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Capitalising on decline

So two-thirds of advanced economies have created tax and other incentives for people to have more babies, so they can avoid the negative population trends already plaguing countries like Germany and Japan.

Without population growth, GDP growth is difficult; and without growth oiling the economy, unemployment tends to rise. Moreover, fewer babies means populations begin skewing older, bringing rising healthcare and superannuation costs. It’s a fairly basic equation that has the world hoping for more overcrowding.

A new wave of thinking, however, is pushing back. A recent study out of the Vienna University of Economics and Business says countries are better off with long-term fertility rates between 1.5 and 1.8. That is the statistical range associated with the most highly educated populations – and thereby healthier and more productive citizens. Welfare across the country can be improved as a result, the study says.

About 2.1 babies per woman are necessary to replace the dying, so this supposedly optimal range also implies fewer people over time. It’s a way of addressing population declines with more education. Though this, it must be said, is costly in itself.

Previous attempts to stem national population declines — now affecting almost half the world’s population — have included cash handouts, including as much as $18,000 per child in Singapore. Generally speaking, there has been little long-term success in restoring fertility. As women are given greater — more equal — economic opportunities, having babies becomes a more disruptive and sacrificing prospect for them.

Meanwhile, in Detroit, the Midwestern American city, where the population has plunged in the wake of the financial crash and a crumbling motor industry, abandoned warehouses and cheaper housing are fuelling something of a comeback. An infusion of entrepreneurs is making the most of a rarity: having more space and room to roam. Negative growth, when it comes to the rent you have to pay, certainly sounds like good news.

The pushback against growth also extends to the economy more generally. Particularly among the environmentally-aware, there is a growing desire to avoid endless growth. Movements calling for “zero growth”, “degrowth” or “steady state economies” have been attracting huge numbers around the world.

As an idea, nothing could be more sensible. How high must standards of living get before they’re enough? Could we stop, if only we were twice as rich as now?

The idea of endless progress was born together with science and the Age of Reason. Yet there is no rational brake that can slow it down.

As a reality, escaping the trap of growth seems far, far away.