Much of what happens in the world can be explained by the fact that we swing between two extremes. Look at American politics. It is hard to believe that only a few years ago the CEO of Twitter had to apologize for buying a sandwich from Chick-fil-A. That being replaced by a political regime that is openly racist, corrupt, is an insane extreme no one could’ve predicted. But that’s how things go. Every generation thinks it has finally understood the problem. Then it pushes too far in one direction, until eventually reality forces it back toward the middle.
I see the same thing in the way we talk about population. In the 1960s, overpopulation was one of the great fears of the age. The doomsday scenario was so extreme that policymakers were convinced that population would grow to the point resources will get exhausted, farms won’t produce enough, and famines and starvation would follow.
It’s hard to blame them, though. Decreasing child mortality, combined with increased life expectancy, had multiplied the planet’s population. It had doubled from roughly 1.6 billion at that start of century, to four billion by 1975. Growth rates in developing countries had yet not peaked. So we were imagine tens of billions of people by next century.
Then something changed. Fertility began to fall, faster than anyone expected. Population growth was finally slowing, and by the beginning of the new millennium, the argument itself had begun to turn. As fertility rates fell below replacement level in more countries, the fear shifted from a world with too many people to one with too few young people—a future where a shrinking workforce would have to support more retirees.
The young population, which had once been seen as a problem, became an asset. India in particular began to talk about the demographic dividend. The idea was simple. If a country had a large number of working-age people and relatively few children and old people, it had a window in which it could grow rich.
I think it’s time we revisit the idea.
The demographic dividend is largely illusory if a young population lacks useful skills or cannot find productive work. I would go further and argue that a large population can make things worse. When labor is cheap and plentiful, there is less pressure to find more efficient ways of producing things (automation and machines).
You can see this in the difference between much of Chinese and Indian manufacturing. China has spent enormous amounts of money on machines, factories, and automation. They have specialized, precision manufacturing that works at a scale, while in India, we have struggled to move away from old, labor-intensive ways of producing things. Much of India’s old-school manufacturing has proved uncompetitive on the global market.
The burden of young population also places too much stress on the cities. Agriculture can only absorb so much labour before people are forced to migrate to cities. The cities grow faster than the roads, trains, and housing can grow. As a result, you get traffic, pollution, long commutes and endless construction. I have personally seen how this has played out in India. Every city has become a chaotic mess in the last decade or so.
While there has certainly been progress in sanitation, incomes, and infrastructure, a large part of India’s young population remains stuck in menial, unorganized work or in years of preparation for white-collar jobs. We have simply failed to create enough productive economic opportunities to keep them meaningfully employed.
Now let’s come to the other side of the equation: countries that are both aging and shrinking demographically. Japan is the obvious example. There are serious consequences to this kind of demographic change. The pension and healthcare systems comes under stress because there are fewer young workers to support it. Consequently, the retirement age might be raised. Business will struggle to find workers, and on the same front, the shrinking domestic market makes fewer opportunities available.
These are all serious problems. But I think we have made the mistake of turning them into something larger than they are.
Japan has already succeeded in building a remarkably good society. Its public infrastructure is excellent. Its cities are safe, orderly and functional. There is a high degree of trust between people and institutions. On every front, the quality of life for an average Japanese is well above even the rich class here in India.
A declining population does not simply erase these gains. Japan may eventually have fewer people, and it will certainly have to deal with the problems that come with that, but the living standard of an average Japanese would still remain high.
On the other hand, India will likely remain one of the fastest-growing major economies for some time, and we will reap real benefits from that growth. However, a large population would make it challenging country to live in for a very long while. The future for us is largely messy, and chaotic.
And even the problems created by an aging and shrinking population are not the time bomb they are often made out to be. Automation and immigration can fill some of the gap that aging population causes. This is not to say the transition is going to be painless, but there ways to soften the effects of demographic decline.
So I don’t believe an aging population is automatically a disaster, just as I don’t believe a young population is automatically a dividend. Both are simplistic stories we love to tell when reality is far more complicated.
Declining population is probably something almost every country will eventually have to face. With a few exceptions, falling fertility has gone hand in hand with higher female education, greater participation of women in the workforce, and rising incomes. Should we really disregard all of those gains simply because they create demographic problems several decades later? The answer should be obvious.