Bernard Salt abandons his Baby Boomer theory

In one of the most sudden retractions in recent Australian political debate, Bernard Salt, the Australian's columnist and perhaps our best known advocate of Big Australia, has abandoned his central thesis.

Salt, often tagged as "demographer Bernard Salt", had argued that the impending retirement of Australia's baby boomers will create a "Baby Bust" or a "Big Tilt", which only high immigration can control.

The crunch was supposed to occur in 2011 when "of a sudden baby boomers born in 1946 exit the workforce at a faster rate than Generation Y can enter the workforce."

Salt's retraction is bound to re-open debate about whether he is a demographer. He has on at least one occasion emphatically stated that he is not, and implied that media carelessness causes him to be so described. Yet one might argue that both his prominence in public debate and his influence upon some MPs and business figures depend on the belief he is a demographer. His publishers seem to agree. The back cover of his new book states he is "Australia's number one demographer".

Salt had been arguing his "Baby Bust" line for months, but his claims reached a crescendo as his book The Big Tilt approached. He persuaded the ABC to put his claims to air as simple fact, in the TV evening News program on May 24. Then on 28 May his Facebook page alerted fans: "Beware the Baby Bust. See the central thesis to my new book out today The Big Tilt in The Weekend Australia at http://tinyurl.com/3cr8uzk".

Sure enough, this Australian article "Baby boom to baby bust" crowed that "The baby bust, the big tilt, whatever you want to call this bold new demographic world, is like nothing we have experienced before. It works silently, eating away at the consumer and the tax base..."

Over the years Salt has offered many different arguments for population growth, but of late this one has been his bedrock. It was music to the ears of the big end of town, which generally sees profit in population growth yet knows it has lost round one of the Big Australia debate.

Polls show that about 70% of Australians think we do not need more people. They can see that rapid population growth destroys amenity, kills other species, bloats house-prices, and clogs our cities. Yet they may prove susceptible to the argument that we need to go on rapidly pushing up population through immigration --- just as an emergency measure for the next 15-20 years to counter "the baby bust". Bernard Salt was emerging as the growth lobby's ace in the hole.

Instead less than a week later, in an article in the Australian on June 2, Bernard retracted his central claim. He admitted that there was no such generational imbalance – or rather that it was the other way. Gen X and Gen Y are not smaller than the baby boomers. They are larger! In his words

There are 4.1 million boomers, 4.4 million Xers and 4.6 million Ys in Australia.

With those words, Salt's "Baby bust" expired!

Two questions arise.

1. How did he get his calculations so wrong? And 2. What forced the retraction?

Let's start with the first. Here is Salt's miscalculation, in his own words [with my comments in square brackets], from his article of 28th May 2011 in The Australian:

"THE Big Tilt is the proposition that from 2011 onwards there will be a fundamental shift in the demography of Australia.

"This is the idea that over the past 60 years the number of people entering the workforce has exceeded the number exiting through retirement. But with what some demographers are calling "the baby bust", and with the first baby boomer born in 1946 turning 65 in 2011, this means that during the 2010s more people will exit than enter the productive stage of the life cycle. [Not true in fact, say demographers. See the Australian Bureau of Statistics catalogue no 3101.0 p, 19.)]

"This is best demonstrated through the interplay between the 15 and the 65 cohorts. [He means that if you count 15-64 as working years, and if you know the number of people who turn 15 in a given year, and if you subtract the number who turn 65, that gives you the number by which the potential workforce has grown. So far a demographer would agree.]

"Between 1981 and 1985 the number of 15-year-olds increased by 23,000 to 271,000, whereas the number of 65-year-olds increased by 7000 to 122,000. This means that in the early 1980s the working-age population expanded by 16,000.

Excuse me!!

[The correct calculation is more like this: 271,000 15-year olds joined the potential workforce in 1985, and 122,000 65-year olds left it, an overall gain of 149,000 potential workers in one year alone.]

"Fast forward 30 years to the 2010s. Over the four years to 2015, the number of 15-year-olds will increase by 3000 to 290,000, whereas the number of 65-year-olds will increase by 33,000 to 246,000. This means that in the early 2010s the working-age population will contract by 30,000."

Excuse me!!

[Bernard, you've done it again! The correct calculation is that in 2015 the working-age population will increase by 290,000 minus 246,000 = plus 44,000. One of the most basic skills required of a demographer is the ability to distinguish between a decline in the size of something (in this case Australia's potential workforce) and a decline in its rate of increase.]

One demographer commented to me, "He does not do any labour force projections. The only data he has is an unsourced table from the ABS purporting to show the net growth in the 15-64 year old group. And while numbers aged 65 is converging on numbers aged 15, it will take longer than he claims."

That comment "He does not do any labour force projections." – surely one of the first things a real demographer would do – is crucial. If Salt had attempted a proper demographic calculation, defining his assumptions, he would surely have noticed the error.

And of course real demographers don't just get their sums right. They also stay in touch with their peers, and notice if others are getting results very different from their own.

For instance Salt, in his June 2 piece in the Australian, claims as a supporter the pro-growth demographer Professor Peter McDonald. It's true that McDonald's first degree was in Economic Statistics, and he remains a passionate believer in economic growth and population growth. Yet McDonald publicly stated as recently as 13 May 2011 that Australia's labour force is still growing (without immigration) by something under 100,000 a year. If Salt were more aware of the demographic community, then he would know of McDonald's calculations, and be aware that they contradict his own.

Now to the second question!

.

What forced Salt to admit that "Gen Y" is bigger not smaller than the baby boomers?

Academic demographers don't commonly comment on what a populist like Salt writes, so he had long flown under their radar and received little criticism – despite much adulation from some business groups and the Australian newspaper.

However, my web-article on May 26. "Baby boomers retiring. Is there really a crisis?" put on record a detailed refutation of his "Big Tilt" theory.

To add to his troubles, the book, Dick Smith's Population Crisis, appeared in the same week as Salt's The Big Tilt. Salt found himself head to head with Dick Smith in two major ABC interviews. Dick Smith pursued him on both issues: not being a demographer, and mistaking the baby boom for a bulge in generation size rather than a bulge in the fertility rate. Salt gave ground considerably, and then published in the Australian on June 2 his admission that Gen X and Gen Y are larger than the boomers. Clearly there will not be any sudden decline in labour-force due to Gen Y being too small to replace the boomers!

At this point I would draw the curtain of charity -- except that Salt did not apologise, or even mention that he had previously claimed the reverse. Instead he stridently titled his article Let Dick have his say, but case for growth is overwhelming

"By my measure," he wrote magisterially, as if he were leading the debate rather than conceding, "there are 4.1 million boomers, 4.4 million Xers and 4.6 million Ys in Australia."

Salt then dug a deeper hole for himself by arguing that if Dick Smith is right to say Salt is not a demographer then neither is Bob Birrell (whose research Smith had used): "Professor Birrell's CV shows degrees in history, economics and sociology, not in demography." Salt ought to be aware that in the academic world demography is a category within sociology, and that Birrell has been publishing detailed research articles on the interactions of demography, economics, and society in peer-reviewed journals for several decades.

Salt also used the odd argument that you can call yourself a demographer if you are just writing for the business community: "Business calls anyone who deals with population, workforce or market numbers a demographer, including pollsters." Similarly on his Facebook page he told Kate Case who queried his qualifications, "The Australian column is pitched to the business community so the editor gives me the tag of demographer. I tag myself as KPMG Partner." So is it all the Australian's fault?

And without admitting that his main argument about the baby boomers was in ruins, Salt tried to transpose back into the original plain-vanilla variant of the aging population scare:

The issue is not the 10 per cent jump from boomers to Xers; it is the 60 per cent jump between pre-boomers and boomers. We are used to providing services to, say, 2.5 million retirees now; the funding required to deliver the same services (let alone to ramped expectations) to boomers in retirement will be 60 per cent higher. Who's going to pay for that?

The answer is of course that this is largely an imaginary problem, as Dr Ben Spies Butcher recently pointed out in his, "The myth of the ageing 'crisis'" and as the government's recent report on sustainable population makes clear.

We are moving towards a "normal" population in which there will be roughly equal numbers of people in each ten-year age group (up to those ages at which people begin to die off). Yes there will be more people too old to work --- but fewer too young. That is no economic disaster, since the young are far more economically dependent than the old. (In simple terms, grandparents mind children; children don't mind grandparents. And remember that even now Australia each year has twice as many births as deaths.)

Worse still for Salt, if aging is a problem, the Productivity Commission says immigration is no solution. In a recent submission to the Minister for Population the Commission says that to delay the aging of Australia's population to deal with baby boomer retirements "would require a net migration-to-population ratio of 3 per cent per year, leading to a population of around 85 million by 2044-45." (!!!!! ) That's more than twice the Big Australia figure of 35.9 million in 2050 that so alarmed Ken Henry. They add, "It follows that, rather than seeking to mitigate the aging of the population, policy should seek to influence the potential economic and other impacts." Professor Peter McDonald has produced a similar calculation. How come Bernard doesn't know about this?

In any case, this older and simpler version of the aging population scare is one over which Salt has no special ownership. The failure of his Baby Bust theory threatens to leave him as a guru without portfolio.

Back in 2004 when the Property Council asked him to explain his success as a "property guru", Salt obliging explained that the secret was to be impartial and fearless:

In order to be a property guru you cannot have a vested interest. A guru must be an advisor, not a developer.... I do think that gurus can set the agenda. All you need is a genuinely good and new idea that has a commercial edge. And all for the better if that concept is pitched to a rising market.

Well Salt's Baby Bust idea was certainly pitched to a rising market, or at least to a property and developer audience that wanted to believe any reasons he could offer them for thinking it wasn't selfish to demand a continuation of Big Australia.

Yet, to paraphrase Dr Johnson, the parts of Salt's big idea that are true seem not very new, and the parts that are new now seem not to be true.