Population Decline in Asia is Near with Africa to Follow

Recently Nikkei Asia, drawing on research from the University of Washington, published an article contrary to much of the western Anglo or European world’s view of population and humanity, i.e. start of long term population decline has arrived, not infinite increases.

While they present and analyse well, albeit dependent upon sub-optimal UNPD data, they acknowledge the lowering fertility rates from which headline population data is derived.

Since the time of Malthus then fossil fuel supported ZPG Zero Population Growth it has been assumed that high fertility and higher populations were inevitable. However, ZPG relied on high UNPD fertility rates and data, with catastrophic or pessimistic predictions that are now looking less likely.

More recently several demographers and researchers have successfully analysed and argued to show that fertility has peaked, population is to follow by mid century or earlier, as opposed to UNPD forecasts based on unclear or unexplained fertility rate changes in China and India, i.e. declining then rising again to peak at double figures.

The new population bomb –  For the first time, humanity is on the verge of long-term decline

KAZUO YANASE, YOHEI MATSUO, EUGENE LANG and ERI SUGIURA, Nikkei staff writers

SEPTEMBER 22, 2021 06:06 JST

TOKYO — For the past 200 years, a rapidly rising population has consumed the earth’s resources, ruined the environment, and started wars. But humanity is about to trade one population bomb for another, and now scientists and policymakers are waking up to a new reality: The world is on the precipice of decline, and possible extinction.

The twin forces of economic development and women’s empowerment are combining to end the age brought on by the Industrial Revolution, in which economic growth was buoyed by a growing population, and vice versa. Since the early 19th century, the rising tide of humanity has provoked many dire predictions: English economist Thomas Malthus argued as early as 1798 that population would grow so fast it would outstrip food production and lead to famine. In 1972, the Club of Rome warned that humanity would reach the “limits to growth” within 100 years, driven by a relentless rise in the global population and environmental pollution.

Today the world’s population, which stood as 1 billion in 1800, is now 7.8 billion, and the strain on the planet is clear. But scientists and policymakers are slowly waking up to the new numbers: The population growth rate reached a peak of 2.09% in the late 1960s, but it will fall below 1% in 2023, according to a study by the University of Washington, published last year. 

In 2017, the growth rate of people aged 15 to 64 — the working-age population — fell below 1%. The working-age population has already begun to drop in about a quarter of countries around the world. By 2050, 151 of the world’s 195 countries and regions will experience depopulation.

Ultimately, the study forecasts that the global population will peak at 9.7 billion in 2064 and then start declining.

Over the approximately 300,000 years of human history, cold-weather periods and epidemics have caused temporary drops in population. But now humanity will enter a period of sustained decline for the first time ever, according to Hiroshi Kito, a historical demographer and former president of the University of Shizuoka.

East Asia is one region that already faces the world’s most acute baby bust — led by South Korea’s total fertility rate of 1.11, Taiwan’s 1.15 and Japan’s 1.37 average from 2015 to 2020, according to the United Nations publication “World Population Prospects 2019.” A country’s population begins to drop when fertility falls below the so-called replacement rate of 2.1. This has led to labor shortages, pension fund crises and the obsolescence of old economic models.

Southeast Asia, which has powered global growth as a part of the “Asian Miracle,” is also at a critical juncture. Thailand once had a total fertility rate of more than 6, but it is now 1.53, coming closer to Japan. In 2019, the working-age population began to decline, and the economic growth rate was around 2.4%. That is roughly one-third the 7.5% economic growth the country experienced in the 1970s.

Vietnam, meanwhile, became an aging society in 2017. In January the government began raising the retirement age for men and women [now 60 and 55, respectively], in an effort to head off a pension crisis. It will reach 62 for men by 2028 and 60 for women by 2035.

But the biggest force behind the “degrowth” trend is China. The University of Washington predicts that its population will begin to drop from next year, and that by 2100 it will plummet to 730 million from the current 1.41 billion. By that same year, 23 countries, including Japan, will see their populations shrink to half their current levels or less, according to Christopher Murray, head of the Institute for Health Metrics and Evaluation at the University of Washington, who has focused much of his career on improving global health.

The University of Washington study comes as a corrective to previous estimates that saw the global population continuing to grow through this century. “World Population Prospects” in 2019 estimated that the population is likely to continue to grow, reaching 10.9 billion by 2100. But new projections show the birthrate in developing countries falling faster than expected.

Murray believes global fertility will converge at around 1.5, and likely lower in some countries. “This also means that humanity will eventually disappear in the next hundreds of years,” he said.

The new reality will create new dynamics — already visible in some cases — in areas from monetary policy to pension systems to real estate prices, to the structure of capitalism as a whole. As global population approaches its peak, many governments are increasingly under pressure to rethink their policies, which have so far relied mostly on demographic expansion for their economic growth and geopolitical power.

Getting old before getting rich

Asia’s baby boomers are reaching retirement age, and the population as a whole is growing older, and governments have experienced a rapid increase in social security spending, including for pensions and medical care.

With an over-65 population of more than 21% and a per capita gross domestic product of above $44,000, Japan has become a “super-aged society.” When the working-age population and companies can no longer support the social security system, government funding becomes the only option.

In China, the number of births skyrocketed after the Great Chinese Famine of 1959 to 1961, and the total population increased by about 190 million in the following decade. China’s baby boom generation, which is 1.5 times the size of Japan’s total population, will begin to reach the retirement age of 60 next year. The burden of this mass retirement will fall on a society of the “unwealthy elderly,” who will grow old before they become wealthy.

China faces the prospect of growing old before it becomes wealthy enough to pay for the pensions of the coming wave of elderly retirees. 

“It’s a hard life,” said Chen, 59, who lives in a farming village in China’s eastern Jiangsu Province. He works as a plasterer, building brick houses. Chen suffers from a chronic illness, but with no pension he does not plan on retiring when he turns 60 this year. He stayed in the village instead of moving to a city so he could take care of his parents.

China’s transition to a market economy since the 1980s sent migrant workers streaming to cities. Families in rural areas are increasingly unable to support their elderly relatives. Just over 70% of the population has joined the pension system that was set up in 2009. Its benefits are about 10% the average income of the working-age population. An insurance system for elderly care, like that of Japan, is still in the trial stage…..

For more blogs and articles about immigration and population growth click through below.

Expert Analysis of Australia’s Populist Immigration and Population Growth Obsessions

Demography, Immigration, Population and the Greening of Hate

Population Pyramids, Economics, Ageing, Pensions, Demography and Misunderstanding Data Sets

China PRC – Fertility Decline – Peak Population?

Malthus on Population Growth, Economy, Environment, White Nationalism and Eugenics

Grey Tsunami – Electoral Demographics – Ageing Populations vs. Youth

Population Growth or Decline?

UNPD Global Population Growth Forecasts Debunked

Property – Kylie Sells House in Melbourne – Nominal Profit or Treading Water in Real Terms?

Many view residential detached housing or property as a good investment whether owner occupier or formal investor using tax write offs, but is it really and not more about obsessive PR and promotion in Australian media and social narrative, backed up by sub-optimal financial and data literacy?

SQM Research has presented the sale of Kylie Minogue’s house in Melbourne, see below, and with the data provided one can calculate real value based upon 7% benchmark return.

SQM claim a profit of $1.5 million over 31 years; this is backgrounded by using a 7% interest rate, benchmark or discount rate of required annual value increase to ‘tread water’ i.e. covering all costs such inflation, renovations, maintenance etc. to retain value.  

However, it appears that Ms. Minogue made a modest or no profit in real terms when the purchase price, at 7% compounding or future value, would be $1.5 million….  (without application of a discounted capital gains tax which would take another 17% off the capital gain)?  

Further, with local rental rates for similar property in the area at $700 per week, using 7% benchmark this would equate to real property value, based upon gross annual rental income of $36400 would make $520,000 fair value, but with advertised sale price of $1.7 million and same rental would equate with 2.1%, less than inflation….. Indicates divergence between income and asset values?

This does not preclude Ms. Minogue or new owner/investor using negative gearing to lower the total (other) income tax in Australia, like many high earning professionals do e.g. medical specialists.

Further it shows how much FIRE (finance, insurance and real estate) PR, through consolidated media and social narratives relies upon low financial literacy, religious obsession with property and influencers or high profile people to promote the market.

In tandem with legacy media are several real estate market data and intelligence services e.g. SQM Research which presents as ‘analysis’ using advertised property sales data, property/auction listings, auction clearance rates, rental vacancies, but no clear presentation of historical property sales in real value terms (vs. nominal headline prices) and ignores or avoids the private market.

Most data is collected via state Real Estate Institutes round auctions (change results over days following…) but not private sales,  then relying upon the local subsidiary of US Core Logic which analyses real estate data then presents a patented ‘hedonic index’, described in some circles as ‘subjective’ based upon house options and extras.

Further, a statistical analyst the Quixotic Quant working with quantitative data had issues on statistical analysis of a finance blog MacroBusiness which does some reasonable analysis of property, though obsesses as price drivers immigration, NOM net overseas migration and population growth (as negatives by inflating headlines numbers) using ABS data; along with criticism of Core Logic’s analysis.

Property market analysis leads to spruiking and encouraging buyers through media by presenting not just sub-optimal real estate analysis but also following the same techniques with immigration and population too. 

With closed borders, within the permanent population, older generations passing away and the top end of the baby boomer ‘bubble now’ following i.e. already in or transitioning to retirement, hence downsizing and/or moving, unsure how the property market can tread water for much longer?  Warning…… danger ahead.

Article was posted by SQM from original Domain post:

Kylie Minogue sells Armadale investment property for $1.715 million after buying it for $185,000

‘Kylie Minogue, one of Australia’s highest-selling female artists of all time, has recently sold her Armadale property for $1.715 million. Minogue purchased the 25 Cambridge Street property in 1990 for $185,000, and made a profit of $1.53 million.

Jellis Craig Boroondara director and auctioneer Campbell Ward “would not comment on the quiet February sale of the two-bedroom, Victorian-style property, only saying the vendor had owned the property for some time.” The home has been used as an investment property over the years and has not been lived in by Minogue, even though she grew up in the nearby neighbourhood of Camberwell.

Despite the city enduring six lockdowns since the beginning of last year, “Melbourne’s property market has been running hot.” With homes selling at auction for above reserve prices, Minoque chose to sell the property.

Over the last five years house prices in Armadale have soared by 24.7% and according to Domain data, the median house price is $2.52 million for the inner-city suburb and for a house the median rent is $698 per week.’

For more related blogs and articles clock through below:

Economic Business Risk – Property – Real Estate – Australia – Core Logic

Population Decline and Effects on Taxation, Benefits, Economy and Society

Economic Research – No Negative Relationship with Immigration and Wages, Income or Employment

Many believe immigration can be equated with or blamed for increasing unemployment or low or stagnant wages and income; this question was addressed recently by an article in Inside Story.  However, there is no evidence locally in Australia nor globally in any credible finance, economic or social research, but in fact immigration has a positive effect on the economy.

If this is the case then why does this old nativist or eugenics based trope still exist in social narratives?

Radical right libertarian socio-economic ideology that drives much business, especially large corporate entities for their own benefit, but relying upon right wing parties, with consolidated legacy media and others to develop and shape conservative voter coalitions, in ageing electorates (who can be encouraged to view immigrants with antipathy).

In Europe it’s known as ‘pensioner populism’ for ageing monocultural electorates with a focus on immigration, Muslims, refugees, the ‘great replacement’, white Christian nationalism, terrorism etc. and the same taking locals’ employment opportunities while being dog whistled for lacking languages skills, technical skills, attitude etc.

Australia is similar, reminiscent of white Australia policy agitprop imported from the US via NewsCorp, GOP trained pollsters producing ‘wedge’ issues, Koch think tanks and with the addition of ‘population growth’ for fossil fuels sector to disrupt environmental regulations.

Another issue used to nudge voters away from serious or substantive policies and issues under the guise of US ‘freedom and liberty’ for top corporate players.  This has been achieved or helped by business or economic journalists lacking higher education skills (and resources) to report, investigate and analyse workplace issues well, and further, lacking skills of science or social science research, academic integrity, data or statistics etc. hence, easily gamed to unwittingly promote old tropes dressed up as new rope, or informed ‘research’.   Examples have been the media promoting the idea that not only immigration is bad for wages but superannuation too, being presented as an ‘or’ proposition, possibly by retail banking interests.

From Inside Story:

‘Does immigration mean lower wages?

Despite the popularly held belief, there is no evidence that immigration reduces wages in Australia

Adam Triggs 20 July 2021

The governor of the Reserve Bank of Australia has walked into a minefield. In a speech to the Economic Society of Australia, Philip Lowe pondered why wages growth has been so low despite a tightening labour market. One of the factors that helps explain this phenomenon, he said, is Australia’s relatively high rate of immigration pre-Covid. Several economists were quick to agree with him.

There’s just one small problem with this hypothesis: it’s baseless. Countless studies have looked at the relationship between immigration and wages, and all have reached the same conclusion: that either there is no relationship between immigration and wages, or immigration increases wages rather than reduces them. This raises an awkward question: why are so many economists willing to abandon their own discipline’s research, not to mention their discipline’s mantra of evidence-based policymaking, by making this assertion?

Some economists argue that immigration and wages are related for the same reasons that one in three members of the public believe the same thing: it seems intuitive, is politically convenient, and aligns with the simple model in most people’s heads about how the labour market works. The model goes something like this. Wages are a price that, like any price, is determined by the competing forces of demand and supply. The demand for workers comes from businesses who want to hire people to work, and the supply of workers comes from the people who want to work for those businesses.

This simple model of the labour market would suggest that an increase in demand for workers (with supply unchanged) will push wages up. Conversely, if the supply of workers goes up (with demand unchanged), then wages will go down. Given that immigration increases the supply of workers, this simple model concludes that immigration will mean lower wages.

But is this true? What many economists seem to have forgotten is that developing a theoretical model is only the first step in a proper economic analysis. The next step is to interrogate the data to see if your model is correct. Luckily, countless studies have done just that.

The ANU’s Robert Breunig, Nathan Deutscher and Hang Thi To used immigrant supply changes in skill groups, defined by education and experience, to explore the impact of immigration on the labour market. Controlling for the impact of experience and education on labour market outcomes, they found almost no evidence that immigration harms the labour market outcomes of those born in Australia.

The results from a study by Daniel Crown, Alessandra Faggian and Jonathan Corcoran went further. They found that the skilled visa program in Australia actually increases the wages of those born in Australia, finding no evidence of negative effects on the wages of either high-skilled or low-skilled workers.

Modelling by the Committee for Economic Development of Australia using Australian Bureau of Statistics data confirmed these results. It found that temporary skilled migration has been an overwhelming net positive for the Australian economy, enabling skills shortages to be filled and contributing to the transfer of new knowledge and experience to workers born in Australia.

So, why is it that the simple labour market model in most people’s heads doesn’t stack up in reality? There’s a clue in the adjective: the model is simple. Very simple. Unsurprisingly, it turns out that the labour market in the real world is much more complex than the hypothetical market for widgets taught in high school economics.

Labour demand isn’t homogeneous, and workers aren’t commodities. Labour demand consists of millions of different businesses of different sizes in different industries in different sectors, all of them demanding different workers. Labour supply consists of millions of workers who are infinitely varied in their skills, their qualifications, their experience, their intelligence, their emotional intelligence and their personality, to say nothing of the sorts of jobs they are seeking.

A simple aggregated demand–supply model might work fine when thinking about the price of a commodity with zero product differentiation, but it struggles in markets with lots of product differentiation and complexity — and the labour market has plenty of both.

It gets worse. Even if this simple labour market model were useful for thinking about immigration, those who are using the model aren’t even applying it consistently. The argument that immigration pushes wages down by increasing labour supply only holds if labour demand remains unchanged. This is a bizarre assumption when it comes to immigration because immigrants don’t just add to labour supply, they also add to labour demand. Immigrants use their wages to buy goods and services and do so at the same rate as the broader population.

Immigrants are also more likely to start businesses than people born in Australia, meaning that immigrants increase labour demand both directly (by creating jobs) and indirectly (by increasing demand for goods and services, which stimulates employment).

There is similarly no evidence that immigrants are competing with young Australians for scarce jobs. If immigrants and young Australians were competing, we would expect to see wages declining in those jobs as a result of immigration. The evidence shows this is not the case.

The economists who blame immigrants for low wages seem to have forgotten one of the most basic tenets of macroeconomics: that my spending is your income and your spending is my income. They also forget that, in the long run, wages are determined by productivity — something that research shows is boosted by immigration not reduced by it. This is an unsurprising result. Australia’s skilled migration program brings in more skilled workers, raising the marginal productivity of labour and thus pushing up wages for everyone.

In sum, it’s little wonder these studies contradict the simple labour market model in most people’s heads: the model is flawed in its simplicity, immigration increases both the demand-side and the supply-side of the labour market, and immigration raises productivity — the long-run driver of wages — rather than reduces it. Blaming immigration for low wages may be intuitive or politically convenient, but it’s a baseless proposition.’ 

For blogs and articles related to economics and immigration click through the following.

Expert Analysis of Australia’s Populist Immigration and Population Growth Obsessions.

Adam Smith – Classical Liberal Economics or Conservative Calvinist Christianity or White Christian Nationalism?

Radical Right Libertarian Economics or Social Populism?

Malthus on Population Growth, Economy, Environment, White Nationalism and Eugenics.