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« Back to Fewer People, Part Two main page    Transcript for: Fewer People, Part TwoThink Tank with Ben WattenbergTTBW 1228 'People, Part Two' PBS air date9/30/2004 Funding for Think Tank is provided by... At Pfizer we’re spending over five billion dollars looking for the cures of the future. We have 12,000 scientists and health experts who firmly believe the only thing incurable is our passion. Pfizer. Life is our life’s work. Additional funding is provided by the Bernard and Irene Schwartz Foundation, the Smith Richardson Foundation and the Lynde and Harry Bradley Foundation. We are PBS. WATTENBERG: Hello, I’m Ben Wattenberg. In the past three decades birth and fertility rates have been dropping like a stone, worldwide. Europe is losing population. America sustains growth but principally through immigration. Now, what happens to a nation’s economy when it fills more coffins than cradles? How is consumer spending affected and how will changing demographics affect the global politics and power chessboard. To find out, Think Tank is joined by the men who head the agencies that gather and tend the data from which we make our judgments. Joseph Chamie, Directory of the U.N. Population Division which produces world population prospects and the author of Religion and Fertility and Peter Way; Chief of the International Program Center at the U.S. Bureau of the Census in Washington, D.C. which produces the Global Population Profile. And me; author of a new book entitled Fewer: How the New Demography of Depopulation Will Shape our Future. The topic before the house: Fewer People, Part Two this week on Think Tank. WATTENBERG: Peter Way, Joe Chamie. Welcome back to part two of our discussion on Fewer People. Let me start out with a word that is getting a lot of play around the world and that is 'older'. I wrote a book called Fewer, but the population is getting older. Can you explain what’s happening, give us some numbers both of you and what does it mean. WAY: By that we mean that both that the average age is getting higher and that there are relatively more people in the older ages. Those born in the late ’40s and ’50s up to 1964 in the U.S., when that population begins to enter age 65, the proportion of the older population 65 and over in the U.S., is going to start increasing quite rapidly. WATTENBERG: The baby boom in America started in 1946, which if I’m not wrong were the birth year of both President Bush and President Clinton. They will be 65 when? WAY: In 2011. At the same time, there have been fewer births relatively, after 1964; fertility rates have come down in the U.S. and so there are fewer workers to support basically this population. And that’s what’s causing a lot of concern about Medicare, Social Security and various government programs like that in the United States as this population moves into the older ages. WATTENBERG:Is that phenomenon true in Europe and Japan as well? CHAMIE:Absolutely and the same rules of demography apply. WATTENBERG: Even more so because the fertility has fallen lower. CHAMIE: The more rapidly the rate of fertility comes down to the lower levels, the more rapid the aging process is going to be. WATTENBERG: I mean, I have always - as I read about this topic - it’s always brought up in the popular press as an aging problem, and in fact it’s a low fertility problem because if fertility had remained where it was you wouldn’t have these disproportionately aged people; you wouldn’t have the shortage of people putting money into the system and so on and so forth. CHAMIE: I would cast it differently. I don’t see it as an aging problem. I think it’s a success story. People are living longer and as a consequence of lower fertility we’re having a change in the age structure. Both things are very good, and as Peter said, two things very distinct. People are living longer than ever before; the fastest age group is 100 plus; there’ll be more in that group - a sixteen-fold increase by mid-century and the 2nd thing is the average age is moving up at the same time and all that is very good news. I mean, a situation the reverse, if you had a very young population and people dying off at 50/55... WATTENBERG: As you’re having with AIDS in Sub-Saharan Africa. CHAMIE: So it’s very undesirable. So we should see this as a success story; it’s very good news. What we have to do is adjust to it. CHAMIE: As you know Ben, when they started these programs for pensions they chose 65 because most people didn’t make it to 65. When Bismarck started in the end of 19th century and when Roosevelt started it in the 20th century, they were not imagining that people would live much beyond 65 so adjustments will have to be made as people live longer. WATTENBERG: Right. And the basic adjustments are raise taxes or cut benefits. I mean that’s where you start. CHAMIE: There are several options. You can raise the age of retirement, which is happening in the United States. WATTENBERG: Yes, but that’s a benefit cut. I mean, when you say 'Hey, hello Joe; you can’t retire at 65. You can retire at 70. I’ve just cut your benefit.' Now, I’ve read stories from Europe, I guess particularly, that as these countries have tried to either cut benefits or raise taxes there’s been demonstrations, there have been general strikes. Europeans don’t like this. They want to retire - they get a lot of vacation time and they want to retire early. WAY: Yes, I think we’ve grown up under a situation where we had - have had liberal benefits, especially some of the European countries, and those are not sustainable. WATTENBERG: What does all this do to - in these countries where you’re going to have a population decline and an evermore elderly society - what does that do to business conditions and I’m specifically thinking of real estate, which is probably with all it’s ancillary affects, I mean you’ve got to buy chairs and rugs and lights and television sets and DVD players and everything else. The real estate market is going to collapse. CHAMIE: There are many examples in localities in the United States, countries of Europe, where people have left and there isn’t a market for those houses that are on the market - fewer buyers. The prices decline and eventually you start having very, very big drops in the prices of those homes. And if that continues over a long period of time, you end up with what we have are ghost towns where people simply left. WATTENBERG: But in the United States you have that in certain localized areas in the mid-continent area and the rural areas. But we’re talking about it happening nationally in those European countries. That the population as a whole which has scared those governments, hasn’t it now, finally? WAY: Well I think you’ve got populations that for a long time have been experiencing positive growth. Increase in population, continuing building, you know, new housing projects going up and things like that across the whole economy. There’s not going to be those same driving forces in coming years. It’s already the case in a number of European countries and the economic situation is going to be different. There’s going to be a transition. WATTENBERG: Right. Now, speaking of transitions. There is something called - and Joe you explained to me when I was writing this book - called the second demographic transition and that’s going on according to some European demographers that’s the hot ticket right now. Can you explain that? CHAMIE: We have had in our research in the past, different theories and ideas about the changes of population brought about by dropping - declining fertility and mortality. There are some scholars now talking about the second demographic transition where we go much lower than sort of the replacement level and we start having very low fertility; we have people - smaller families or living alone, individual autonomy... WATTENBERG: Cohabiting, more divorce. CHAMIE: Yes, and we’re seeing more of that - more cohabitation, increasing levels of divorce, postponed childbearing, increases in some countries such as Germany of childless couples. WATTENBERG: I mean this is sort of... CHAMIE: And this means all sorts of adjustments in the society. Social, economic and political. And these are being observed now throughout Europe and East Asia, Japan, Korea... WATTENBERG: And to some extent in the United States as well. CHAMIE: Some extent. Yes. And that shift is very evident and it has not only socioeconomic but also has political and psychological consequences. WATTENBERG: Well, the people who are saying this, not that they’re wrong, but their theory does not extend to it coming back up. If you were to follow those theories you would just say as we said in the earlier show, 'well, we’re going to run out of people. Goodbye world, you know. Been nice knowing you.' Or I guess there would still be Mormons, Orthodox Jews and Hutterites left, you know, per pound, high fertility. But that the nations as a whole will - it’s serious business to go out of business. CHAMIE: There are about 40 countries that are trying to raise the fertility and these are governments that say they want higher fertility and they’re taking steps to do that. Now, will they be successful? They may raise it slightly but will they raise it back to replacement? It seems unlikely in the near term. WATTENBERG: I saw - I think the Swedes had a big story which you probably sent to me, Joe, and they were sort of celebrating this reinvigoration of the fertility rates and it went up by 1/10th of a child, from 1.7 to 1.8 or something like that. I mean, it’s - there really has been no rebound yet. WAY: Even less developed countries are also facing aging issues. China is going to be a huge example in the future. WATTENBERG: The case with China is they - as I understand the shorthand for it - is that they’re going to get old before they get rich. Whereas at least in the European countries they got rich before they got old. WAY: The timescale of aging in the less developed countries is much faster than it has been historically in Europe. WATTENBERG: China’s fertility dropped very rapidly with this coercive fertility policy, but you take just across the Yellow Sea, South Korea had an even more dramatic drop without going into coercion. WAY: Yes. And Japan had an equally fast drop in the 1950s. And Japan is currently undergoing a huge transformation in their society with population aging. And because the decline in fertility was so dramatic in several of those countries, the change in the proportion over 65 increases tremendously quickly. And so China, once it starts to age, is going to age very quickly and they’re going to have a huge problem. Relatively few Chinese are covered by pension programs and so there are going to be a need to rely on family resources. CHAMIE: Not immediately. You’re going to have a period where you can reap the demographic dividend, the bonus where you have reduction in a number of children who are dependent and a relatively small group at the upper end. China’s going through that now and India will go through it soon where relatively the dependent population, the retired population and the children are relatively small compared to that enormous working-age population. WATTENBERG: That’s a key phrase in macro economics now for the less-developed world. The demographic dividend. Can you explain what that... CHAMIE: The demographic dividend comes about when you have declining fertility and then you have a shift in the age structure so you have a proportionately larger proportion of the population in the productive working ages. And a reduction, relatively speaking, of children and elderly. WATTENBERG: You have a window there where the less-developed countries can get - because they will have more producers proportionate to their population than will the more developed countries, they can catch up with them. And in fact, the World Bank projects what they call economic convergence, that the rich nations - that the poor nations will get richer faster than the rich nations and consequently the gap between the rich and poor will diminish. As the changes come about of lower fertility and some countries starting from - low bases starting from high bases and so on, the projections that both of you have done, what happens to the geopolitics of the world? Whose got more power; whose got less power? Is power related to population? We can start with those. Those are simple questions. Somebody have some answers? WAY: Does India have a lot of geopolitical power? WATTENBERG: Well, let’s put it this way. India does not have a lot of geopolitical power but it may get it. Switzerland doesn’t have a lot of geopolitical power, but it’s never going to get it because it’s small. I mean, it’s a necessary but not sufficient criteria that for a nation to be powerful it’s got to be big. Now if it’s big it doesn’t necessarily mean it’s powerful. CHAMIE: I think that numbers do count in terms of power. All the superpowers and all the other countries that want to be powers, want more people. They want larger armies; they want a more dynamic economy; they want more numbers. Certainly having more people - and this has been the case from biblical times - the bigger your group, the bigger your nation, the more powerful it is. Everything else being the same. WATTENBERG: So the argument that population growth diminishes economic growth, you don’t buy that? CHAMIE: You have many examples where you’ve had rapid growth. The U.S. population grew rapidly. If we look back, in approximately 1914 there was about a hundred million people, if I remember right. Now we’re approaching next year, 300 million and we’ve been growing very rapidly and we’ve had relatively rapid economic growth. CHAMIE: And some countries have had very little demographic growth and their economies haven’t been growing. But there is a relationship and it tends to vary depending on the level of development. WATTENBERG: Let me ask you this. My colleague - my demographic colleague here at the American Enterprise, Nick Eberstadt, has written quite interestingly about the change in the makeup of family. I guess he started writing about it in terms of China and a one-child family, but that a child growing up in a society with only one child per family has no siblings, no cousins, no uncles, no aunts. The only relatives they have are direct and linear. They have parents, grandparents; maybe because of better health they have great-grandparents. Does that auger a change in the psychology of humanity? CHAMIE: Well an only-child is very different than a child being brought up with two or three siblings, certainly. WAY: The opportunities for social interaction are quite different. Are they going to be engaging in more solitary activities like internet surfing and perhaps less active or less... How are their social skills? WATTENBERG: And you have to have an appointment for everything. You have a ballet class and you have a soccer team and every - it’s not a disorganized growing up. Hey, go out in the street Peter, and play ball or whatever. CHAMIE: I think you need to - I think address the issue how it has a differential impact on men and women ’cause it’s a very different impact on women than it is on men because of course women are the ones giving birth and they are now much more free to decide not to have children and this is very different than it has been historically. Getting voting rights, equal educational opportunities, employment opportunities. All sorts of other participation in society politically. The change for women compared to their grandmother is much greater than a man in comparison to his grandfather. WATTENBERG: Their lives have changed dramatically. Now the mother and the father are both working outside the home? CHAMIE: Exactly. They’re both in the workplace increasing the number of women in workplace, increasing the number in the political system, active in society which was not the case 100 years ago, 50 years ago. WATTENBERG: With all this problem of potential depopulation it not only means the possibility of economic turbulence on the downside, but is it possible that it can yield labor shortages which might increase wages? Have some of your experts talked about that in those wonderful seminars you put together? WAY: I think there certainly has been discussion about - I mean in some ways the young people will have employment opportunities that they might not have had or be more in demand in terms of labor. Older people will be more in demand and be encouraged to stay in the labor force. But... WATTENBERG: We’re beginning to see that in the United States now of people staying in the labor force a little bit longer. WAY: Sure and lots more flexibility in terms of retirement options, working part-time or very flexible schedules and that sort of thing are being called in for their expertise. There are issues that we’re adjusting to the same way we adjusted to events in the past and as we were saying earlier, for the developing countries they’re just happening much faster. France may have taken 100 years to sort of become an elderly population, but for countries like Tunisia or China it may take only 25 years. They’re having to adjust much more rapidly and in the United States, Europe, Japan, the developed countries, we have the resources to adjust to these changes. The challenge for the developing countries is many of them are short on the resources to adjust to the demographic changes. WATTENBERG: Yes, but they have an advantage that the now developed countries didn’t have which is they have access to the technology that has already been created and that - I mean, you see that in India - that not only are they producing high-tech engineers and now into biogenetics and everything on their own, but they’re also picking up or picked up the base of all this research from the U.S. and Europe which gives them an advantage in terms of speed of development. WAY: Sure. How long did it take for them to pick up these technologies? Getting back to that, those lucky workers... WATTENBERG: So that they can answer the telephone in Bangalore when you pick up and ask how to fix the computer. WAY: We’ve all had that experience. I think we’re having it more and more. The - getting back to those lucky workers who are being paid well, they’re also probably paying higher taxes to support their retirement programs of their parents and parents of other... WATTENBERG: And the other thing on the pension side which we didn’t get to which we should have is the possibility of this partial privatization of Social Security or any form of self-financing rather than pay as you go, which according to its advocates - I believe in it as well, which is most important - is these can provide much greater benefits at much lower cost because they’re invested in markets rather than in just pay as you go payers-in. CHAMIE: The difficulty in the U.S. is this transition. You have pay-as-you-go...to go to the vested, then you’re going to have a period where you have to make up for that difference, so the length of time that you have this transition is very critical. And as we’ve said, the earlier you start, the less painful it’s going to be on these transitions. And that’s why recognizing demographic trends is so important, both in terms of growth and a decline for populations. WATTENBERG: Okay. That’s a very good note to get out on - is demography is partially destiny or destiny is partially demography. Let me just ask you as a closeout question - a brief answer - you Peter, first; Joe you second. Look ahead a hundred years for me. We’re now talking it’s the year 2104 - the year 2100. What’s the world going to look like in terms of differences from now from a demographic perspective? WAY: In looking ahead we tend to think about these changes and because we do these 50-year projections we tend to think of these changes as either inevitable or happening at a very rapid rate. And demography doesn’t necessarily happen at a rapid rate and there is a hundred years for societies - a hundred years of time for societies to adjust to changing population structure. More older people, fewer younger people and maybe there’ll be pressure to increase fertility. That’s certainly plausible in even in the next 50 years and even more so in 100 years. WATTENBERG: You got the last word here. CHAMIE: Well there are a number of things that I think are going to be true. The short answer would be I’m optimistic about the demographic future for the world. Certainly it would be larger in my view than it is today. Second, it’ll be more urbanized. WATTENBERG: Larger but shrinking. JOE: The rate may be coming down or it could be going up and down in sort of a cycle, but more of the people will be living in urban areas. More people above the age of 100 than we have today. People living much longer than we are estimating today. Maybe people reaching 100, 110, 115. Also increased movement of people between countries. And we’ve seen a faster exchange of information through the internet and other sources and we’ll see more control over fertility. Maybe people having children at older ages and this may account for an increase in fertility if people can have children later in life. Women now are restricted to a very small window in order to have their children. It’s usually between 25 and 35 and if that technology comes along where they can extend it, people may be having children at later ages. And there may be... WATTENBERG: And live long enough to still take care of the children. CHAMIE: Absolutely. And I think that given what’s happened and the progress we’ve had with the exception of AIDS, we’ve had rather impressive improvements in health, mortality and ability to control fertility. WAY: Time after time over the last 50 years we have continually underestimated the progress in mortality in terms of the reduction of mortality rates. We have always been more pessimistic than turned out to be the case. WATTENBERG: Okay, on that optimistic note, which is a note I always like to end on, Peter Way, thank you; Joseph Chamie, of the U.N., thank you very much. And thank you. Please remember to send us your comments via email. It helps us make our program better. For Think Tank, I’m Ben Wattenberg. 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