In the depths of the Great Depression in 1935, acting Commonwealth treasurer Richard Casey released a 19-page report about Australia’s “Vital Drift” in population structure.
What I find interesting about looking at historical reports like this is how economic debates have remained essentially unchanged despite nearly a century of experience.
Ageing is one of those fears that circulate endlessly in our collective conscience. It’s a concern that just feels right (like concerns about the federal debt).
I too have been sucked in at times. But I now see it is no big deal, like most such fears.
You call that ageing?
Imagine if just 6.5% of the population was over 65. How quaint.
Today it is 16%. Across the European Union, it is 21%. In Japan, it is 30%.
Concerns about ageing don’t seem to be related to the age of the population. It was a problem at 6.5%. It seems a problem at 17%. It’s the same problem at 30%.
The symmetry of the old and young
I remember reading years ago that declining youth dependency was the “opposing blade of the ageing scissors”. And I remember feeling stupid for not realising this obvious fact before.
Yet we usually ignore in ageing debates that both the old and the young are non-working dependents that need to be allocated resources from workers.
What was interesting in 1935 is that although there was a decline in the proportion of school-aged children, because public spending was used to build up new facilities for a relatively new idea of broad public schooling, the cost of schooling had been growing.
A correct diagnosis ignored
What puzzles me is that ageing is as much a product of advancements in economic activity, medical science and other forms of progress as it is a product of birth rates.
Are these amazing life-extending achievements actually economic negatives?
If ageing was really costly, the easiest thing to do would be to let people die younger. But we don’t. Because we know that ageing is good and we all want to do it.
Back in 1935, the fact that life expectancy had increased by 15 years was a major part of the story.
The fact that economic productivity and technology improvements have so much more of an effect on the productive capacity of the nation than the age of its people is also noted but strangely ignored.
An interesting point is that birth rates in the 1930s had fallen to 1.5 per father. The modern measure is 1.7 per woman. I don’t know why birth rates seem to trend towards this ballpark, but I wonder if it happens throughout history or whether it is a product of modern longevity.
Population concentration in cities
Agglomeration effects are as real today as they have ever been. These are the efficiency benefits of co-locating many production and consumption activities.
In most countries, we see cities grow and rural towns decline. Any time market forces are unleashed we see the efficiency gains result in growing cities and declining rural areas.
Just like a new mine nowadays attracts many people temporarily to a region, the conversion of land to farming did the same a century ago. But after the land is prepared, efficiencies continue to improve, reducing the labour needed. As transport speeds improve, people can live closer to where they need to go regularly (shops, schools, medical, etc) instead of occasionally (to the farm for harvest).
Some people see the rise of cities and the decline of regions as a bad outcome. But it is also true that larger regional towns soak up activity from smaller ones and that the collective result is overall improved economic efficiency.
Population growth grows markets
One of my critiques of the “Get a Big Australia Fast” approach to immigration policy is that it is a lazy approach business owners love of growing their market via population rather than by competition.
In the 1930s, this point was laid out clearly: we needed a growing world population for our primary production exports.
Pensions and transfers
Public pension fund transfers happen via a public agency. But funds and resource transfers to children happen within a household. That non-workers benefit from the incomes of workers is unavoidable in any society.
We heavily focus on the old because pension transfers are measured and recorded. But most transfers happen within households to children and spouses and hence leave no records, so one cares whether they are sustainable or not.
Fear of the cost of transfer payments is another one of those ideas that feel right, but that unravels when you realise the same argument applies to sharing resources within households.
I’m also intrigued by the final comment in Casey’s report describing the age pension system and the approach to welfare in general.
In such ways are the fortunate seeking to remedy the lot of the unfortunate — and it is right that it should be so. It represents a practical instead of avisionary socialism.
Balancing the budget
Another debate that doesn’t seem out of place today is about balancing the budget and identifying what spending should be cut. After the boost in taxation by the Commonwealth government to fund World War I, the concern was about how to return to the past levels of taxation.
Lines we hear today were trotted out about more taxes meaning more slush fund spending.
It is said by the cynically minded, and by those who have not adequately examined the facts, that the Commonwealth government has expended its expenditure programmes to absorb the increased revenues. This is not the case.
I am cynically minded, so I do think this can be the case at times. But my general view is that no politician really cares about the budget itself, so a tight budget doesn’t constrain the most wasteful spending anyway.
It is interesting that a commentary on the budget is packaged in a report on ageing and the pension system. Rather than celebrate the success of the pension system and the way taxes were raised to fund it, the whole thing reads as if it is trying to reverse this successful system.
Just like today, the thought-bubble vibe of this report is “If only there was a way to not tax our mates but also have poor people be looked after by their own families. I know. More babies and immigrants.”
This was republished with permission from “Fresh Economic Thinking” by Cameron Murray.
This is such a stupily poitless arguement. Everyone on this planet wiil either age or die, moving to another country changes nothing about that, we begin to age the day we are born — every single one of us. The old are an easy target, or they think we are though many of us still have our mental capacity, which is often keener than those fifty years our junior.
So, get off our backs and turn to those not paying their fare share in tax because they can afford to pay thousands to get a tax consultant to fix their tax papers so they end up paying, too often, nothing at all, and same with the big companies who fix the books so it looks like they made a loss, if that was true how come they can keep operating
Ah yes.
The ageing population: truly terrifying to those altruists over at the property council and the BCA as they demand ever higher immigration intakes.
Bless ’em.
And happily given a run by every government since the first IGR as their lame excuse for keeping donors happy.
Meanwhile the demise of Japan on the basis of said ageing has been predicted-but sadly not realised-for the past 40 years.
Just as an afterthought it’s surprising that this piece was even given a run: it does question that value of the big Australia narrative after all.
Given some the drivel published in Crikey over past week (dog whistling anyone?) it must have been an agonising editorial decision.
yes ! how about the narrative thats doing all the damage – ageism; being told being a human you are an older worker or job seeker and this is bad ? senior, seasoned and experience negates the individual and self determinism is a fight to the grave
sic seasoned, senior with experience objectively should be a positive but the media and social systems and data pirates need to prematurely age people to use em as fodder for their jobs race to the bottom taking our resources
I don’t disagree with the conclusion that successive governments see immigration as an easy way to pay for non-workers but the argument feels reverse-engineered with some cherry-picked data – which makes it weird that the author would “wonder” if the birth rates trends below replacement levels historically, as there is abundant data that obviously correlates to contemporary events.
1935 was the midst of the Great Depression (which would have surely discouraged people from starting families or adding dependents) in the wake of WW1 (so many men killed who would now be of parenting age) so it’s hardly surprising the birth rate was low and was indeed the absolute bottom of the fertility curve … just as the subsequent post-WW2 boom – with a birth rate peaking at 3.55 in 1961 – was an anomaly at the other end of the scale which also conveniently wiped away the looming problem the report was citing.
It’s interesting too that the boom ran to 1971 with a pronounced bump that year – we didn’t get more babies per capita until 2007! – which I assume was a collision between the tail end of the local baby boom and the coupling of the ‘traditional values’ cohort of Boomers. Even more interesting, the number of births plummeted for the rest of the decade just as the migration intake became more diverse and the Whitlam era ushered in more liberal attitudes … perhaps including the first generation of women who saw motherhood as a choice not for them rather than an obligation, aided by easier access to higher education / contraception / divorce.
Also: ageing is most definitely costly but most of us value some things more than money. And the hospitality industry isn’t joking when they say immigrants power their sector. Plus, I’m pretty sure the photo accompanying this article is of a family that was evicted – which was a frequent occurrence in Sydney during the Depression and surely a reason you’d think twice about starting or expanding a family.
“What I find interesting about looking at historical reports like this is how” a 19 page report in 1935 will become a 1,900 page report by 2025. Oh, for such brevity and concision.
The ageing of the population is a big problem from a purely economic point of view (as the Japanese do realise). It’s not people over 65, who have always been a part of society. It is those over 85, once a tiny proportion of the population but now growing fast. They are the ones who consume a disproportionate amount of healthcare, and who can only rarely contribute to the economy.
They provide many jobs in healthcare, and their life’s savings continue to work by providing capital. They don’t seem to pollute much with travel and big appetites. They have built one of the world’s most equal societies (since being nuked for US political purposes) with the benefits of good education and all the rest that equality brings. Also an enforced military abstinence has been a big saving for their country. Just saying.
They provide many jobs in healthcare – is this serious? The way drunk drivers provide many jobs in car repairing?
And I’m not denying their past contribution, just their economic role.
And finally, what does “just saying” mean? Genuine query, I’ve seen it on many comments and can’t see why it’s there.
More like the way children provide many jobs in childcare, education, entertainment…
“Just saying” is just another way of saying “in my opinion”
It’s becoming more apparent everywhere, even locally the fastest growing permanent cohort are the 70+ years of age cohort; Japan is planning to ramp up immigration esp. for healthcare, budgets etc..
Locally it was forecast generations ago as a result of high fertility, better health and longevity i.e. baby boomers and why super was set up to deal with demographic imbalance; it’ll probably shakeout by mid century, inc. globally with fertility rates in decline everywhere…..
World population will get bigger, possibly catastrophically so, before it starts to decline. And fertility rates are still very high in some places, like Nigeria.
No, Nigeria is trending down. Credible analysis by international researchers inc. Bricker & Ibbitson (‘Empty Planet’) claim that the UNPD has been (inexplicably) inflating future population forecasts by using inflated &/or high fertility rates that do not match local demographic analysis on the ground.
Bricker claims the UNPD lost 3/4 billion between the last several years ago and present forecast, while it now staggers around 8 billion+, which some predicted would be near the peak?
World Bank has global headline fertility declining from 5+ in ’60s to now just above replacement 2.5; like China, India etc., Nigeria too have also experienced decline with the latter at 5.2, but a significant downward trajectory….. while it’s becoming a significant player with huge middle class.
https://data.worldbank.org/indicator/SP.DYN.TFRT.IN
https://overpopulation-project.com/review-of-empty-planet-the-shock-of-global-population-decline-by-darrell-bricker-and-john-ibbitson-part-1/
The authors’ confidence arises from two sources: personal conversations, and a simplistic theory. They travelled “to Brussels and Seoul, Nairobi and São Paulo, Mumbai and Beijing, Palm Springs and Canberra and Vienna” and they “talked to young people: on university campuses and at research institutes and in favelas and slums” (p.3). This gives them, they think, better insight than UN demographers because: “Some of the indications of an accelerating decline in fertility can be found in scholarly research and government reports; others can only be found by talking to people on the street” (p.3). I find this unconvincing: demographers use large and carefully sampled surveys. For example since 1984 USAID’s Demographic and Health Survey (DHS) in 90+ developing countries has assisted 400+ surveys each with a sample size between 5,000 and 30,000 households.13
Good try, but are you serious, ‘The Overpopulation Project’ as a credible source? 🙂
Confection of Phil Cafaro linked to Tanton’s mob, whose CV includes oxymoronic US greenwashing astroturf ‘PFIR Progressives for Immigration Reform’?
Same PFIR who had an event years ago that was attended by former Labor MP Kelvin Thompson, who now helps the Sustainable Australia Party; maybe you need to give him a heads up on these types?
Climate & Capitalism warning from environmentalist Ian Angus (August 27, 2012):
‘Racism in a fancy green wrapper Why I refused an invitation to speak at a public meeting in Washington. Another attempt to draw sincere environmentalists and progressives into the anti-immigrant swamp…..
What they really represent, as my good friends at the Global Environmental Justice Project say, is “just plain old racism in a fancy green wrapper.”
The radical immigration activists at Imagine 2050 agree:
Good try, but how could one seriously consider ‘The Overpopulation Project’ as a credible source?
Confection of Phil Cafaro linked to Tanton Network, whose CV includes US ‘PFIR Progressives for Immigration Reform’?
Same PFIR who had an event years ago that was attended by former Labor MP, who now helps the SAP; maybe they need a heads up on these types?
From Climate & Capitalism warning from environmentalist Ian Angus August 27, 2012:
‘Racism in a fancy green wrapper Why I refused an invitation to speak at a public meeting in Washington. Another attempt to draw sincere environmentalists and progressives into the anti-immigrant swamp…..
What they really represent, as my good friends at the Global Environmental Justice Project say, is “just plain old racism in a fancy green wrapper.”
The radical immigration activists at Imagine 2050 agree:
“Progressives for Immigration Reform (PFIR), a front group that is part of white nationalist John Tanton’s network of anti-immigrant groups, is grossly misnamed and far from progressive. Even the slightest tie to Tanton’s anti-immigrant network erases an organization’s ‘progressive’ credibility, and PFIR is a staunch Tanton-network mouthpiece.’
Just the usual ad hominem then.