paranoia its fictional basis and all too real costs Jane OSullivan Fenner Conference 2013 Population Resources and Climate Change AAS 1011 October 2013 Ageing is the main excuse for maintaining population growth ID: 360198
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Slide1
Ageing paranoia: its fictional basis and all too real costs
Jane O’Sullivan
Fenner
Conference 2013 – Population, Resources and Climate Change.
AAS 10-11 October 2013Slide2
Ageing is the main excuse for maintaining population growthPopulation growth is a policy variable (a choice).A significant shift in policy in the past 20 years
:
High fertility nations have reduced family planning.
Low fertility nations have resisted stabilisation.
A consequent resurgence in global population growth.
Global population won’t peak unless nations embrace stabilisation or descent.Slide3
2012 UN Population ProjectionsSlide4
High15.8 16.6 billion
Medium
10.1
10.9
billion
Low
6.1
6.8
billion
2012 UN Population ProjectionsSlide5
High15.8 16.6 billion
Medium
10.1
10.9
billion
Low
6.1
6.8
billion
2012 UN Population Projections
Constant Fertility 28.6 billionSlide6
High
15.8
16.6
billion
Medium
10.1
10.9
billion
Low
6.1
6.8
billion
Projections are blind to carrying capacity
Resource Constraints?
Joel Cohen “How Many People can the Earth Support”: 7-12 billion is “the zone”
“If most people would prefer a decline in birth rates to a rise in death rates, then they
should take actions to support a decline in fertility while time remains to realize that choice.” Slide7
Annual Increment of Population
Medium
Projection
Constant
Fertility
Projection
Recent estimates from
Population Reference BureauSlide8
Press briefing upon publication of UN’s “World Population Prospects: The 2012 Revision”
“…Most
of this increase is due to changes in our estimates of
current
fertility for several
high-fertility countries …
“Our
medium-variant projection continues to assume a rapid fall in future levels of fertility for these countries. We continue to calibrate the pace of future fertility decline using the historical experience of countries that underwent a major reduction of fertility levels after 1950, in an era of modern contraception.
The medium‐variant projection is thus an expression of what should be possible …“… [it] could
require additional substantial efforts to make it possible.” John Wilmoth, Head of Population Division, UNDESASlide9
Fertility reduction in response to population-focused family planning programs
Typical fertility reduction of 2-3 units per decade in the first two decades.
(UN projection assumes 1 unit per decade.)Slide10
UN Survey of Population Policy 2011Slide11
International support for family planning has fallen
Allocation of international funding for “Population Assistance”
from
S.W.
Sinding
2009. Population Poverty and Economic Development.
Phil. Trans. R. Soc. B 2009 364, 3023-3030.
Slide12
Fertility rebound in developed countries
from:
Myrskyla
et al. 2009 “Advances in development reverse fertility declines”Slide13
Ageing is an inevitability of the demographic transition
from: Productivity Commission 2005: “Economic Implications of an Ageing Australia”Slide14
Population growth only partly delays ageing
% over 65
Aged dependency: >65 / 15-65
Dependency Ratio: (<15 & >65) / 15-65
“Real” dependency ratio?: (<20 & >70) / 20-70
TFR=2, NOM=0
TFR=2, NOM=220,000Slide15
The “3 Ps”: GDP = Population x Participation x Productivity
Assumptions:
Natural resources don’t count.
Diluting, degrading and depleting them will not affect per capita wealth, because they are not in the model.
Job seekers create jobs.
The size of the economy will be proportional to the number of working age people.
The 3 factors are independent.
Population growth will not reduce participation (competition for jobs) or productivity (competition for resources and markets).
Growth rate costs nothing.The infrastructure, equipment and professional personnel that added people need will be created without penalty.Slide16
Self-affirming factorisation:The “Kaya formula” for global emissions is another example: Emissions = Population x GDP/person
x Energy Intensity of $ x Carbon intensity of energySlide17
The first “P”: Population- but wealth is a per capita thing!
Did population growth help Australia avoid the GFC
?
Negative
per capita
growth for >4 quarters – made deeper by population growth.
Population growth
delinks
GDP from wealth.Slide18
So, does population growth increase participation or productivity?The ageing argument: keep the proportion of working age people high.
Productivity Commission 2011
“Plausible
increases in fertility and net migration would have little impact on
ageing trends.”
“any effect would be short lived. This is
because immigrants
themselves
age”“to maintain the age structure of 2003-04 in 2044-45, annual migration during that period would need to be above 3 per cent of Australia’s population, leading to a population of over 100 million by the middle of this century”Sustainable Australia Report 2013:
“every 50,000 new migrants have roughly half the impact on ageing trends than the previous 50,000.” Slide19
Models show ageing will reduce participationThe unemployed are unlikely to take up the slack because:
“Unemployed
people and people outside the labour force are
generally different
from the employed in skill, motivation and aptitude
.”
Productivity Commission (2005)
“Economic Implications of an ageing Australia”Slide20
The real world experimentIs the proportion of people employed governed
by the supply of people of working age,
or
by the supply of
work?
There is no correlation
between
ageing
and proportion of people employed.Slide21
The real world experimentIs the proportion of people employed governed
by the supply of people of working age,
or
by the supply of
work?
The differences are even smaller when part-time work is considered.Slide22
The real world experimentDoes population growth increase productivity?
There is no trend among nations, nor among municipalities (USA).Slide23
Are we measuring productivity decline as GDP growth?Density diseconomies: Infrastructure Australia (2011) “The cost of providing new infrastructure is rising faster than the rate of inflation — in part, because costlier construction
options,
such as tunnelling for new roads, now need to be adopted in the large cities.”
Unremunerated costs of labour: Grattan Institute (2013):
on the perimeters of Brisbane, Sydney, Melbourne and Perth, more than 90 per cent of jobs are at least an hour away on public transport
.
Residential
housing debt tripled since 2003.Slide24
What about wealth distribution?Does a growing workforce create more opportunities for the needy?
The most youthful nations have the poorest poor.
“
Because immigration makes labour more abundant relative to the existing stock of capital and land, it tends to increase the returns to the latter at the expense of labour
.” – Productivity Commission 2011Slide25
What about wealth distribution?The GINI coefficient measures inequality of income:
Greater inequality is associated
with worse physical health, mental health, drug abuse, education, imprisonment, obesity, social mobility, trust and community life, violence, teenage pregnancies, and child
well-being (Wilkinson & Pickett, “The Spirit Level” 2009)Slide26
What about Pensions and Health Care Costs?If the labour market is oversupplied, pensions only replace unemployment and disability benefits.Raising the pension age by 3-5 years negates change in working age proportion.
… but is not needed if labour supply holds up.
The worst trends for
retirement funding are
h
ousing inflation and
casualised
work.
… a generational time-bomb imposed by population growth.Slide27
Can population growth offset Health Care Costs?Most increase in health costs is due to changing treatment technologies and expectations.
Cost is related more to proximity to death than to age
.
Proportion of adults with <15 years life expectancy in creases at half the rate of old-age dependency.
Proportion of adults with disabilities increases even less.
However, death rate will increase with ageing – only partly offset by population growth.
Why is expanding construction regarded as economic boom, but expanding health care regarded as a burden?Slide28
Remeasuring AgeingData from Sanderson & Sherbov, “Remeasuring Ageing”
Science 329:1287-1288, October 2010.Slide29
What about the cost of growth rate?A higher population growth rate means a greater proportion of total economic activity dedicated to expanding infrastructure, equipment and skills.
For each 1% p.a. population growth, around 7-10% of GDP is needed for expansion
.
Govt
infrastructure spending has been around 1.85% of GDP per 1% p.a. growth.
The increased burden is proportional to the lifespan of the assets to be multiplied.
If infrastructure lasts 50 years, maintenance requires creation of 2% of the stock per year. 2% population growth doubles this burden.
This is an “opportunity cost” – income that would otherwise be available for wellbeing of existing people.Slide30
Cost of ageing vs. growthDifference in all age-related costs between stabilising around 25 million (IGR1) and
“Big
Australia” projection (IGR3) is 1% of GDP by 2050
.
Public
Infrastructure
cost of growth
has historically been around 2.6% of
GDP (1.85% per 1% population growth) but is currently over 3.3% an rising. (Not included in the IGRs.)Expect energy and materials costs to outpace inflation. More than doubles the cost of decarbonising the economy.Loss of biodiversity, food and water security, public amenity and quality of life.Slide31
Dependency RatioSlide32
Dependency RatioSlide33
Depopulation DividendsGerman perspectives (Kluge et al. 2013): Smarter? - greater proportion with higher ed.Cleaner?
- fewer greenhouse gases.
Richer?
- concentration of inheritance.
Healthier?
- greater proportion of life in wellness.
Happier?
- more leisure in the life cycle.Slide34
In summary:Population growthDelinks GDP from wealthDoesn’t strengthen workforce
Doesn’t increase productivity
Increases poverty and inequality
Diverts income from wellbeing to infrastructure creation
Reduces per capita resources
Increases climate change and biosphere impacts
Creates increasingly interdependent and brittle socio-economic conditions.Slide35
Remember the Millennium Bug?
Like ageing, the trigger conditions are inevitably reached.
But the dire consequences are conspicuous only by their absence.
In the mean time, we are turning our backs on real threats.