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Eureka: How to get higher fertility rates Eureka: How to get higher fertility rates
by Akli Hadid
2017-03-02 10:08:34
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I lived 10 years in South Korea. One anecdote I like to tell is that I met quite a few bar owners, bakery store owners or grocery store owners who told me they had marketing assistants. Marketing assistants for proximity shops? I thought proximity shops were for people who live in the neighborhood and have no other alternative than to shop in the store, so why would a grocery store need a strategy to compete with another grocery store? Why would there be three grocery stores in the same street?

fer01_400The answer is simple: like Japan and many European countries, South Korea is suffering from what I like to call the “mid-career level demographic curse.” What I mean is the dominant demographic in most of Europe, East Asia and other countries is one where the dominant demographic is people who are 30 to 50 years old, who are in the middle of their career, and who are trying to save as much money as they can for retirement. Adding to the curse, mid-career level workers sometimes don’t even have children, making them even more stingy since they have no one to provide for them later in life. This is how small shop owners need marketing strategies to get stingy mid-career level workers to spend their income, even if that means advertising harmful products such as alcohol or gambling products.

The idea with a Keynesian approach to the problem of depopulation is that a high GDP means high investment rates, high government spending rates, high consumption rates and high export rates. The problem with societies where the dominant demographic are the mid-career level workers is that there tend to be very high investment rates but very low consumption rates. High investment but low consumption. This means you have a lot of stores invested in that no one is going to. This is why many small stores hire marketing assistants.

Japan, China, South Korea and many other countries are facing high investment but low consumption rates. This is only one of the consequences of depopulation. One might ask: what is depopulation? Why is there depopulation? What are the consequences of depopulation? Finally, how do you fix the problem of depopulation?

There is a whole jargon dedicated to what depopulation is. The trend is for people to marry later and to have children later, if at all. People talk about “gold collar workers” that is of workers who make decent salaries but are not married and don’t have children, meaning they have a lot of money to spend for their personal belongings. “Golden missies” are women who worked almost all their adult lives and who have a lot of money, usually in savings accounts, and who are almost too old to have children.

But late marriage is not always associated with richness. South Korea refers to the present generation of young adults as the “sampo” generation meaning a generation which due to lack of financial stability has to give up three things: courtship, marriage and children. In many countries, women are said to refuse to get married with men who don’t have the “three keys” which are: the keys to a car, the keys to a house and the keys to their personal business.

From a philosophical standpoint, it is said that more intelligent and more educated people tend to avoid marriage, because marriage and couple life are based on instinct rather than careful intellectual thought and reasoning. Technology, high levels of urbanization and soaring housing costs in big cities also mean delays in marriage.

This essay will be discuss the three aspects of depopulation. First, it will discuss why there is a growing trend of depopulation in some countries and why the trend is growing to other countries. It mostly has to do with cost of life and different expenses involving life in larger cities, as well as vast movements to larger cities. Then the essay will discuss the consequences of low population growth rates, that is the economic and philosophical trends that go with depopulation. Finally, this essay will suggest ways to fix depopulation, including the modernization of agricultural and industrial societies that can lead to more stable lives for traditionally large families.

I identify five types of economy depending on what the dominant demographic is and what their level of depopulation is.

For populations whose dominant demographic is children under the age of 10, the economic model tends to be one with high consumption and low investment. That is, in countries where there is a baby boom, mothers have to consume to provide for their children and the government has to spend money to educate the children, meaning that there is little money left for investment at a macroeconomic scale. This means that the government must find sources of income, either coming in the form of aid from foreign countries, or in the form of nationalizing raw materials or agriculture and selling it to foreign countries. Another important source of hard currency is tourism, where countries with such demographic models bring tourists with hard currency, the currency being used to import consumer goods to feed its population. This is because in such societies families spend a lot of money for survival and don’t have savings, and savings can not be recycled into investments.

For populations whose dominant demographic is teenagers or people between the ages of 10 and 25, that is populations who experienced a baby boom but are experiencing lower fertility rates, there is a good balance between investment, consumption and government spending. Younger people tend to be good consumers but can also produce input by working. Their savings accumulate and they can then invest in projects, while the government has less spending for education for example. So in an idea world, countries should try to work on maintaining the 15 to 25  year olds as the dominant demographic rather than that of children aged less than 15.

For countries whose dominant demographic is people between the ages of 25 and 40, this is when a country can experience an economic slowdown. People aged 25 to 40 tend to invest more and consume less, meaning that there can be overinvestment if investment are not careful enough. Although the government does not have to spend on education, it has to start saving for workers’ retirement pensions. The presence of a demographic that is typically mid-career level means that there are more people investing and less people consuming, meaning that a lot of investments can not find their consumers.

When the dominant demographic is people aged between 40 and 60, that is when the mid-level career demographic crisis really sets in. Most people over 40 are saving for retirement, and banks have a lot of savings money that can be used as investment. However, people who use investment money can not find consumers, leading to small profit margins. The government has to save money for retirement savings and has to start thinking about becoming a nanny state, that is taking care of an increasing number of retirement-age citizens.

When the dominant demographic is people aged 60 and over, that is when you have the notion of a nanny state and population replacement starts being an issue of concern. Often, such countries resort to immigration as Germany did in the 1960s and 1970s or other European countries did in the 1970s and 1980s.

What causes depopulation? The first explanation is the cost of living. In rural societies, the prices of food, clothing, housing, transportation and school are basically very low. In semi-rural areas, the cost of food, clothing, housing, transportation and school tend to be cheap and affordable. In urban areas however, with both the largeness of the cities and the need to conform to society, the cost of food, clothing, housing, transportation and education is basically expensive, meaning people tend to avoid having children.

One reason Asian and European countries are hit with low birthrates is the high level of urbanization because of agricultural sufficiency and a shift to a service sector economy. However, low birthrates means that more people are providing services than are willing to receive services, leading to slow growth in such economies.

Why such high urbanization rates? It starts with education. European and Asian countries have increasingly high levels of high school completion rates and high rates of university students. As most universities are located in the cities, many people from rural areas complete high school and move to the cities for university education.

Now that we have examined the causes of depopulation, basically in the form of high rates of high school completion, leading to a high number of people moving to cities to study at universities or to work, leading to higher urban population rates, and as in urban cities the cost of food, housing, transportation, clothing and education tends to be expensive, people tend to delay marriage, if they get married at all.  

As we have seen, the more a population ages, the more savings there are, the more money there is to invest, the more money the government collects through taxes, the less money the government spends, but the fewer consumers there are as most consumption targets children rather than adults. This means the government has the plan long-term to be able to afford workers’ retirement pensions, but more importantly it means money invested that can not find its consumers.

 

This means companies have to find consumers elsewhere, either by exporting goods to foreign countries or by importing workers with children who will consume locally produced goods. These solutions have their problems. As for focusing on exports to revive the economy, high transportation costs can make exporting difficult, as well as geopolitics where if neighboring countries are also experiencing low birth rates it is difficult to export to such countries.

 

Another area hit by low birth rates are insurance companies, as in health insurance or retirement pensions where traditionally healthy younger men and women provide contributions that are later used by older, less healthy or retiring men who have to use funds for healthcare or retirement.

 

Another more serious consequence is what I like to call the “mid-level career worker” crisis where the dominant demographic at work is mid-career level workers. The consequences can be negative for hiring younger workers because of the lack of consumers or buyers of the products of the company as well as the importance of the presence of experienced workers at the company who often make themselves indispensable for example by being expert handlers of their tasks, when new recruits would often have to be trained to learn how to accomplish the task.

 

For younger people, the path to happiness can be a complicated one. While doing field work in South Korea on company culture I found that mid-level career workers often play on the four vital skills that a worker needs to be successful: a worker needs emotional stability, but older bosses tend to play on that emotional stability. Workers need organizational stability and being part of an organized culture, but their mid-career level bosses often make the environment very unpredictable for new workers such as by blaming them for mistakes they did not do or changing the nature of tasks on a daily basis. Workers also need to know how to perform their tasks but mid-level career workers often don’t teach younger recruits how to get the tasks done. Finally, workers need stability in their private lives, but mid-level workers often constantly threaten to fire or punish workers, leading to harming workers’ private lives.

 

Companies may want to get rid of mid-career level workers because such workers cost a lot of money in terms of incremental pay and other bonuses such as retirement bonuses, but while they are aware of lifetime employment no longer being an absolute norm, they are aware that some companies are trying to train younger workers so they can push older workers to retirement at a younger age than the norm. In South Korea for example, many workers are forced to retire around their late 40s or early 50s, when the norm tends to be the late 60s.

 

Some countries have attempted solutions such as giving parents allowances for raising children, tax breaks if they have children, or maternity or paternity leave when having children, or even reduced time at the workplace if they have children. Unfortunately such solutions are sometimes in vain when it comes to raising children, especially in the cities. Unfortunately, monetary incentives or time incentives do not reduce the cost of housing, food, transportation, clothing or education.

 

Some countries even offer subsidized housing, food, transportation or education to encourage parents to have more children. Unfortunately such incentives are also often vain. The answer may lie in psychology: parents don’t want to merely get by, they want stable and growing upbringings for their children.

 

Why do people in the countryside have more children than people in the cities? In the countryside education is not a must to get a job nor is housing mandatory to get married. In many cities in the countryside around the world, people share a house across generations and not a lot of emphasis is put on education. Food is also served in basic ways with salt, vegetables and staples such as rice of wheat, but rarely more complex forms of food such as food with herbs or spices served and meat tends to be saved for holydays or special occasions. Cooking utensils tend to be basic and so are heating systems when it’s cold. Urban life makes costs such as heating or kitchenware drives the cost of living further.

 

Another aspect of urban life is the anonymity of life, meaning that men and women can be anonymous, which does not comfort husbands and wives. Biologically, a woman can only have one child fathered by one man, while men can technically have an unlimited number of children by an unlimited number of women. This means women can be insecure with the idea that their male partners are anonymous. In rural areas, men are not anonymous, meaning they often have to care and provide for their wives and children, while in urban areas men can disappear for example.

 

So what are the solutions for higher fertility rates? I believe my research can provide some answers: you need a society which is emotionally stable, personally stable, organizationally stable and where citizens are able to conduct day to day tasks.  

 

A society which embraces emotional stability, which embraces an organized way of life and where people can get their day to day tasks done is one where naturally personal lives become more stable and where fertility rates can go high again. This means a society where you don’t have your boss yelling at you all the time and one where you know what needs to be done when you go to work.

 

I’m not trying to start a cult here. I’m just saying that if you want higher fertility rates, you need a legal framework that can protect against employers who yell too much, who don’t pay wages on time, who change their minds about job descriptions all the time or who blame workers for mistakes they didn’t do. That is when society can have growing fertility rates.


     
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