I find it striking how the world often swings 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.
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 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 more than 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 imagining 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. 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, was now being seen as 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 the potential to realize high economic growth.
The reality is that demographic dividend has proven very difficult to realize for most countries that were supposed to benefit from it. In fact, with a lack of useful skills or productive work, a large young population has shown itself to be a liability in many ways.
For eg, when labor is cheap, 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 industrial modernization. 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 (Although, that is changing gradually).
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 and they start growing faster than the roads, trains, and housing can. As a result, you get traffic snarls, pollution, and stressed out urban infrastructure. 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 India has certainly shown 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. Business may struggle to find workers, and on the same front, the shrinking domestic market makes fewer opportunities available.
These are not trivial 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 will not simply erase these gains. Japan will have to deal with the problems that come with an aging demographic, 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. The transition is not going to be painless, but there ways to soften the effects of demographic decline.
So, I don’t believe an aging population is inherently a disaster, and I don’t believe a young population is an asset. For years, a large youth population was touted as the next great engine of growth for much of the developing world. Yet in most places, it has failed to deliver the promised demographic dividend. It’s time to face the reality.
Declining population is 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.