The political economy of demographic winter

Decades of Depopulation Already Baked In the Cake
Our present economic issues began decades ago. To understand what is happening economically, simply check the headwaters of (de)population (excluding Africa) under way since 1990…the chart below shows the 0-5yr/old population (excluding Africa) vs. the 0-5yr/old population of Africa. Population growth is responsible for the majority of GDP growth…so a downturn in population growth matters…particularly when population growth shifts from wealthy or developing nations to the poorest and the wealthy elderly. I’m not describing something that may happen in the future…I’m describing what has already happened that is continuing to send progressively larger tsunamis swamping the world economy and has the central bankers doing everything and anything to try to sustain the unsustainable.

Anyway, world 0-5yr/old population (excluding Africa):
1950–>1990 + 234m
2015–>2050 (UN med. est.)
Africa 0-5yr/old population:
1950–>1990 + 71m
1990–>2015 +75m
2015–>2050 +95m (UN med. est.)

Why??? The chart below shows the child bearing 0-40yr/old world population (x-Africa) has essentially peaked and will be declining from here forward…but the total births of this population have been declining since 1990.

The above 0-40yr/old declining child bearing population combined with declining birth rates among them means a continued decline in births is pretty much assured.

Worldwide depopulation from the bottom up (x-Africa) has been underway for decades and looks set to gain momentum to the downside as the child bearing population begins outright declining.

For those curious how the US compares…the US 0-5yr/old population has never regained the Boomer peak seen in 1961 and is currently trending down. However, the ever optimistic Census expects a sudden and significant reversal (red columns) taking the population of young (and ultimately, the total population) to new heights.

But even the current projection above (which is still non-sense) is far more realistic than that made in 2008. The 0-24yr/old Census Bureau projected US population made prior to the 2010 Census…and the updated projection as of 2014 are radically different with future growth downgraded among the young by more than 3/4’s!!!
Why this is so strange is if one again looks at the 15-40yr/old child bearing US population (red line, chart below) vs. annual US births (blue columns), the US child bearing population has been stagnant for nearly 3 decades…and that child bearing population continues to wait longer and have fewer children…a double whammy.


Furthermore, with regard to the USA:

The next business cycle recession will be unending and is very likely to run years into decades and perhaps a century or more. A declining population already indebted with record debt and zero interest rates will consume less…meaning overcapacity and excess inventories will never be fully cleared before the next downturn…and on and on and on.

But the absence of a growing consumer base isn’t just a US issue…this is a global problem. The annual growth of the 0-64yr/old population of the combined OECD nations (most the EU, US, Canada, Mexico, Chile, Japan, S. Korea, Australia / New Zealand) plus China, Brazil, and Russia show the growth that has driven nearly all economic growth has come to an end…and begins declining from here on. And when importers are shrinking, exporters have no one to export to…and on and on and on.

I am slightly hopeful that China will do something very clever invovling lots of international trade. If this were left to Westerners, the species might go extinct, but (it seems to me that) if China has anything to say about it, the species will not go extinct.

Postscript: Even though mass extinction appears to be the long-term future, in the short term, there is also economic nationalism and a moribund middle class to worry about. The BIS can’t generate any useful ideas for change, because it exists to uphold the status quo. Regarding the BIS report:

the report discussed the growing threat of protectionism, perhaps the most dangerous of the four main risks it identified. In a sidebar to the main report, the BIS said estimated that if 10% tariffs were put on imports from Mexico or China, U.S. labor costs would have to drop by about 6% to compensate for the higher costs of “imported inputs.” Translated: crashing wages, and political upheaval once globalization goes into reverse in earnest.

the BIS simulation “reveals a comparatively large sensitivity of US production costs to tariffs on imports from Mexico or China. To put the resulting cost shocks in context, the centre panel of Graph III.B displays the reduction in US wages that would be required to fully compensate for the increasing costs of imported inputs. For example, such tariffs would lead to a 0.86% cost increase in the US transportation industry. To fully offset this increase, US labour costs would have to decrease by around 6%,

If we want to be very optimistic, we can imagine that some economic geniuses will unveil an entirely new economic paradigm that will seamless replace old-fashioned capitalism.

Charles Hugh Smith would like to believe that he understands the big picture. He advocates making it easy for people to word hard at meaningful jobs but denying them handouts. He believes this will build up healthy habits and teach people to act like responsible human beings.


Apparently he has never heard the phrase “psychic income,” meaning that emotional factor that makes people value their work beyond the compensation. Here’s a quote:

The Future Belongs to Work That Is Meaningful There may be a perfect word for everything beyond a wage that makes people want to come to work, but I confess I can’t find it. I have described the elements of work that is purposeful, meaningful and fulfilling: autonomy, ownership, positive social roles, building capital, opportunities to contribute, learn and excel. Condensing this to meaningful work expresses our profound need for purpose, pride, dignity, belonging, contributing, participating, collaborating and learning, but it still doesn’t capture the joys of work. In the conventional narrative, work and fun are mutually exclusive. Work is onerous, difficult, boring, unpleasant, and stressful, while fun is partying, shopping, playing games and being entertained. Saying that work should be fun makes a mockery of its difficulties, and trivializes its many rewards. But discussing work without discussing its potential for joy is to miss an important part of what could and should be.



In a system in which paid work is abundant, the future belongs to work that is meaningful, and at times, yes, fun, if we define fun as everything beyond money that makes a person want to go to work. These dynamics are often not immediately visible, even to those doing the work. A recent account (on about a young man’s summer job on a farm expresses this quality of meaningful work. The young man had spent months driving hundreds of cedar fence posts with a sledgehammer. Few would describe this work as fun; most would describe it as hard, tiring, boring, and so on. The young man had gone on to college, and recently returned to tell the farmer that the days he’d spent working on the farm were some of the best days of his life, and that he’d come to understand their importance in his life. To those of us with similar experiences, the reasons why the young man valued this work experience so highly are self-evident: he had done good work that was sincerely appreciated. The work had been hard and repetitive but it was purposeful and something he could be proud of. He could see and touch the results of his work. He hadn’t learned a trade so much as learned the value of meaningful work. A system that doesn’t offer this opportunity to everyone is a failed system. Paying people to do nothing but while away their lives as passive consumers is a failed system. In Section Two, I lay out a system that offers meaningful paid work for all who want it. Money Creation/Distribution Is Integral to Meaningful Work and Widespread Wealth Creation The point of all these questions is now clear: the way that money is created and distributed is absolutely integral to the creation of meaningful work and broad-based wealth creation, i.e. ownership of the output and creating human and social capital. In the conventional narrative, the creation and distribution of money is completely separate from the creation of jobs and work. Rather than aid widespread wealth creation, the current system of money creation actively widens wealth and income disparity because this is the only possible output of the system. It’s clear that the way we create and distribute money…

I don’t intend to pay money for his ebooks. However, he seems to be making a very revolutionary recommendation:

the way that money is created and distributed is absolutely integral to the creation of meaningful work and broad-based wealth creation, i.e. ownership of the output and creating human and social capital.

Charles Hugh Smith apparently wants to end the current system of money creation and replace it with something better.  In the USA, that would require ending the Fed.  In Russia, it might not be necessary to end the central bank.  But I can’t see any way to come close to any of his ideas without destroying the Federal Reserve and its associated banks, up to and including the Bank for International Settlements.

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