- Babies, or lack thereof, are becoming an obsession in economic circles
- Fewer Babies, Coupled With Greater Longevity, Is an Unpleasant Tax Picture
- Which means higher tax bills to fund healthcare and pensions.
To an economist, children used to be an income-generating asset, but now they have become an expensive luxury item. No wonder they call it the dismal science.
Babies, or the lack thereof, are becoming something of an obsession in economic circles.
In the past, in many families children were expected to contribute financially from an early age. Now, middle-class children are on their parents’ payroll for decades.
Women in Britain and most of the developed world have less and less.
Pope Francis said last month that declining birth rates show Europe is “losing hope in tomorrow.”
Falling birth rates: Babies, or lack thereof, are becoming something of an obsession in economic circles
He’s not the only one who’s worried.
The Economist magazine – whose editor Zanny Minton Beddoes is a mother of four – recently dedicated an important column to the subject. And commentator Martin Wolf focused his formidable mind on the Financial Times “baby bust” last week. Why the concern? On the current trajectory in the UK, 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 within a generation if nothing changes, according to HSBC economists.
Not long ago, people worried 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, without success.
In the UK, fewer babies, coupled with greater longevity, means a shrinking working-age population and an ugly fiscal picture, with higher tax bills to fund healthcare and pensions. Governments will be pressured to take on more debt, which is a tax on the future.
The prospect of Britain becoming one giant care home is not imminent.
But the average age in the UK is over forty, making us a middle-aged nation, if not an elderly one.
Young people 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 are likely to see more conflict between parents and non-parents, which is already a major topic 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’s easy to identify the likely causes of baby bursting, including high housing costs and exorbitant child care. But solutions are harder to find.
Government attempts to incentivize women to become mothers with subsidized child care or cash payments are costly and do not appear to work.
In South Korea, the government has spent £212 billion since 2006, but the baby crisis persists.
Immigration is an obvious answer, but it is politically difficult.
There may be hope in an unlikely direction: Artificial Intelligence.
I’m not suggesting that robot babies replace bouncing bundles of joy.
However, it is conceivable that AI (pun intended) could alleviate labor shortages by performing tasks currently performed by humans.
Technology could also help older people stay in work for longer, which is part of the answer.
Better, more affordable child care 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.