Human Population - A Depleting Resource

Some predictions about the human population

As early as the sixth century B.C., catastrophists have been describing human beings as ‘burdensome to the world’. They were wrong then, and continue to be wrong today. Such concerns were expressed in the writings of Plato and Aristotle in the fourth century B.C. as well as in the teachings of Confucius as early as the sixth century B.C. In 200 A.D., Quintus Septimius Florens Tertullianus, an early Christian author from the city of Carthage, argued “We are burdensome to the world, the resources are scarcely adequate for us… already nature does not sustain us”. The population of the world then was approximately 180 million, which is about 3-4% of what it is today! And far from facing hunger and destitution; in fact most of these people are leading quite a decent lives!

In 1588, Giovanni Botero, an Italian thinker, priest, poet and diplomat, published Delle cause della grandezza delle città (On the Causes of the Greatness of Cities). In this, Botero outlined the generative and nutritive virtues of a city, the former being the rate of human reproduction, and the latter being the ability of the products of the city and its countryside to maintain its people. He wrote that ‘Cities grow when their nutritive virtue is greater than the generative, but at the inevitable point when these virtues are inverted, the city begins to die’. In 1798, Thomas Robert Mathus, an English cleric and an authority on political economy and demography, in his book An Essay on the Principle of Population wrote “If our population keeps growing we will be faced with famine, epidemics, pestilence, and plagues that will sweep off tens of thousands of people”. The world population then was 980 million. Today, more than the population of the world in Mathus’ time lives in India alone!

In 1968, Stanford professors, Paul R. Ehrlich, the author of the book The Population Bomb said “The battle to feed all of humanity is over, in the next ten years hundreds of millions of people will starve in spite of any crash programs embarked upon now. At this late date nothing can prevent a substantial increase in the world death rate”. Post his visit to New Delhi in 1971, he remarked that India couldn’t possibly feed all its people and would experience some kind of collapse around 1980. The population in India while Ehrlich visited was around 550 million; today we have around 1.2 billion people. Yes, we do we have social problems like poverty and malnutrition but we do not thousands and thousands dying of starvation; in fact the standard of living and per capita income has been steadily increasing!

Population Trends

The human population has been increasing in absolute numbers. However the rate of increase is slowing down steadily. This is because people are choosing to have fewer children than their ancestors. In many parts of the world, the population is declining and this is could pose huge problems in the not so distant future.

Let’s look at the total fertility rate (TFR) across the world as it is today.

 

The TFR of a population is the average number of children that would be born to a woman over her lifetime if:

·       She were to experience the exact current age-specific fertility rates (ASFRs) through her lifetime, and

·       She were to survive from birth through the end of her reproductive life

The TFR needs to be at least 2.1 in developed nations and 2.5 in developing nations in order to ensure that the population remains stable. As we see currently most of world’s regions are either lower than the threshold or close to stability. The only exception is Africa which should stabilize as the continent develops.

Developed countries usually have a much lower TFR due to greater wealth, education, and urbanization. Mortality rates are low, birth control is understood and easily accessible, and costs are often deemed very high because of education, clothing, feeding, and social amenities. With wealth, contraception becomes affordable. In countries where contraception was subsidized before the economy accelerated, birth rate also rapidly declined. Further, longer periods of time spent getting higher education often mean women have children later in life. The result is the demographic-economic paradox. Female labour participation rate also has substantial negative impact on fertility.

In undeveloped countries on the other hand, families desire children for labour and as caregivers for their parents in old age. Fertility rates are also higher due to the lack of access to contraceptives, stricter adherence to traditional religious beliefs, generally lower levels of female education, and lower rates of female employment in industry.

The total fertility rate for the world has been declining very rapidly since the 1990s. The TFR was 4.95 between 1950 and 1955. This has fallen down to 2.36 in 2010-15. It is expected to fall down further to less than 1.5 in 2090. Going by the trends we can expect to see a reduction in population in our own lifetime.

(Source: World Population Prospects 2015, UN)

Even in many parts of India, the population is expected to fall – the states of Andhra Pradesh, Tamil Nadu, Kerala, Karnataka, Goa, Punjab, Himachal Pradesh, Jammu & Kashmir, Maharashtra, West Bengal, Sikkim, and Tripura along with the union territories of Delhi, Lakshadweep, Daman & Diu, Andaman & Nicobar, and Chandigarh, have a fertility rate of below 2.1 while these states accounted for 50.4% of India’s population in 2011.

(Source: Chapter 3, Estimates of Fertility Indicators, SRS Report 2013, Census Commission of India)

The Real Crisis

Contrary to popular opinion, the bigger issue could be not having enough people. Throughout history major events such as the decline of the Roman Empire, The Great Recession and The Great Depression have all been attributed, at least in part, to a declining population. A declining population reduces the demand for goods and increase shortage of labour. In today’s world, thanks to increasing lifespans, there would be an additional pressure on a smaller younger generation providing for a large number of retirees.

Let’s take a look at the situation in Japan. The population in Japan is expected to decline by 25% from 128 million in 2005 to 95 million in 2050. By 2055 the population of those aged over 65 is expected to increase to 38% of the population.  Thus, the government may have to raise the age of retirement to 77 or allow immigration of 17 million people in order to maintain the worker to retiree ratio. Caring for the elderly will become a huge challenge as the increased participation of women in the workforce coupled with the demand for labour will reduce the availability of family members who could take on this responsibility.

Europe is currently facing a similar crisis too. The median age is expected to rise to 52.3 years by 2050 (India is currently at 26.7). More than a fifth of the population is over 65 years and the proportion is rising. Europe will need to add 50 million more people by 2060. Many countries will see a drastic revision in their retirement age or will have to attract millions of immigrants each year in order sustain the economy. Large scale labour shortages (unless there is a huge influx of immigrants) will lead to a reduced industrial output.

Believe it or not, the world’s most populous country, China, is also undergoing a similar crisis! China’s population growth rate of 0.47% is one of the lowest in the work (Rank 159th). The one-child policy limited the population growth drastically, which has resulted in severe demographic & gender imbalances and a shrinking workforce. The restriction has resulted in a situation wherein one child may have to provide for two parents and four grandparents. The ruling Communist Party on October 29, 2015 during the fifth plenum, abandoned its 3 decade long one-child policy to overcome these challenges. The Chinese media claim that this would lead to an increase in $ 75 billion in consumption in the long run. As per an online survey conducted by Sina News, 43% couples said they would not have 2 kids, 28% said they would wait and watch, and 29% said they would take advantage of the scrapping.

  
Impact Of The Crisis

The population crisis will result in a shortfall of workers in the developed world and a surplus in the developing world. Economies will have to compete for manpower since low manpower would result in low production which in turn would result in low output and poor balance of payments. Accepting migrants and refugees could be alleviate this crisis.

So has Germany realised this? Probably yes. Germany currently faces a huge demand for workers trained in Mathematics, IT, Natural Sciences and Technology or ‘MINT workers’. The population will shrink from 81.3 million in 2013 to 70.8 million in 2060. The Institute for Economic Research, Cologne, in September 2015 issued a statement urging the German government to facilitate asylum claims from skilled workers and for language and integration courses to enable those workers to enter the German labour force as soon as possible.

So what is the impact of migrants? Migrants lead to increases in social sector spending. Host countries must house, and sometimes educate refugees until they become productive members of the local economy. As we are aware, the European Commission has released $ 2.6 billion emergency aid of which Italy would receive $ 616 million and Greece would receive $ 473 million. Germany has set aside $ 9.6 billion to deal with the migration crisis. Migrants alter the local labour market. Skilled refugees compete with local workers for jobs and may end up displacing them, which may result in a temporary increase in unemployment numbers. The labour markets of host economies may become flexible, with migrant workers taking jobs that locals shun. Conversely, in the case of countries with aging populations, migration may increase the number of working-age members in an economy. Refugees increase aggregate demand. New migrants represent potential markets for new services. They can revive and resuscitate host economies, leading to increases in real income and GDP for their host countries as native workers and professionals migrate to new forms and types of work. Studies show that immigration to the United States between 1990 and 2007 resulted in a 6.6% to 9.9% increase in wages per worker. Migrants will also impact social and political environment in the home country. It could also result in intolerance as we are currently seeing in many European countries. Victor Orban, the PM of Hungary said that he would accept only Christian migrants to keep Europe Christian. He, very rightly, received flak from several quarters for this. We are also seeing an anti-immigration sentiment rising across Europe with political parties like the UK Independence Party, Alternative for Deutschland and France’s National Front upping the ante. The Paris attacks has further strengthened the voices of the anti-immigrant population. As a fallout of the attack on Paris, we have seen nations like Macedonia, Serbia, Slovenia, and Croatia seal their borders; even the US is looking to stop migrants from entering the US!

So has the influx of migrants historically been good or bad? Let’s look at how it impacted a few countries.

In September 2013, the UN Refugee Agency estimated that a total of 2.1 million had fled Syria. Lebanon and Jordan received the biggest inflow in terms of their own populations. Lebanon has seen its population surge by 19%. The tiny Mediterranean state of 4 million has seen almost half a million Syrians enter its territory over the past one and a half years. In fact, 1 out of every 10 residents in a migrant! The demand for electricity in Lebanon, which already suffers daily power cuts, has jumped 27% in one and half years. In an interview with Reuters, the Energy Minister Gebran Bassil, termed the situation as ‘disastrous’. Food prices and rents have increased substantially. Lebanon’s Interior Minister Marwan Charbel says the refugees threaten security, and popular resentment is building against what many believe is a growing financial burden on the country. After a stellar growth of 8% YOY from 2007-2010, expansion has slowed to around 2% and Lebanon recorded its first primary budget deficit since 2006! A World Bank report suggests that the influx of Syrian migrants has cost Lebanon $2.6 billion between 2012 and 2014.

Jordan has also seen its population surge by 8%. An IMF study found an overall negative effect on economic activity in Jordan. The study also highlighted the following:

·       Without the conflict, the annual growth for 2013 could have been 4% instead of 3%. The 1% point loss may not seem significant, but considering that it translates into a cumulative loss of incomes close to what Jordan received in budget grants, it is not easy to dismiss

·       Inflation rose mainly due to an increase in rental prices as Syrian families were looking for housing. Without the inflow, rents would have grown by 2.7% instead of 7.7%

·       The informal sector seems to have grown as the refugees, who are not legally allowed to work in Jordan, took up employment opportunities illegally. This has had adverse consequences for the economy, the key of which of crowding out of Jordanian workers (due to lower wages to the refugees) and loss in tax revenues

·       It has also taken a toll on Jordan’s trade balance. Non-energy imports increased by over 11% and exports dropped by 30%

A USAID study attempted to calculate the fiscal impact of the Syrian migrants on Jordan. It estimates that Jordan’s spending increased by about 1% of the GDP to meet the humanitarian needs of the refugees. The rapid rise in users of public services led to a deterioration of its quality. The study estimates that re-establishing the quality of public services to the pre-crisis levels would have resulted in additional fiscal spending of 0.6% of GDP.

Sweden is considered to be the most open nation in the world today and also happens to be one of the richest nations in the world. It adopted a policy of active labour migration in 1970. The country has 25 times more immigrants than the US. As of 2010, 14.3% of the inhabitants were foreign born. Of these 64.6% were born outside the European Union. Sweden has transformed from a nation of net emigration after World War I to a nation of net immigration since World War II. The nation has seen a steady decline in unemployment rates. The nation has an expansive social security system providing child allowances & parental benefits, housing allowances, benefits for the ill and disabled, support for the elderly and welfare for the no or low income groups.

UK too has seen a positive impact of migrants. Immigrants between 2001 and 2011 contributed ₤ 20 billion to public finances, paid out 64% more in taxes than they received in benefits and provided skills that would have cost the UK € 6.8 billion in education. Germany and France too have seen their share of migrants. And both these nations have done exceedingly well, economically and otherwise. The French and German football teams that won the FIFA World Cup were dominated by immigrants!

The jury is still out on this one!