It would be nice to be able to push a button and create a norm of early family formation and then later on mothers returning to the out-of-home labor force. This is NOT because I think low fertility is per se a problem, but I think it may be a result of a lot of individually small disincentives to family formation. Like policies that make housing more costly than it needs to be
I have to disagree about immigration, though. I think seeking out ambitious educated/educatable people is all to Australia's good. I wish the US did that.
Aug 23, 2023·edited Aug 23, 2023Liked by Misha Saul
Hi Misha,
I think it's also worth highlighting the impact increased two-parent labour participation had on family income inequality, which I think had significant downstream impacts on society cohesion (although less so in Aus, because there are fewer poor people/per capita in Aus compared to many other Western countries).
- given the legibility of income/labour status, there is now more assortative mating based on income (compared to other traits sought after in the past)
- if you value homemaking as being equivalent to X salary, then attributing nearly every homemaker with the same "salary" effectively compressed family income inequality by close to half.
I think you’re probably right that some of the policy and cultural stuff has contributed to the decline in fertility. But as you point out non-western countries are experiencing the same decline. The decline in fertility is global; India, a big driver of world growth for many years, has fallen below the crucial 2.1 level.
Africa remains the only region at large that is having children above replacement. Population will no doubt keep increasing for some time even if Africa were to fall below replacement (which will also happen in time) because of increasing life expectancy, meaning more generations remain alive at the same time even as the base of the pyramid is withering away.
I think quite simply it appears to be a result of wealth, truly revolutionary increases in economic opportunity and education and the way in which all modern industrial societies work. All the different cultures, technology, and government policies (tried so far) have been futile against the inevitable force of the exponential increase in opportunity cost of having children in the modern world.
Left of centre people tend to think that inequality, high land costs and general market capitalist outcomes disadvantage working people and in the modern world they can’t afford kids. I like that theory because it fits nicely with the idea that globalisation and supply side economics are the issue and if we simply undid the late 20th century death by thousand of cuts of welfare states, unions and the benefits of increased global trade very disproportionately accruing to the elite at the expense of the bottom 90% of the West, the working man and non-working woman would start having more kids.
But the decline in fertility in non-western countries that were never as generous to begin with, and those that haven’t experienced the increases inequality that the west has experienced since the 1980 seem incongruous with the idea that western domestic economic and distribution issues cause falling. Besides, places in Scandinavia do have very generous welfare states and they still have declining fertility. Places like Italy have had real declines in property prices for many years and have truly depressing baby creation outcomes.
Right of centre people tend to think that the modern world with its lack of respect for traditions and religion has caused a change in way people live, and we simply must RETVRN. Religious people still have more kids these days. If only everyone became more religious, society would right itself and fertility would go back up again. The issue is that religion, even if we can academically say has net social benefits, and even some individuals might benefit socially and psychologically from becoming more religiously involved, is quite simply based on varying levels of bullshit that the average person isn’t going to turn back too. Pandora’s box has been opened on this one, sorry. It’s impossible for everyone to go back to such opaque forms of social signalling when so many of us would already be in on the fact that it’s all an act.
It’s been a centuries long decline – Nietzsche proclaimed God’s death 141 years ago. The collapse in religious affiliation during the late 20th and early 21st centuries, in my opinion, was just the last two generations finally putting the nail in the coffin of something that had been deceased and sticking around like a bad smell for quite some time. It wasn’t the loss of religion of caused women to get out working and stopping having kids. It was women getting out working and stopping having kids that made us all realise that we should stop pretending that we care about Church and God so much. Besides, as we’ve already seen, the decline in children being born is a worldwide phenomenon that is happening in every religion and culture (except Africans, for now). Not every religion and society has followed the same path as Western Christianity (though many have somewhat of a decline, if less pronounced).
Quite simply, the reason the modern world has less children is, as I said, is that the opportunity cost is way too high. It’s not just that having a child has become more expensive. It has, but also mostly because of costlier housing and we demand higher levels of childcare and better things for our children – something I don’t think people are going to be quick to give up just so we can have more children that grow up with worse lives than we can potentially provide them. It’s that the cost of opportunities lost by having children is too high. Way too high. I don’t mean that the modern world is more interesting and there are many more fun and rewarding things you can do (Also true).
I mean that the economic cost of not working is too high. Simply taking years or even decades off work so that you can raise kids as a mother is not viable in the modern world. What you lose is just too much. This creates a vicious cycle as you diagnosed that even the necessities of life start to cost more because people in dual income families start bidding up the price of things like houses, and single income families simply can’t compete. What was once bountiful opportunities for women to increase their income by taking up work has become what feels like a requirement so that families can afford things.
This is really a Baumol cost disease thing. Or Baumol’s income opportunity, depending on perspective. Time costs more in the modern world. A lazy Sunday is nice. A lazy Monday would be great. But as economic growth marches forward, and real incomes rise, and economic opportunities make it possible for more people to make incomes in more diverse ways, every single second is worth more and more money. Even that Monday these days costs you more in lost opportunity did 30, 50, 70 years ago. Now think about lost years.
So long as economies continue to grow and real incomes rise, time not spent chasing opportunities for more income will cost you more and more. That’s why childbirth collapses across all societies and cultures. It’s simply a function of income and opportunity. Keating bemoans that more women are working - from the perspective of a society as a collection of families that like their mother’s and wives, it is a sad thing that more women are working and not spending with their kids and families. Keating said that 53 years ago. Real incomes are far higher now. Bemoan all you want; those women will march with their feet. I just don't believe women and society at large would choose to be poorer so that women can have more time for children. They will not be housebound when there is a world out there asking for their labour.
What comes next? I have no idea… the decline in childbirth in the West has been offset by immigration from the third world. (Japan, notably not Western, is an exception, just as they often are in all economics discussions). But that’s not a sustainable solution, and certainly not one that can be repeated over the next 30 years like it has over the past 30. Immigration from the third world to the West only works when the third world is producing ample surplus of young people who can leave without it materially harming the age structure of those developing countries. Asia and Americas are below replacement and Africa will be soon enough in a few decades (and their continued growth won't be enough to offset the declines elsewhere, even if we accept a big assumption that everyone would become accepting of African immigrants without friction). The world’s immigrant factories are about to close and to date not a single country has successfully managed to create a suite of policies that sustainably encourage women to have more children to the replacement level.
Interesting comment. As a father, I’m surely biased, but I’m beginning to feel there’s a very strong case for childbearing to be heavily subsidised (notwithstanding the obvious complications). You could feasibly make the case that transfers to families would be efficient on economic grounds.
I’ve had a few conversations over the years with people re Australia’s population policy, and many feel that natural population growth is not inherently more desirable than immigration. I strongly suspect many fear that to disagree would look ‘racist’.
To me, the idea that we ‘offshore’ procreation because we’re too busy chasing careers so we can buy big houses and fill them with things is just so sad. FWIW, I feel equally morose about the idea of Bali filling with wealthy white expats, or British people establishing English simulacrum villages in Andalusia.
I agree it should be heavily subsidised, and that from a long-term perspective It is better than immigration. The problem is the $$ required to my mind are simply too large for it to be politically feasible. Because It's not just the cost of raising children that's the issue, It's the opportunity cost of having kids in what you lose. You can provide public childcare, education, healthcare, cheaper housing and money transfers to families.
We do some of this, we could do more of this, some countries do it well. But it would require much higher taxes and much higher government spending. Could not be achieved through market means or jobs (So good luck when this country has been laser focused on not raising taxing or spending for the last 30 years and keeping gov % of GDP stable even when demographic and economic realities necessitate this going higher if we want to keep the same "social wage"). Government transfers to families to support more equal outcomes amongst working families with more non-working dependents (children, seniors & disabled) was the corner stone basis for the welfare state in the early 20th century.
But all evidence to this point suggests that even such generous transfers to make children less of a cost to the parents aren't enough to move the needle, as the north European countries that do these things the best still haven't been able to move the needle. Maybe it is just a case of more and more money and the cash transfers need to be higher and higher still to compensate not just for the costs of child raising but also giving families (women) huge transfers of cash to make up for their lost income opportunities. But that would need huge spending funded via land and other taxes that fall mostly on the wealthy and old (as it can't fall on the young and poor, as they're the people who need to have kids...), but I just can't see that ever happening, at least any time soon.
In Australia the natural social and economic response has been to use immigration because there is a big surplus of people in undeveloped countries that already exist and there has simply been no economic incentive to "burden" Australian families with more children and the Australian taxpayer with more childcare, education and healthcare costs.
As someone who has paid childcare for three kids, I can confirm that the present cost is outrageous. Hour for hour, it’s equivalent to the cost of elite private schooling.
Whether by design or by accident, we’ve created a society in which (in most cases) there’s a financial requirement for households to have two earners.
Given this, it’s only right that the same logic that leads us to make available (essentially) free state schooling, should extend to childcare.
I think free childcare would be a good (albeit expensive) start.
I’m also (and my 20 year old self can’t believe I’m typing this) open to tax offsets to families, on a ‘per child’ basis. Those that don’t work need our children to underpin the future aggregate demand that underpins the future viability of the businesses they own/ work for. It’s therefore totally legitimate that they subsidise the creation of these future customers.
Well said. To add, urbanization is a factor in declining birth rates (a global phenomenon, though less pronounced in Africa). And Israel is an exception to the trend, perhaps there's something to be learned from them. (It's more than just high birth rates among the religious).
Will say for all the prognosticating about low birth rates. There are strikingly simple solutions, it's just that no one ever dares speak them(restrict advanced education for women, ban contraception), and instead call for pouring more money down a bottomless hole.
Good for the receiving country but terrible for the sending country. Instead of bettering their own country, the ambitious and/or educated leave their own country to make more money (or for greater opportunity) and drain their own country of ambition and talent. It's fascinating to me that those calling for higher and higher levels of immigration always seem to get labeled as the "good guys" because they want "diversity" and in reality, they are often skimming the cream and destroying the development and prospects of the sending countries. It is the progressive colonialism. Instead of robbing a country of its natural resources (gold, oil, jewels, timber), it is robbing countries of their best and brightest people.
It would be nice to be able to push a button and create a norm of early family formation and then later on mothers returning to the out-of-home labor force. This is NOT because I think low fertility is per se a problem, but I think it may be a result of a lot of individually small disincentives to family formation. Like policies that make housing more costly than it needs to be
I have to disagree about immigration, though. I think seeking out ambitious educated/educatable people is all to Australia's good. I wish the US did that.
US does do that. Selection effects! Attracts many of the worlds brightest. More than australia even with Australian selective migration
Hi Misha,
I think it's also worth highlighting the impact increased two-parent labour participation had on family income inequality, which I think had significant downstream impacts on society cohesion (although less so in Aus, because there are fewer poor people/per capita in Aus compared to many other Western countries).
- given the legibility of income/labour status, there is now more assortative mating based on income (compared to other traits sought after in the past)
- if you value homemaking as being equivalent to X salary, then attributing nearly every homemaker with the same "salary" effectively compressed family income inequality by close to half.
Yes assortative mating an excellent point I should have raised
I think you’re probably right that some of the policy and cultural stuff has contributed to the decline in fertility. But as you point out non-western countries are experiencing the same decline. The decline in fertility is global; India, a big driver of world growth for many years, has fallen below the crucial 2.1 level.
Africa remains the only region at large that is having children above replacement. Population will no doubt keep increasing for some time even if Africa were to fall below replacement (which will also happen in time) because of increasing life expectancy, meaning more generations remain alive at the same time even as the base of the pyramid is withering away.
I think quite simply it appears to be a result of wealth, truly revolutionary increases in economic opportunity and education and the way in which all modern industrial societies work. All the different cultures, technology, and government policies (tried so far) have been futile against the inevitable force of the exponential increase in opportunity cost of having children in the modern world.
Left of centre people tend to think that inequality, high land costs and general market capitalist outcomes disadvantage working people and in the modern world they can’t afford kids. I like that theory because it fits nicely with the idea that globalisation and supply side economics are the issue and if we simply undid the late 20th century death by thousand of cuts of welfare states, unions and the benefits of increased global trade very disproportionately accruing to the elite at the expense of the bottom 90% of the West, the working man and non-working woman would start having more kids.
But the decline in fertility in non-western countries that were never as generous to begin with, and those that haven’t experienced the increases inequality that the west has experienced since the 1980 seem incongruous with the idea that western domestic economic and distribution issues cause falling. Besides, places in Scandinavia do have very generous welfare states and they still have declining fertility. Places like Italy have had real declines in property prices for many years and have truly depressing baby creation outcomes.
Right of centre people tend to think that the modern world with its lack of respect for traditions and religion has caused a change in way people live, and we simply must RETVRN. Religious people still have more kids these days. If only everyone became more religious, society would right itself and fertility would go back up again. The issue is that religion, even if we can academically say has net social benefits, and even some individuals might benefit socially and psychologically from becoming more religiously involved, is quite simply based on varying levels of bullshit that the average person isn’t going to turn back too. Pandora’s box has been opened on this one, sorry. It’s impossible for everyone to go back to such opaque forms of social signalling when so many of us would already be in on the fact that it’s all an act.
It’s been a centuries long decline – Nietzsche proclaimed God’s death 141 years ago. The collapse in religious affiliation during the late 20th and early 21st centuries, in my opinion, was just the last two generations finally putting the nail in the coffin of something that had been deceased and sticking around like a bad smell for quite some time. It wasn’t the loss of religion of caused women to get out working and stopping having kids. It was women getting out working and stopping having kids that made us all realise that we should stop pretending that we care about Church and God so much. Besides, as we’ve already seen, the decline in children being born is a worldwide phenomenon that is happening in every religion and culture (except Africans, for now). Not every religion and society has followed the same path as Western Christianity (though many have somewhat of a decline, if less pronounced).
Quite simply, the reason the modern world has less children is, as I said, is that the opportunity cost is way too high. It’s not just that having a child has become more expensive. It has, but also mostly because of costlier housing and we demand higher levels of childcare and better things for our children – something I don’t think people are going to be quick to give up just so we can have more children that grow up with worse lives than we can potentially provide them. It’s that the cost of opportunities lost by having children is too high. Way too high. I don’t mean that the modern world is more interesting and there are many more fun and rewarding things you can do (Also true).
I mean that the economic cost of not working is too high. Simply taking years or even decades off work so that you can raise kids as a mother is not viable in the modern world. What you lose is just too much. This creates a vicious cycle as you diagnosed that even the necessities of life start to cost more because people in dual income families start bidding up the price of things like houses, and single income families simply can’t compete. What was once bountiful opportunities for women to increase their income by taking up work has become what feels like a requirement so that families can afford things.
This is really a Baumol cost disease thing. Or Baumol’s income opportunity, depending on perspective. Time costs more in the modern world. A lazy Sunday is nice. A lazy Monday would be great. But as economic growth marches forward, and real incomes rise, and economic opportunities make it possible for more people to make incomes in more diverse ways, every single second is worth more and more money. Even that Monday these days costs you more in lost opportunity did 30, 50, 70 years ago. Now think about lost years.
So long as economies continue to grow and real incomes rise, time not spent chasing opportunities for more income will cost you more and more. That’s why childbirth collapses across all societies and cultures. It’s simply a function of income and opportunity. Keating bemoans that more women are working - from the perspective of a society as a collection of families that like their mother’s and wives, it is a sad thing that more women are working and not spending with their kids and families. Keating said that 53 years ago. Real incomes are far higher now. Bemoan all you want; those women will march with their feet. I just don't believe women and society at large would choose to be poorer so that women can have more time for children. They will not be housebound when there is a world out there asking for their labour.
What comes next? I have no idea… the decline in childbirth in the West has been offset by immigration from the third world. (Japan, notably not Western, is an exception, just as they often are in all economics discussions). But that’s not a sustainable solution, and certainly not one that can be repeated over the next 30 years like it has over the past 30. Immigration from the third world to the West only works when the third world is producing ample surplus of young people who can leave without it materially harming the age structure of those developing countries. Asia and Americas are below replacement and Africa will be soon enough in a few decades (and their continued growth won't be enough to offset the declines elsewhere, even if we accept a big assumption that everyone would become accepting of African immigrants without friction). The world’s immigrant factories are about to close and to date not a single country has successfully managed to create a suite of policies that sustainably encourage women to have more children to the replacement level.
Interesting comment. As a father, I’m surely biased, but I’m beginning to feel there’s a very strong case for childbearing to be heavily subsidised (notwithstanding the obvious complications). You could feasibly make the case that transfers to families would be efficient on economic grounds.
I’ve had a few conversations over the years with people re Australia’s population policy, and many feel that natural population growth is not inherently more desirable than immigration. I strongly suspect many fear that to disagree would look ‘racist’.
To me, the idea that we ‘offshore’ procreation because we’re too busy chasing careers so we can buy big houses and fill them with things is just so sad. FWIW, I feel equally morose about the idea of Bali filling with wealthy white expats, or British people establishing English simulacrum villages in Andalusia.
I agree it should be heavily subsidised, and that from a long-term perspective It is better than immigration. The problem is the $$ required to my mind are simply too large for it to be politically feasible. Because It's not just the cost of raising children that's the issue, It's the opportunity cost of having kids in what you lose. You can provide public childcare, education, healthcare, cheaper housing and money transfers to families.
We do some of this, we could do more of this, some countries do it well. But it would require much higher taxes and much higher government spending. Could not be achieved through market means or jobs (So good luck when this country has been laser focused on not raising taxing or spending for the last 30 years and keeping gov % of GDP stable even when demographic and economic realities necessitate this going higher if we want to keep the same "social wage"). Government transfers to families to support more equal outcomes amongst working families with more non-working dependents (children, seniors & disabled) was the corner stone basis for the welfare state in the early 20th century.
But all evidence to this point suggests that even such generous transfers to make children less of a cost to the parents aren't enough to move the needle, as the north European countries that do these things the best still haven't been able to move the needle. Maybe it is just a case of more and more money and the cash transfers need to be higher and higher still to compensate not just for the costs of child raising but also giving families (women) huge transfers of cash to make up for their lost income opportunities. But that would need huge spending funded via land and other taxes that fall mostly on the wealthy and old (as it can't fall on the young and poor, as they're the people who need to have kids...), but I just can't see that ever happening, at least any time soon.
In Australia the natural social and economic response has been to use immigration because there is a big surplus of people in undeveloped countries that already exist and there has simply been no economic incentive to "burden" Australian families with more children and the Australian taxpayer with more childcare, education and healthcare costs.
You’re probably onto something.
As someone who has paid childcare for three kids, I can confirm that the present cost is outrageous. Hour for hour, it’s equivalent to the cost of elite private schooling.
Whether by design or by accident, we’ve created a society in which (in most cases) there’s a financial requirement for households to have two earners.
Given this, it’s only right that the same logic that leads us to make available (essentially) free state schooling, should extend to childcare.
I think free childcare would be a good (albeit expensive) start.
I’m also (and my 20 year old self can’t believe I’m typing this) open to tax offsets to families, on a ‘per child’ basis. Those that don’t work need our children to underpin the future aggregate demand that underpins the future viability of the businesses they own/ work for. It’s therefore totally legitimate that they subsidise the creation of these future customers.
Well said. To add, urbanization is a factor in declining birth rates (a global phenomenon, though less pronounced in Africa). And Israel is an exception to the trend, perhaps there's something to be learned from them. (It's more than just high birth rates among the religious).
Thank you, Mr. Keating, very based!
Will say for all the prognosticating about low birth rates. There are strikingly simple solutions, it's just that no one ever dares speak them(restrict advanced education for women, ban contraception), and instead call for pouring more money down a bottomless hole.
Lol unless Aus turns into a religious theocracy or Arab monarchy like Iran or Saudi Arabia, those are the stupidest ideas I’ve ever heard.
Iran's a hardline religious theocracy and it's done the exact opposite of both ideas.
Someone out there this century has got to be the one to cut the Gordian knot!
Good for the receiving country but terrible for the sending country. Instead of bettering their own country, the ambitious and/or educated leave their own country to make more money (or for greater opportunity) and drain their own country of ambition and talent. It's fascinating to me that those calling for higher and higher levels of immigration always seem to get labeled as the "good guys" because they want "diversity" and in reality, they are often skimming the cream and destroying the development and prospects of the sending countries. It is the progressive colonialism. Instead of robbing a country of its natural resources (gold, oil, jewels, timber), it is robbing countries of their best and brightest people.