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How to handle plunging US birth rate before it’s too late

May 9


The latest CDC report on the U.S. birth rate reveals a decline in fertility rates, with 2023 seeing just 1.62 births per woman, marking the lowest level since data collection began in the 1930s. Births in the U.S. decreased for over a decade prior to the onset of COVID-19, and then experienced a 4% drop from 2019 to 2020.

Straight Arrow News contributor Peter Zeihan explains the decline in the U.S. birth rate and what it means for America’s future. Zeihan argues that if the low birth rate continues, eventually the U.S. economy could see a decline similar to the declines in the German and Korean economies.

Excerpted from Peter’s May 9 “Zeihan on Geopolitics” newsletter:

Well, it looks like there’s something in the water in the U.S. and it ain’t little blue pills. The recent U.S. Census data shows a 40-year low in the birth rate – about 1.6 per woman.

With the birth rate well below the replacement level, there could be huge economic implications that follow. There are plenty of other countries facing similar demographic issues, so the U.S. has plenty of case studies to read up on.

This isn’t the kiss of death quite yet, but it won’t be [an] easy path forward. Between meaningful immigration reform and policies supporting young families to have more children, the U.S. has to make some big changes if they want to stop that demographic timebomb.

Hey, everybody, Peter Zeihan here coming to you from Colorado in between the snows. It is April 25. And the news that you’re not gonna get this for like a week. I know I’m sorry. The news today is that the United States Census has come out with the most recent information on population structure for the United States. And it indicates that our birth rate has dropped to a 40 year low of about 1.6 per woman. 2.1 is generally considered to be replacement level. And if you add in increases in the death rate, the United States from things like COVID, which killed about 1,000,004 million, 3 million for people, as well as the rapidly aging and therefore passing the baby boomers. And then on top of that the opiate opioid epidemic, we really need to be closer to 2.3 or 2.4. It’s just a cold the population where it is. The only other way that you can plug that gap was with immigration, let’s just say that that is a topic that is somewhat hot at the moment. What does this mean? Well, in the short term, from a demographic point of view, short term is 20 years. From a short term point of view, this is actually positive for economic growth, because if you have a lot of people aged roughly 20 to 45, which is where the millennials are right now. And they don’t have a lot of kids than the money that they would spend on schooling and buying a bigger house they can use for more furnishings and more travel, and more restaurants and more high octane growth that feeds through the system and has a multiplier effect. This is something that we saw in China in the 2000s. This is something we saw in Europe in the 1990s. And you can get some really high quality growth out of it. The problem is that you only do that once. And if your birth rate never recovers, then after 20 years, you start eating into your working age population. And after 50 years, you start eating into your skilled worker population as well as your tax base. And eventually you’ll get to a place like where the Germans and the Koreans are now, where this has now been going on for 60 years. And so this is the last 10 year period that we basically have a modern Korean or German economy unless something radical shifts more traditionally, having a low birth rate just means that you’re going to have fewer people available to work in the future and fewer people to maintain the system in the future. Now for the United States, we have a very atypical demographic history compared to really everyone else in the rest of the world. Compared to the rest of the industrialized world, most of the other industrialized countries are far more urbanized than we are. So they started this collapse below replacement levels not just 20 years ago, but 3040 5060 70 in some cases, 80. And so it has a lot of steam build up. For us, the decline really below replacement is only about a 10 to 15 year process. And it’s been very slow even then, in addition, because the United States was part of a second cadre of countries to industrialize, we have seen our birth rates go down. But because the United States is such a big place, with so many small towns and such huge options for suburbs, it’s declined a lot more slowly than everywhere else. So if you look at the data, and we’ll throw chart up here, you’ll see that the United States has been kind of hovering around that to 2.1. area for the last 40 years. Whereas a lot of other countries that are kind of in our pure class plunge below it long ago. That doesn’t mean that we are doomed to follow them. If Americans keep aging at their current rate, if the birth rate keeps dropping at its current rate, we’re not going to be facing a Korean or a German style problem within the next 40 years, and probably closer to 50. So while this isn’t a great sign, it’s not like we’re about to jump off a cliff. The other group of countries, the developing countries are very different. These are the countries that for the most part did not develop the technologies of industrialization that was thrust upon them. So you took a century, a century, a half of technical development in the West, and in Japan, and in the course of under 30 years implemented throughout most of what we now think of as the developing world. And so they went directly from the farms to condos, and in doing so saw their birth rates just plunge horrendously. And you can see that on the chart. China, of course, is the country that industrialized the most quickly got the growth boom from that from not having the young generation, and now is well past the point of no return and is very close to having one of the lowest birth rates in the world. So is there anything we can do about this? Well, there’s two things. The first is you can have meaningful immigration reform in order to bring in more people. But to bring in the scale of people that were required to tilt this would be pretty extreme. The second thing you can do is encourage policies that make it easier for younger families to have more kids. Part of the economic growth story of places like Texas the last 30 years is that the land is cheap. The electricity is cheap, the food is cheap, and taxes are low. So if you’re a young family starting out, it’s easier to have a house with a yard and raise children. If you’re going to do that and say San Francisco who are New York? Yeah, it’s not gonna happen. Raising kids in a condo is no fun at all. One other little thing that I just wanted to throw in there so that people understand that everything has a consequence, over the same time that us birth rates have dropped since 1990. We’ve also seen the teen pregnancy rate drop by roughly half and there is a direct correlation between those two things. So saying you need more kids makes a lot of sets. How you get more kids. That’s what really matters.

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