Depopulation and longevity are causing headaches for welfare states

Some 400 million plus people disappeared the other day and it wasn¹t from a spate of alien abductions. The United Nations Population Division has revised its projected world population figures down by 403 million people. This is from its projection of just two years ago. For the first time they now say world population in 2050 will fall below the 9 billion mark.

For about fifty years the United Nations has been making projections. And in general, when the numbers actually come in, the projections seem to always err on the side of over- estimation. The UN now says the 2050 population number will be 8.9 billion. But this is
its “medium variation” projection. Its “low” projection usually misses the mark as well,
with the real numbers being somewhere in between. If their record remains consistent the actual figure should be between 8 and 8.5 billion.

Using this medium projection the UN also estimates that by 2050 some 75 percent of the least developed countries in the world will have birth rates below replacement levels. In these regions the total number of births per woman have been cut in half in the last 50 years. More importantly, much of that drop was in the last ten years.

For some years we “population optimists” have been arguing with the Green pessimists that the “over”-population problem was illusionary. In fact, another population problem is arising. The world’s population is aging faster than at any time in history. The reason is simple. The number of infants born is decreasing every year while life-spans continue to improve. Human existence has improved so much that we are living considerably longer.

The most recent UN numbers verify the case of the optimists once again. The average life expectancy in the world is now at 64.6 years. But by 2050 the UN estimates it will rise to 74.3 years. During that same period the numbers of children born to each woman, on average, will decline from 2.83 to 2.02 with a rate of 2.1 required for a stable population. Anything above that means increasing populations and anything below that means that populations are declining.

Currently, some 63 countries have birth rates low enough to lose population. By 2015 the UN estimates that the birth rates of 82 countries will be below replacement levels. And by 2050 they estimate that 156 countries will be below the replacement level and another ten will be just on the verge of that rate. Just 23 countries will have fertility rates in excess of 2.5.The average world fertility rate is estimated, by 2050, to be 2.02. The world birth rate will be lower than is necessary to prevent declining populations.

The only reason that world population will still grow in 2050, in spite of declining birth rates, is that so many people will be living longer. Longer life-spans, not high birth rates, have been the main reason for the world¹s population explosion over the last 50 years. But what began in 1950 will fizzle out by 2050. And then world population will go into decline. Already,
24 nations have decreasing populations.

This huge drop in birth rates, coupled with longer life-spans, spells disaster for the welfare states of the world which rely on people of working age paying in while the elderly collect. But if the number of workers declines, while the number of recipients continues to increase, a disaster looms. Currently the world has 606 million people over the age of 60. By 2050 this figure is estimated to grow to 1.9 billion. The projected increase for those who live past 80 years is even more incredible. Currently there are 69 million such people worldwide; by 2050 this will increase to 377 million.

Living to 100 years of age was once a real anomaly. Today just under 200,000 people worldwide have accomplished that feat. The number of 100-year-olds is estimated to rise to 3.3 million by 2050.

These trends are most pronounced in the welfare states. Sweden will see the number of elderly people increase from the current 22% of the population to 33% while the percentage of children (0-14) will be just over 15%. Just 51% of the population is currently of working age and many of them are not employed. A minority of the population will therefore be trying to support a majority. In the United Kingdom the percentage of elderly will also go from 21% to 30%. In Slovenia only 45.6% of the population will be of working age. The rest will either be elderly or children. The burden on young workers in all welfare states will have to increase substantially just to sustain the current system. Clearly that can¹t work.

Welfare states assumed that there would be growing populations because they were generally created during the age of baby booms. But today’s demographics make it clear that these schemes can¹t work much longer. Like a pyramid-scheme, the numbers paying in have to grow faster than the number of recipients. As long as that is happening the illusion that the system works can be maintained. But current trends show that the opposite is now happening. Attempts to repair the damage can only provide short-term solutions for what is a long-term and growing problem.

South Africa can avoid the problems that are looming for the world’s welfare states by declining to become one. It can do so by establishing a low-cost, minimal-regulation government, that makes entrepreneurship, self-reliance and saving worthwhile.

Author: Jim Peron is President at Laissez Faire Books. This article may be republished without prior consent but with acknowledgement to the author. The views expressed in the article are the author’s and are not necessarily shared by the members of the Free Market Foundation.

FMF Article of the Week/4 March 2003 - FMF Policy Bulletin / 08 December 2009