An interesting look at world demographics

I was around 12 when I was watching a national news broadcast (yes, I was a nerd even then) when the reader mentioned at the end of the broadcast that the Earth's population had reached 4 billion. Well times have changed.

Sometime in the last few days it is estimated the seventh billion person was born. My how things have changed. I wonder if any journalist will go up to that fraud Ehrlich of The Population Bomb infamy and ask him about mass starvation. But on to more intelligent analysis of the growth of our population.

The Earth at Population 7 Billion

The United Nations Population Fund estimates that the world’s 7 billionth person was born Oct. 31. Understanding demography is a core part of STRATFOR’s work, as it colors a great many factors, from whether a state can balance its budget to whether a state will be capable of defending itself.

Conventional wisdom tells us that the increase in population is putting pressure on the global ecosystem and threatening the balance of power in the world. As the story goes, the poorer states are breeding so rapidly that within a few generations they will overwhelm the West and Japan — assuming the environment survives the rising tide of people...

...That thinking obscures a far more complex reality. Four factors help properly analyze the impact of population growth. First, populations are indeed cresting in the developed world — and appear already to have done so in Germany and Japan. Because of large gains in life expectancy, these cresting populations are first aging. Third, while a senior citizen and an infant both count as a single person from a census point of view, only one of them can one day have children — in other words, aging is the last step before a population begins declining. The developed world is moving into an era of shrinking populations. And before anyone thinks that the masses of the developing world are about to take over, the demographic profiles of the major developing states are only three decades behind the developed world.

So while the absolute population of the developed world will crest within the next generation, that of the world as a whole will level out and begin to decline sometime in the next two to three generations....

...Capital supply is robust as those mature workers save for their retirement and pay more taxes than when they were younger (or both). But there are fewer young families to absorb the available capital. In such a capital-rich environment, borrowing costs plummet, leaving substantial room to lower taxes. Economic growth greatly increases when money management becomes a booming industry as every saver looks for ways to earn returns on investments. Sectors become overinvested and bubbles form; volatility and financial crashes become more common.

Demography drove economies to this condition in the 1990s, when credit (and thus growth) increased. In the 2000s, mature workers produced a good deal of excess capital. The 2010s find the global economy correcting itself after 20 years of excess-capital-driven growth — at the same time as mature workers are retiring and leaving their capital-supplying role.

A darker period is likely to dawn by the 2020s. Most of those high-wage earners will have retired — they will no longer supply capital and instead will depend on the state to issue their pensions. The cost of capital will invert strongly. The generation born between 1964 and 1979 — characterized by its low numbers — will be responsible for supplying capital. Not only will they have to fund the younger generations, they also will have to support the pensions and geriatric-support programs created by their predecessors. Since the developing world’s aging process lags about 30 years behind that of the developed world, this same generation will act as the primary capital suppliers to the entire world....

...The developing world started to age too late. Its countries will lack enough mature workers to generate the capital needed to replace that which can no longer be imported from the developed world. The developing world will experience the financial challenges of the developed world, without having built up the infrastructure and industrial base the developed world has had for three generations. Such capital scarcity threatens to halt growth across the poorer parts of the planet. It will also make for strange bedfellows: The only hope the developed world’s ’64-’79 generation will have to meet their bills is to import more taxpayers. Perhaps the most unexpected outcome of population patterns is that the developed world will have a massive interest in attracting immigrants.

The aforementioned analysis is what the picture will look like on a global scale — but with demography, every country and region in many ways constitutes a unique reality. The trends that shape demography are affected by geography and culture. The overarching trend is of a shrinking global population, but there are dozens of standalone stories where that trend is either bucked, magnified or otherwise interpreted through the lens of the locality. Here are five examples:...

...The United States is the only developed state that still can claim a positive demographic profile, and this is before factoring in immigration. In the developed world, only New Zealand is younger than the United States, and the United States is the only developed state that has a young generation strong in numbers — those born between 1980 and 1999 are second in number only to the baby boomers, who are currently in the process of retiring. As such, the United States not only faces the least severe shift from capital excess to capital scarcity, it is also the only developed state that can hope to grow out of the current demographic period in anything less than sixty years. In the 2020s, the United States will have a good number of citizens in their 30s, who are capable of having children. Across Europe, the dominant generation at that time will consist of people in their 50s and 60s. America’s adjustment will still be difficult, but it alone among the major powers will still have excess capital and a younger generation capable of supporting its economic systems.

More detaiils in the full article which I don't have permission to post (and I probably have pushed fair use beyond all limits) but it's worth the read....check out the hyperlink.