann By Charles Laffiteau
Given the short comings of the French approach to increasing its population (and thus its taxpaying workforce) that I cited in last weeks column, today I want to explore why America’s population is growing faster than that of any other developed country as well as the long term benefits America will realize as a result of this.
Unlike France, the American government doesn’t pay couples to have children, although it does provide parents with income tax deductions that partially subsidize the cost of child care and the expenses associated with raising children. But these income tax breaks are nowhere near as generous as the subsidies provided by France and other developed countries such as our Scandinavian neighbours. So why have America’s fertility and population growth rates now taken an upward trajectory when all the other developed countries’ fertility and population growth rates are on a downward trajectory?
If we take a closer look at America’s current demographic structure and the underlying characteristics of its fertility and population growth rates we can see that it is not skewed in favor of any one ethnic group. As one might expect the fertility rate of Hispanics is higher than that for other ethnic groups at 3.0, but the rate for non-Hispanic whites is 1.9 while the rate for African-Americans is 2.1.
America’s population growth is also fairly well balanced between growth driven by immigration and growth resulting from the birth and fertility rates of native-born Americans. That means America’s population growth isn’t subject to the destabilizing effects the addition of large numbers of immigrant workers and their families can have on a nation’s workforce and its social structures.
America’s steady and fairly balanced population growth will also continue to keep America’s population younger than the aging populations of other developed countries. Currently the median age in America is 36.6, but its 40.4 in Europe and Ireland is the only EU nation with a median age lower than the US at 34.6. According to Bill Frey, a demographer at the University of Michigan, the median age in America in 2050 will only be 37 while in Europe it will be almost 53. In other words, the difference between US and EU median ages is likely to rise from 4 to as much as16 years by 2050.
This means that Americans will have to continue to spend more than EU countries on education, but it also means that US taxpayers will have to shoulder a much lighter burden of retiree pension and healthcare costs than its EU and East Asia neighbours between now and 2050. Retiree benefit costs are expected to skyrocket in America and the developed countries of Europe and East Asia thanks to the retirements of post World War II baby boomers. As a result, US government debts could rise to a level almost equal to 100% of US national income by 2050. But government debts would rise to over 150% of income in East Asia and EU overall, and to over 250% in Germany and France.
A younger population will also result in lower labour costs for companies operating in the US and make American companies more productive and globally competitive. This is exactly what happened in Japan during the 1960s and 1970s when its workforce was younger than the US labour force and those lower labour costs helped Japanese companies become much stronger competitors around the world. Using current demographic trends, the number of people over 65 will be equivalent to 60% of the working-age population in Europe and Asia in 2050, compared to only 40% in America.
These huge economic impacts on countries with declining populations can best be addressed by encouraging more young people to immigrate to these countries. But except for the years between 1920 and 1970 when it was encouraged by France, immigration levels have always been low in European and Asian countries. So even if these countries suddenly decided to throw their doors open to immigrants, I think there is a good chance they won’t get the results they would be hoping for.
America is a nation of immigrants and 75% of all the people in the world who have ever emigrated from their native countries have moved to the United States. That’s why Kenneth Prewitt, former head of the US Census Bureau, argues that “in the struggle to find workers to support growing economies, nations that are hospitable to immigrants will have an advantage.” In other words, immigrants tend to go where they already have friends and or family waiting to welcome them and help them get jobs. So if you were an immigrant where would you prefer to move; to a youthful and multi-coloured America (where you likely know someone) or to an aging Europe with a 90%+ white population?
There are also military and geopolitical implications associated with the declining populations of countries in Europe and East Asia. Despite its promises to narrow its defense spending gap with America to address the military imbalance within NATO, ever since the end of the cold war Europe has chosen to increase spending on social programmes instead. As a result the United States now spends twice as much on military defense than the entire EU spends each year and that military imbalance is unlikely to ever be corrected. Why? Because if Europe is unwilling to spend what is needed on defense when people over 65 are only 30% of the working-age population, what do you expect Europe to do between now and 2050 when the proportion of 65 year olds doubles?
I would contend that anyone who thinks the United States’ economic, military and or political power has peaked and has already begun the same slow but inexorable decline that Rome and England experienced is making a big mistake. Thanks to its positive demographic trends, it is much more likely that America’s economic, military and political power will become even more solidly entrenched during the rest of this century. What other country has America’s potential?