“The afternoon knows what the morning never suspected.”
– Robert Frost
“It's paradoxical that the idea of living a long life appeals to everyone, but the idea of getting old doesn't appeal to anyone.”
– Andy Rooney
“Deng Xiaoping made a calculation. He bet on demographics. What he knew was that China had this enormous population of young, underemployed people, people who he could move from the farms to the coast and put them to work in factories, and that would be the lifeblood of China's economy.”
– Evan Osnos
(My comment on that quote: He launched this policy after he went to Singapore in 1978 and saw what Lee Kuan Yew had done and then went back home to duplicate that effort, albeit in a manner that would work within the Chinese system. But he did ride the tidal crest of demographics.)
In February 1990, the Voyager 1 space probe reached the outer edge of our solar system. NASA commanded it to take a last image of Earth from 3.7 billion miles away. The planet is only a small speck from that distance.
Seeing that image, Carl Sagan profoundly called our home a “pale blue dot” in the vastness of space. Since then, we inhabitants of that pale blue dot have been turning gray at a rapid pace. The resulting demographic changes may appear insignificant against the backdrop of the cosmos, but they are increasingly visible here at ground level.
The aging of the world’s population is already having profound effects on the global economy, and it is only getting started. Today we’ll consider those changes, drawing partly from research conducted by the intrepid volunteers for the demographics chapter of my new book.
(This letter will print a bit longer because of the large number of charts and graphics. And I apologize for the late delivery of what is supposed to be a weekend letter. I was somewhat distracted by life. My intention is to be better in the future.)
It is important to understand the profound shift in demographics that is going to cause sweeping changes over the next few decades. Those changes will broaden the scope of our study of economics and investing; they will alter our understanding of sociology; and they will radically affect politics and governments. Precisely what these changes will be is difficult to discern and predicting them requires some guesswork, but the one thing we don’t have to guess about is the demographic shift itself. Everyone who will be over 20 years old in 2035 has already been born. Moreover, birth rate trends don’t tend to change radically but evolve slowly.
We’ll begin with the big picture. Experts think global human population first hit 1 billion around the year 1800. The next billion took another 120 years, arriving in 1920. It took only 40 years to add a third billion, by 1960.
From that point the growth curve turned higher, and now we’re approaching 7 billion. What next?
Here we enter the realm of guesswork. I wanted to begin with this chart because it shows just how widely the estimates can vary. The UN’s “low variant” line shows human population peaking around 2040 and falling below 6 billion by 2100, while the “high variant” has the population at 14 billion and still rising in 2100.
The gap between 6 billion and 14 billion is greater than the total number of people alive today. The gap is that wide because demographic projections require many assumptions. Most of them pertain to small changes in population, but they can combine to make a dramatic difference over time.
Unknowable future events may also bend the population curve. Baby booms and busts, wars, famines, epidemics, medical breakthroughs, and more are all potential game-changers. The late-20th century acceleration in population growth was mainly a result of modern vaccinations. Other technologies could have – and I think will have – similar impacts in the future.
Technology can cut the other way, too. We now have the capacity to wipe out entire nations and even the human race with nuclear weapons. Some scientists think our excessive antibiotic use will create drug-resistant superbugs that could kill millions. I don’t expect such events, but we can’t rule them out, either.
For now, at least, we are making new humans faster than we are losing them. The result is a growing global population. But the growing total population masks the shrinking population in much of the developed world.