In Japan, adult diapers sell more than baby diapers
In the article “This is a dumb demographic” I pointed out thatDemography is a very important factor that affects growth in the world, for better or for worse. As the population ages there are fewer young people in the workforce and everyone has to hold the adults on their shoulders and growth suffers. I focused on the demographics of China. The growth of the Chinese population in the official numbers released in 2022 was 0%. From here they will only start to decrease and this is the population that is aging the fastest in the world, due to the one child policy that created an irreconcilable demographic deficit. China’s labor force has already begun to shrink. This will lead China’s economy to very difficult situations in the future.
But not only China. The population of dozens of countries around the world is starting to shrink. Most of them in the aging Europe but not only. In the US, since the financial crisis of 2008, the birth rate has fallen far below the number of 2.1 children per woman – the same number below which the population begins to shrink. The drop in fertility in South Korea is the largest in the world and has dropped to a rate of 0.81 children per woman, and it is estimated that the population of South Korea will decrease by about 30% in 50 years. Japan, Russia, Germany, Italy, Poland, Portugal, and Hungary stand out among the countries whose population is already declining. In Japan, which has a median age of 49, adult diapers are already sold more than baby diapers… If it wasn’t so sad and disturbing, it could certainly sound very amusing. In fact, Israel is currently the country ofOECD The unit that swims against the current and its young population is growing (in all sectors).
What led to economic growth in the past and why is the world in trouble?
The classic factors that contributed to growth in the developed countries (but still operate in some third world countries) were: division of labor and specialization, economic competition between firms, literacy and education, the entry of women into the workforce, the opening of new markets, free trade and population growth, with an emphasis on the middle class. But all these classic factors that pushed growth in the last 150 years have long been used up. In the developed world, the main factors that still produced growth, especially since the 2008 crisis, were low interest rates to increase demand in economies and technological improvements.
In fact, for over a decade, a key factor that contributed to growth in the past has turned on us: demographics. In the current era, in the analysis of long time spans, this is probably the most important figure that succeeds in predicting the future growth of farms. Specifically – the proportion of young people entering the labor market and starting families versus the proportion of adults leaving the labor market. Especially important is the weight of the young age group from entering the labor market to the end of starting families. Usually it means 20 to 35 years old. Relative growth in the 20 to 35 age group is completely correlated with positive growth rates. This is the group that takes big financial risks, takes more initiative, often works the hardest and generates the greatest consumer demand, in light of starting families at these ages. A relative reduction in this group does the opposite. A study published by Credit Suisse calculated that the contraction of the working-age population drags down GDP growth in Germany by about 0.5% per year.
Europe is aging and sinking
The Western world, with an emphasis on Europe, is getting older and this is reflected in the decline in growth. Cumulative growth in Europe in the second decade of the century was about 25% lower than in the first decade. In the rest of the world, growth decreased at the same time by only about 5%. This is not surprising. Decades ago the Europeans and other developed nations decided to have fewer children. The results: Between the years 2010 and 2030, the 20 to 35 age group, which is the most important age group for economic growth in economies, is reduced by an average rate of 14% in the countries ofOECD and especially in Europe (The reduction would have been greater had it not been for immigration to them from third world countries). 70 years ago about 7.5 million children were born in Europe per year, 30 years ago about 6.0 million children per year, 10 years ago the figure had already dropped to about 5.0 million, 5 years ago about 4.5 million, a year ago about 4.0 million children only. ..
You can see in the graph the drop in the fertility rates of European women from 2.6 children per woman to only 1.6 children today:
It is again important to note that the watershed for maintaining the population as it is is 2.1 children per woman and Europe is very far from that. Although the slight increase in the graph in the last 10 years shows that fertility has increased slightly and this is as a result of new laws that make it easier for women to give birth, laws that terrified European governments were able to enact. But the absolute number of births is the lowest in the era of modern Europe, this is because the group of women of reproductive age had already shrunk due to the decline in the birth rate many years before. The population of the European Union grew by a minimal rate of 0.1% in 2020 and that too only as a result of increased life expectancy and inward migration. For example, according to demographic forecasts, Germany will have 68 million inhabitants in 2060, including immigrants, compared to 80 million today.
Anyone who travels in Europe and opens their eyes a little sees that as soon as they leave the main cities, the young people are concentrated there, they see mainly an older population. One of the side effects is that in Europe there are almost no buyers for apartments and houses located in small towns and villages. Due to lack of care and neglect many houses become abandoned. More people are leaving their jobs because they have to care for elderly parents, leading to a shortage of workers. There is an increase in the fiscal burden of spending on public health, pensions and care for the elderly. Pension funds and insurance companies are threatened with bankruptcy due to a decrease in the number of young tax payers, on the one hand, and an increase in life expectancy, on the other hand. Some European pensioners fear, and rightly so, that there will be no one to pay their pension in the future.
Think about the burden of the moral and ideological burden that European countries are now carrying whose original population is aging and shrinking: pessimism, hesitation, dependence, resentment, lack of care (after the flood), division…
Encouraging childbirth?
France, Hungary, Sweden and others. These countries have tried and are trying programs to encourage childbirth through financial incentives. The results of these experiments? They are very expensive and help in the immediate term, but with the end of the subsidy the birthrate drops to lower levels than it was even before the programs. why? Parents who have decided to have children and receive an injection of financial encouragement from the authorities, advance the birth of a child that they probably would have had anyway. As soon as the programs end, some stop, probably out of hope and waiting for a new program. The Swedish demographers call the phenomenon the “Swedish roller coaster”.
Will immigration save Europe?
Some say the Europeans have no choice but to open their borders to waves of immigrants. Apparently a very reasonable idea. In modern history, large waves of immigration have greatly contributed to the economy of the USA, to the economy of Australia and also to the economy of Israel. In fact, 24 million people, which is 5.3% of the 447 residents of the European Union, are citizens who were not born in it.
The question is who are the immigrants to Europe today? When academics and professionals come, there is indeed a contribution to the economy. But when immigrants arrive from third world countries with an education that is not relevant to the modern world, they integrate into the lowest professions in the value chain and their contribution to a tiny economy. The mix of those entering Europe in the last decade has changed compared to the past and although it still includes many who come from Morocco and Turkey, many also come from Afghanistan, Pakistan, Syria and various countries in Africa. Almost all of them are young non-academics.
So the first generation is problematic in terms of its economic contribution, but you must say that the logic means that the generations after it already integrate, become more educated, more productive, right? So that’s it, not really. studies done inOECD They found that integration into the labor force does not change between the first generation of immigrants and the second generation that is already native to the place. How is that possible? It turns out that the next generation and the one after that feel a sense of alienation in Europe. The alienation from the host country makes some of them not want to study, not want to work, not want to pay taxes and prefer to rely on social supports as much as possible. They may be a minority, but this is enough for the average to show that the output of the children and grandchildren of immigrants does not exceed that of the first generation and, as mentioned, is relatively very low.
So maybe encouraging the entry of only academics? But what, Europeans don’t like foreigners. This can be said, and probably rightly so, about any nation, but it is more noticeable among the Europeans. There is a study of theOECD from 2015 that tested various parameters that examined how quickly immigrants integrate into the general population. Israel came out in first place there. The fact that almost all Israelis themselves are descendants of immigrants a generation or two ago and the importance that Zionism and the state sees on the rise, has created unique absorption mechanisms in Israel, which hardly exist in other developed countries. Most European countries came out low in this study. As long as Europeans do not change conceptually and culturally, the ability of immigrants from outside Europe to integrate there will be low.
Dr. Adam Reuter – Chairman of Hysonim Finance, Chairman of Hedgewiz, co-author of the book “Israel Story of Success”
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