- Babies, or the lack thereof, are becoming an obsession in economic circles
- Fewer babies combined with longer lifespans is an ugly budget picture
- That means bigger tax bills to fund health care and pensions
For an economist, children used to be an income-generating asset, but now they have turned into an expensive luxury item. No wonder they call it the bleak science.
Babies, or the lack thereof, are becoming something of an obsession in economic circles.
In the past, many families expected children to make financial contributions from an early age. Now, middle-class children have been on their parents’ payrolls for decades.
Women in Britain and most of the developed world have less of it.
Pope Francis said last month that falling birth rates show Europe is “losing hope for tomorrow.”
Falling birth rates: Babies, or the lack thereof, are becoming something of an obsession in economic circles
He’s not the only one worried.
The Economist magazine – whose editor Zanny Minton Beddoes is the mother of four children – recently devoted a leadership column to this subject. And commentator Martin Wolf turned his formidable mind to the ‘baby bust’ in last week’s Financial Times. Why the care? On Britain’s current trajectory, the total fertility rate – the typical number of children per woman – could fall below one by the end of the 2030s.
This implies that the population would halve over a generation if nothing changes, according to economists at HSBC.
Not so long ago, people were afraid that the world was overpopulated. Even the Chinese government, which for years imposed a cruel one-child limit, is trying to encourage women to have more babies, but to little effect.
In Britain, fewer babies combined with longer lifespans means a shrinking working-age population and an ugly budget picture, with higher tax bills to fund healthcare and pensions. Governments will be under pressure to borrow more, which is a burden on the future.
The prospect of Britain becoming a giant retirement home is not imminent.
But the average age in Britain is over forty, making us a middle-aged, if not already an elderly, country.
The young don’t have a monopoly on innovation and creativity, but could an aging population mean we are less growth-oriented and more risk-averse?
If the baby crisis continues, we’ll likely see more conflict between parents and non-parents, which is already a big theme on social media.
Expect more office wars over holidays, flexible working and the like, as the childless and the childless by choice become more numerous and assertive.
It is easy to identify the likely causes of the baby crisis, including the high cost of housing and exorbitant child care. But solutions are harder to find.
Government attempts to encourage women into motherhood with subsidized childcare or cash payments are expensive and do not appear to work.
In South Korea, the government has spent £212 billion since 2006, but the baby bust continues.
Immigration is an obvious answer, but that is politically difficult.
There may be hope from an unlikely direction: artificial intelligence.
I’m not suggesting that bone babies replace the bouncing bundles of joy.
However, it is conceivable – pun intended – that AI could alleviate the labor shortage by performing tasks currently done by humans.
Technology can also help older people work longer, which is part of the answer.
Better, more affordable childcare would certainly help. But whatever women’s reasons for wanting children – or not – boosting the national economy is unlikely to be high on the list.