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Tiny [thought] bubbles

By Ross Elliott - posted Friday, 15 April 2011


Maulthusians never seem to fade far from attention. Almost 200 years later, in 1968, Paul Ehrlich wrote the blockbuster The Population Bomb'which warned of imminent mass starvations and famine due to overpopulation. 1968 must have been the year for sensationalist blockbusters, because it was also the year that Erich von Daniken wrote Chariots of the Gods (which argued that ancient astronauts built the pyramids, educated the Aztecs and basically gifted mankind with alien intelligence). Pseudo sciences sell better than dry evidence-based science after all. Just ask American pulp fiction writer L Ron Hubbard (and look where it got him).

Now joining the fray is our very own Dick Smith, former super-nerd and founder of Dick Smith Electronics stores, aviator, publisher (of Australian Geographic), entrepreneur and 1986 'Australian of the Year.' Ironically, given his latest comments on population theory, he was also founder of the Australian Skeptics Society (amongst whose ranks you'd be unlikely ever to find a Malthusian).

Dick's a popular figure in Australia, and when he speaks people (and the media) listen. But there are a number of problems with Dick's suggestion that Australia is overpopulated, and even more problems with the suggestion we need to limit our growth through a two child policy.

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First, let's start with some global perspective. Overall, world population growth rates are slowing according to the United Nations and the US Census Bureau. Further, based on United Nations forecasts, populations by 2050 will be smaller than they are today in 50 countries – leading economies included. Here's a useful article from The Economist which explains. And in this article from Bloomberg's Businessweek, titled 'Shrinking Societies: the other Population Crisis', the massive economic and social problems of countries with falling populations are highlighted. Here's an extract:

"Europe, Korea, and Japan have gone into panic mode," says Carl Haub, a senior demographer at the Population Reference Bureau. A declining population impacts a country's economic growth, labor market, pensions, taxation, health care, and housing, according to the U.N. Globally by 2050, the number of older persons in the world will exceed the number of young for the first time in history, according to the U.N. The imbalance will create havoc in the pension systems and make it difficult to support retired and elderly persons, Haub says.

That sounds awfully familiar. Australia's ageing population is a problem, and this country also faces a demographic time bomb whereby, in the absence of more young people, we will soon have a very large population of retirees and seniors, with demands on the welfare system largely unfunded by the present tax system and those who fund it (namely, workers in the private sector).

But strangely, discussions about our ageing population and how to fund it, and concerns about the overpopulation of Australia, seem to take place side by side without the logical connection being drawn between the two. If we are to avoid a horrendous tax burden on the future generation of workers, in order to maintain our standard of living and support the needs of the boomers, we will need more workers. It's either that or higher taxes. And the problem with higher taxes, as other countries with similar problems have found, is that they can lead to an exodus of the workforce seeking better opportunities elsewhere. Which in turn reduces the tax base. No 'win-win' there.

Doug Saunders is the author of 'Arrival City' - a book about the conflicts and change brought on by massive urban migrations. And in this article, he explains the problem very clearly:

In Japan, an aging population and commensurate shrinking work force and taxpayer base has produced 20 years of consistent deflation, rising poverty and inequality. To avoid that fate, other countries are either shifting more of the population into the working-age bracket by raising retirement ages, or by taking in large numbers of immigrants.

Without mass immigration and much higher retirement ages, now-prosperous states will become impoverished: By 2050, most Western countries will have to devote between 27 and 30 per cent of their GDP to spending on retirees and their needs, according to the bond-rating agency Standard & Poor's; this will produce fiscal deficits in most advanced countries of almost 25 per cent of GDP, making the current crisis seem minuscule by comparison.

...

In Japan, the first advanced country to see its population shrink and age rapidly, employers have responded the only way they know: By moving to China, which is now home to some 20,000 Japanese firms.

But even China is aging fast. The working-age population, which now makes up three-quarters of China's 1.3 billion citizens, will plummet to 66 per cent after 2035, when the country's population starts falling. Already, China's coastal cities are talking about taking in immigrant workers. "Given China's age structure today," Mr. Fishman writes, "it is in the midst of a retirement avalanche … today, for every 10 working Chinese there are two elderly dependants, but by 2050, there will be six elderly dependants for every worker."

This is not a remote or abstract crisis. Countries like Canada will soon be fighting to attract anyone we can get to work – and squeezing as much as we can from the remaining few.

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Australia has been fond of comparing itself to Canada. We are both western democracies, operating under similar governance systems. We both have relatively small populations given our geographic size (Canada has 34 million people, we have 23 million) and abundant natural resources. A resource we both lack is people. If Saunders is right about Canada fearing the same demographic problems as Japan (population 127 million), Australia might want to take note.

Dick Smith's concerns for Australia rely on a second, also false, argument:

We are putting our kids into high-rise because we are running out of land, because people want and need to live close to the city. We pay $50 million a year for free range eggs for our bloody chooks to be free range - what about our kids? I was a free range kid. I had a backyard. We are starting to lose that now, and it's only driven by the huge population increases. (full article here)

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About the Author

Ross Elliott is an industry consultant and business advisor, currently working with property economists Macroplan and engineers Calibre, among others.

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