Demographic projections yield interesting insights

Demography does not dictate any nation’s destiny, but it shapes every nation’s trajectory, so attention must be paid to Nicholas Eberstadt. He knows things that should occasion some American worries, but also knows more important things that should assuage some worries regarding Russia and China.

Writing in Foreign Affairs, Eberstadt, of the American Enterprise Institute, warns of “negative demographic trends now eating away at the foundations of U.S. power.” America is the third-most populous nation, and between 1990 and 2015 generated almost all the population growth of what the U.N. calls the more developed regions. From 1950 to 2015, it acquired almost 50 million immigrants — “nearly half the developed world’s net immigration.”

So, by 2040, when the U.S. population is around 380 million, it will be younger than that of almost any other rich democracy, and the working-age population will still be expanding. In 2015, America had twice as many working-age people with undergraduate or graduate degrees as China had — almost one-sixth of the world’s total.

After the 2008 financial crisis, however, the fertility rate fell and, Eberstadt says, “shows no sign of recovering.” Furthermore, the employment rate for men ages 25-54 is comparable to its level in 1939 — during the Depression. And America’s “traditional allies face even more daunting demographic challenges,” with the European Union and Japan having had sub-replacement fertility rates since the 1970s.

Russia’s and China’s problems are more intractable. Vladimir Putin is a strongman ruling a shriveling country. Regarding population and human capital, Russia seems to be, Eberstadt says, in “all but irremediable decline.” With a population of 145 million, Russia has less privately held wealth than do the 10 million Swedes.

Much more important is what Eberstadt calls China’s “collapse in fertility.” Although China’s working-age population (there, 15-64) almost doubled between 1975 and 2010, fertility has been below the replacement level for at least 25 years. China’s population will shrink after 2027; its working-age population has been shrinking for five years and will be 100 million smaller by 2040. By then, China might have twice as many elderly as children under 15.

There will be “tens of millions of surplus men” in China because during the “one-child” policy (1979-2015), many parents chose abortion rather than the birth of a girl. Traditional family structures are evaporating as a rising generation of urban youth consists of “only children of only children.”

India probably will replace China as the most populous nation by 2030, and by 2040 India’s working-age population might be 200 million larger than China’s. Nothing is more certain than that China’s Leninist state will continue the corrupt or otherwise inefficient allocation of resources, making robust economic growth even more elusive than it already is.

The actions of supine U.S. corporations — most conspicuously the NBA — reflect a mistaken extrapolation. It is the projection that China’s four decades of economic ascent will continue unabated, making that nation an irresistible force. Corporate groveling might abate when CEOs understand China’s overrated present and precarious future.