Population Growth and the Economy

Population Growth and the Economy

I found it rather interesting lately that the media has portrayed our shrinking population growth as an alarming trend. Many sources have cited that the drop in the average growth rate to 1.9% isn't even enough to replace the numbers of people dying. This makes me wonder, though, if that's really so terrible. Do we honestly need to increase our population? Let me elaborate on my thoughts, if you'd be so kind, and then let's start a debate in the comments below.

Debunking the "Higher Population Equals World Domination" Theory

In the past, it was proposed that population growth would make countries more powerful. The more hands there were to produce goods –> the more goods that could be sold –> the more money in the governmental pockets –> the more powerful the country could become on the world market.

This theory makes sense, in a way, but it doesn't account for the stagnation of sales. When goods flood the market, they only become cheaper. And when they are sold for pennies on the dollar, supporting the population becomes more difficult, not easier. The higher population countries then must care for more unemployed or underemployed people, which kinda puts a stop to their dreams of economic domination.

Tackling the "Support the Elderly" Idea

Another idea linked to the population and economic principles is that we must replace the persons who pass in our country with bouncing babies. The idea here is that when baby boomers retire, we must have a large young generation in place to work. This generation will provide Social Security with the funds necessary to pay Baby Boomer health care costs.

However, I think that if we plan more carefully, we can cross this "population crisis" bridge with grace –and without robbing the young. For one thing, a smaller population in the future will mean we have to pay out less in tax-supported programs for the young, like less money to support public schools. For another thing, Social Security needs a revamping anyway; we can accomplish this without increasing a more sustainable population growth of two children on average per family.

Reaching for Population Growth is Unsustainable for Today's Parents

Beyond the economic ideas that higher population is positive, we come to the fact that even if having more kids is good for the economy as a whole, it's often difficult for parents to have large families nowadays. The costs of raising children are astronomically high (around $12,000 per year), and even if you cut the costs through things like thrift store shopping, it can still be hard to make ends meet. Now, parents are simply putting off having children or having fewer children overall.

I think this is a positive step toward economic sustainability. It means that more people are aware of how kids will affect their finances and are planning to responsibly provide for their families – a responsible nature that often extends to planning for retirement as well. And responsible parents lead to responsible children, which will decrease the dependence on government programs in the years to come.

So that's it: my thoughts on the population crisis; I think we can weather the storm. Please weigh in below with your own thoughts!

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Michelle's picture

Michelle wrote:

Thu, 04/05/2012 - 02:56 Comment #: 1

Really? I hadn't heard that the population growth had slowed any. I think it's a good thing that people are thinking before having more babies. Believe it or not (because we are in debt...sigh), we actually waited until we were in a good financial place before getting pregnant with our 3rd child. Then...life happened (the sucky part of life that costs a ton of money and makes things break down randomly, NOT the beautiful part where my daughter came into my life) and here we are trying desperately to keep our heads above water.

...What was I talking about? Yea...slowed growth...good thing. I concur :)

Miss T @ Prairie Eco-Thrifter's picture

Miss T @ Prairie Eco-Thrifter wrote:

Thu, 04/05/2012 - 15:22 Comment #: 2

We were just talking about this yesterday but in a different context. Population growth as a whole needs to be controlled and better planned so that we can sustain the planet that we live on. Food production and resources are getting more and more scarce. Financial impacts like you mentioned just add to the problem.

Christa Palm's picture

Christa Palm wrote:

Fri, 04/06/2012 - 22:49 Comment #: 3

Michelle, it definitely happens! For all the planning that we do to stay debt free, things pop up, like broken refrigerators, cars, windows, computers (and yes, those are all the things that have -- most recently -- derailed me and my hubby!). Anyway, I think you're doing great by planning your finances as best as possible. Good luck keeping the appliance breakdowns and such at bay :-)

Miss T, very good points -- planet sustainability is a huge factor to consider when we think about population growth. I'll definitely have to check out your post!

Alex | Perfecting Parenthood's picture

Alex | Perfecting Parenthood wrote:

Tue, 04/10/2012 - 19:31 Comment #: 4

Consumption is the engine of economies, which is why every government is worried about low population growth. If the population is composed of workers who have jobs, consume, and pay taxes then everything runs fine. However, if the working population is shrinking, like all the retiring baby boomers, then that is bad because #1 they cost the government money without paying much taxes, #2 they leave behind a job that might not have someone to fill it, which means that the companies have to pay more to entice workers which results in inflation, and #3 they reduce their demands because people without jobs and kids to care for don't buy as much.

If the 1st world population drops then the jobs go to the 3rd world and/or immigration has to increase. This is because the implicit plan a government in deficit has is for growth to bail them out -- same as when you buy a house with a mortgage you rely on your ability to keep working and getting better paying jobs into the future, as well as your house appreciating. A government in deficit, with large debt, and with an economy producing less over time is like a person with a mortgage who loses their job and their house went down in value.

Anyway, the birth-rate is more-or-less staying flat in N America and we can fill the growth requirements with immigration. Thankfully, there are billions of 3rd world people who want to enter the first world.

Christa Palm's picture

Christa Palm wrote:

Thu, 04/12/2012 - 20:52 Comment #: 5

Alex, great points about the way the world runs! As you sum it up, though, the birth rate is pretty stable right now at about two kids per family -- I think we can weather the storm of the Baby Boomer retirement, especially with so many Americans needing jobs right now.