This is a phrase that maybe you heard: Demographics equal destiny.

Demographers have used this concept to assist in the shaping of policy. If you want to know what a country will look like in 20-50 years, simply look at the demographics.

For much of the world, this is not a rosy outlook. We are seeing a decline in fertility rates across the board. Most countries are down, even in high birth areas such as Africa. Even though most of those countries outpace the developed world, we are seeing lower numbers as compared to the past few decades.

What does this mean going forward?

To start, the noise about overpopulation is showing itself just to be that. In fairness, that crowd has died down for the most part. There are still a sprinkling of people who believe in that narrative but the opposite is the real problem.

We are facing a demographic collapse. This is something that many people are concerned about.

Demographics = Destiny

Let us look at Russia. That is a country that is screwed.

No, that statement has nothing to do with the war against Ukraine or their prospects against the West. Instead, we look at their demographic tree and this is what we see.

Wikipedia

That is called a demographic collapse waiting to happen.

After the fall of the Soviet Union, the country went through a baby bust. That started in 1991, 34 years ago, Guess when the chart takes a major turn inward? We can see how people in their mid 30s (and below) are much less in number than previous generations.

To contrast, here is the demographic tree for Argentina.

Notice the difference?

Future Economy

The challenge with looking into the future is that it is changing so rapidly. Because of this, things only get murkier.

One advantage to demographic analysis was the ability to accurately forecast how certain things would unfold. Demographics is the opposite of what we are seeing now: things change slowly. It takes decades for any shift to be felt.

A problem countries like Russia (South Korea, Japan, Germany) and others have is that fewer people means a hit to the economy. Traditionally, this meant both consumption and production.

Technology is changing the production part of the equation. With AI and robotics, economic output could remain high. Issues arise when it comes to consumption. Who is going to buy what is produced?

Robots are great producers, requiring very little input. Other than electricity, there isn't much a robot needs. Hence the consumption challenge.

This could be offset by exports. Here we see this avenue stalled because most countries will increase their own production. Robotics is not tied to any one nation.

So what happens with all the excess production? This is a question nobody has the answer for.

Then we have the economic situation tied to it. Older people consume more services, mostly healthcare. Economies flourish with lots of children because, anyone who has them knows, they are expensive.

The result is a variety of industries that can flourish. All this disappears when the population ages. As they turn towards more services, the financial support from the working class dwindles. This means the state tends to take on the burden of healthcare services (payments), resulting in more debt.

Of course, politicians will try to offset this by raising retirement ages or taxing workers more. While this looks good on paper, the tendency is for generational warfare to take place. The younger class tends not to be represented as the political leadership is from the older generations (look at the US Senate and the Baby Boomers). This leads to civil unrest.

This is why the idea that Russia is going to try and take over all of Europe is a joke. Putin invades another country so that is a problem. However, look at the chart again. In another 5 years (they already spent 3 in Ukraine), the bulk of the male population will be 45 and older. Actually, this is true for the entire country.

Do you know how many 45 year old guys rush to sign up for war? Yeah, not a lot.

This is how understanding the demographics can frame situation in ways that that provide a reliable basis.

Posted Using INLEO