The Predictive Power of Demography
By Jacob L. Shapiro
Summary
Fertility rates below replacement level are widely considered to be detrimental to national power. If such rates are accompanied by an overall population structure in which older people outnumber younger people, what was detrimental becomes an impending catastrophe. These prevalent beliefs would benefit from more critical scrutiny.
That demographics are relevant to a state’s power is not up for debate. Whether an aging population is indicative of future weakness, however, is a question worth considering. In the 20th century, population structure was actually a relatively weak predictor of national power. Germany in 1933 worked itself into a violent hysteria over fears that population decline spelled national decline. Then it nearly conquered Europe. Moreover, predicting the future age and fertility of a population proved almost impossible for most demographic experts of the 20th century. In the 1960s, American demographers feared overpopulation; by the late 1970s they were writing of a baby bust that would last the rest of the century. They were wrong on both counts.
This Deep Dive is a modest first attempt to check assumptions and rethink the issue. We begin by considering the examples of 1933 Germany and 1980 America. Many of the false assumptions about those countries in those years are now being made about China in 2018. We conclude that although demographics provide an important snapshot of a nation’s status, they are not a good predictor of future strength.
Germany, 1933: A Case Study
Since the 1870s, birthrates have declined in all Western nations. Among the many reasons for the slump, three stand out. First, the Industrial Revolution, which enabled a population explosion in the first half of the 19th century, altered the return on investment of having children. Whereas children had been a resource, the industrialization of society made them an economic drain. Second, freed from the rigors of their traditional childbearing role, women entered the workforce in greater numbers. And third, advances in contraceptive technologies significantly increased women’s ability to control their reproductive cycles, and as a result, lowered birthrates. There was a cyclical component to the decline in birthrates as well. The Industrial Revolution had been a time of tremendous economic growth. Such boom periods are usually followed by periods of contraction, and toward the end of the 19th century, the boom was nearing its end. This is hardly an exhaustive picture of the situation, but it was the context in which a newly unified German state emerged in 1871.
Germany was a latecomer to the economic benefits of the Industrial Revolution, but by the end of the 19th century it had made up for its slow start. From 1871 to 1914, its population increased by roughly 27 million, or by about 66 percent. When the Franco-Prussian War broke out in 1870, the military manpower between Germany and France was more or less equal. But by the eve of World War I, Germany’s population of roughly 68 million was over a third larger than France’s. Crucially, when Germany was recruiting soldiers to fight in the Great War, it was drawing from a pool of 7 million men aged 20-24 compared with France’s 4 million. Germany’s population explosion in no small part contributed to its ability to wage war simultaneously against the British, French and Russian empires – and to come close to victory. In the end, it was defeated – at a cost of 2.5 million soldiers and civilians, or some 4 percent of its total population – because of U.S. intervention.
Besides the losses, Germany by the end of the 19th century had already begun to experience declining birthrates, just as the vanguard of the Industrial Revolution had before. Its total fertility rate began to decline in 1883, but at 5.23 children born per woman, and with a relatively higher fertility rate compared with its main European rivals like the United Kingdom (4.62) and France (3.4), Germany still had a population growth advantage. The end of the Great War did not result in an attendant rise in Germany’s birthrate; in fact, it dropped precipitously, from 25.9 births per thousand in 1920 to 14.7 by 1933. Meanwhile, industrialization was sweeping through Eastern Europe and the young Soviet Union, and with it came the same increases in population and productivity that had enabled Germany’s rise.
In 1926, the national statistics office, the Statistisches Reichsamt, published its first study on the German fertility problem. One scenario in the study predicted that, as a result of the casualties during World War I and the long-term decline in fertility, the German population would begin to shrink as early as 1945. Three years later the office revised its projections, estimating a sharper drop in fertility, and therefore in the population. Population decline had thoroughly entered the German zeitgeist. A slew of popular works emerged in the 1930s decrying Germany’s impending demographic doom. The most famous writer on the subject was Friedrich Burgdorfer, whose “Volk ohne Jugend” (“A People Without Youth”) was widely read. Debates over whether to legalize abortion hinged on whether Germany could afford to allow women to abdicate their national duty. France had once feared the Germanization of Europe; now Germany feared “Slavonization.”
The fear of Germany’s demographic decline was part of the dangerous ideological cocktail that Adolf Hitler’s National Socialist German Workers’ Party would take advantage of during its rise to power. Beyond the insecurity over Germany’s inability to reproduce and the paranoia over the threat posed by the Slavic east, a large population was considered crucial to ensuring the national defense. The population’s robustness and virility were seen as key indicators of whether Germany would survive in a world where social Darwinism was widely accepted. In Germany, the increased emphasis on the study of demographics coincided with a focus on race science and eugenics. The Reichstag was set ablaze in February 1933; four months later, the first German census in eight years was published, with special sections on Jews inside the Reich. The quest to correct Germany’s fertility problem became an official Nazi policy and obsession.
It’s not hard to see why Germany was so self-conscious of its population structure. The Great War cut a deep gash into an entire generation, and, except for a few years immediately after the war ended, the base of the German population pyramid was disintegrating. The Nazis wasted little time attacking the issue. Five months after assuming power, Hitler’s government implemented a marriage loan policy, whereby it redistributed income tax revenue to married couples in the form of 1,000-reichsmark loans (in the vicinity of $6,500 in 2018), repayment of which was canceled by one-fourth for every child born. Only couples deemed racially pure enough were entitled to apply for the program – and from 1933 to 1938, 1.1 million marriages were granted. In addition, women were encouraged not to participate in the labor market, and abortion laws were enforced with new thoroughness. The Nazi fertility policies attracted global attention. The American Journal of Sociology wrote in 1940 that Nazi Germany represented “the only case in which deliberate national policies … have increased the fertility of an entire nation.”
But the long-term “damage” to Germany’s population structure could not be erased overnight, or even over five years. Germany’s net reproduction rate was 0.76 in 1933; Nazi policies managed to increase it to 0.95 by 1938 – still below the replacement level of 1.0 and therefore insufficient to stop the imminent shrinkage of the German population. In five years, Germany had managed only to return to the same rates the Statistisches Reichsamt had observed in 1926.
In the end, though, Germany’s declining fertility rate and misshapen population pyramid did not prevent the Nazi regime from building the most formidable war machine Europe had ever seen. It did not stop Germany’s blitzkrieg into Poland or its march into Paris. Certainly it did not hinder Germany from conquering most of continental Europe by 1942. It required the full exertion of the combined populations of the U.S., the Soviet Union and the U.K. to defeat the supposedly demographically challenged Aryan race.
In 1926, Germany was worried that its 55-year-old experiment as a unified nation-state would fail because of its declining fertility rates, its graying population and the influx of Slavs from the east. Not only did this demographic profile not cripple German strength, but it obscured the myriad other factors (especially military might and industrial base) that made Germany the most powerful country in Europe. Furthermore, the widely accepted orthodoxy on the disastrous effects of imminent population decline was not a benign ignorance. The Nazis expertly, malignantly manipulated it to come to power and to solidify domestic support for mass extermination and continental conquest (in addition to the marriage loans). In this sense, the German case study is an example of how an aging population leads not to weakness, but rather to aggression. Instead of a death knell, an accurate prediction of the implications of Germany’s demographic profile in 1926 would have rung alarm bells about the country’s imminent play for global domination.
The United States, 1980: A Case Study
The 1970s were a difficult decade in American history. The Vietnam War came to an ignominious end. The Watergate scandal led to President Richard Nixon’s resignation – and, along with President Lyndon B. Johnson’s Gulf of Tonkin controversy in the previous decade, permanently scarred the institutional legitimacy of the U.S. executive. U.S. national debt almost tripled, from $371 billion at the beginning of the ’70s to $908 billion by the end. War in the Middle East led to high oil prices. Inflation rates hit 14 percent by 1980, while gross domestic product growth rates stagnated. Dissidents and clerics joined forces in Iran to overthrow the U.S.-backed government and kept 52 American diplomats and citizens hostage for over a year. By the end of the decade, a former actor and governor of California who promised to make America great again had won the presidency in a landslide.
Amid the stagflation and insecurity about America’s future, a serious demographic problem reared its head. The year Ronald Reagan was elected, the total fertility rate in the U.S. fell to 1.76. It was a stunning reversal. The fertility rate had reversed its decline in the beginning of the 20th century, rising to 3.58 from 1933 to 1958. These were the baby boomers, and on the back of war reconstruction and consumer demand, the U.S. economy soared and its demographic pyramid looked the Platonic ideal of a healthy population. In the 1960s, the concern was not with the potential for an aging or shrinking population, but with overpopulation. In the late ’60s, numerous books were written about the negative future effects of overpopulation, the most famous of which was Stanford biology professor Paul R. Ehrlich’s “The Population Bomb,” in which the author predicted that 65 million Americans would die in the 1970s from lack of food.
By the end of the 1970s, it was a potential future decline in population, not overpopulation, that most concerned American demographers. In 1979, Population and Development Review published an article titled “Will US Fertility Remain Low?” which concluded that the “baby bust” could last until the end of the 20th century. (Although, to be fair, the authors were unsure enough of their predictive powers that they left open the possibility that the situation might reverse within a year.) The following year, The Sociological Quarterly printed a slightly more pessimistic article: “Will US Fertility Decline Toward Zero?” As in 1930s Germany, there were debates about abortion (Roe v. Wade, the Supreme Court ruling that legalized abortion, came down in 1973) and access to contraceptives. There was also concern over an increase in the divorce rate, which reached its peak in the early 1980s. Doubts surfaced about the future viability of social security for an aging U.S. population.
And, as in Germany in the 1930s, the insecurity of American virility led to fears that the U.S. would be eclipsed on the world stage. Germany had feared the Slavs; the U.S. began to fear the world’s most populous country, China. Unlike Germany, the U.S. did not develop a pseudo-mystical race narrative, nor was it concerned about acquiring land to expand, but its decision to enter a de facto alliance with China against the Soviet Union reflected this worldview. In Nixon’s own words from a speech in July 1971, China was a country with “the capacity” and “the kind of people” to pose a serious challenge to the United States. It was a statement about quantity as much as quality. Nixon believed that a “multipolar” world was emerging and that, despite its failures in Vietnam, the U.S. had to focus its future foreign policy more on Asia, where the world’s most populous states were modernizing and fast catching up with the West. The general feeling was that difficult times lay ahead for the United States – and that sentiment was reflected in U.S. birthrates.
It was a pessimism that, it turns out, was profoundly misplaced. Within 11 years, the Cold War was over. The Soviet Union collapsed on itself, and the United States was the country left standing. U.S. fertility rates improved slightly from their nadir in the 1970s, climbing to 2.08 by 1990. Furthermore, U.S. fertility rates and birthrates since the 1970s have stayed relatively constant, and slightly higher, when compared with those of most developed countries. This is true despite the recent media hysteria over data published by the Centers for Disease Control and Prevention in May. That report concluded that births in the U.S. in 2017 had declined by 2 percent to the lowest number in 30 years and that the general fertility rate was down 3 percent to a record low of 60.2 births per 1,000 women. It seems that any insecure moment in U.S. history is punctuated by both a decline in fertility rates and an accompanying fear that U.S. power has entered a secular decline.
Historical evidence doesn’t bear this out. Demographers, politicians and popular culture all emphasized the aging of the U.S. population as a sign that the U.S. was in decline four decades ago – and a decade before the U.S. emerged as the sole global superpower. If population structure were a primary aspect of a country’s ability to project national power, then the United States should not have gotten where it did in 1990. One could make a case that relative to that of the Soviet Union, the U.S. population structure was far stronger, and that this played a role in the Soviets’ defeat in the Cold War – but that was not the widely accepted argument of the time. Instead, an unhealthy population pyramid, a declining birthrate and an aging population were all seen as reasons not only that the U.S. might lose the Cold War but that there would soon be global parity in terms of economic and military power between the United States and China, Japan and the Soviet Union. The demographic orthodoxy in this case served only to obscure the fact that the U.S. was far from decline. It was in fact on the cusp of unrivaled strength.
China, 2018: An Open Question
Enough about the past; the more important question concerns the future – and there is no more important demographic question about the future than the fate of China. During the 1970s, when most of the world was fretting over population decline, China was concerned primarily with population control. Among the numerous reforms Deng Xiaoping instituted when he succeeded Chairman Mao was the one-child policy. In Mao’s China, a large population was a strength. Indeed, it was something the People’s Republic of China touted to the world. During the opening session of the U.N. World Population Conference in 1974, the leader of the Chinese delegation proudly stated that China’s population had increased 60 percent in 20 years and would soon surpass 800 million. Of course, Mao’s China was not a modern country. Primarily rural and intentionally distant from the global economy, China in 1979 was more like a pre-industrial European country than an emerging behemoth.
Deng had a different vision for China. Where Mao had emphasized self-reliance, Deng emphasized self-enrichment. But he did not have generations to wait. Mao had unified the Chinese people, but if China’s newfound independence was to be preserved, the country had to join the 20th century, and it had to do so as quickly as possible. China’s population was a tremendous asset in this endeavor: Its hundreds of millions of peasants could work for far lower wages than people in competing countries, making China ideally suited for success when it entered the global trading system. But in the long term, if China’s population continued to grow at previous levels, it could threaten the survival of the Communist Party’s rule. After all, industrialization in Western economies was not a linear or universally enjoyed success. The dislocations of industrialization in the 19th and 20th centuries transformed family life, created new wealth inequalities and included periods of busts as well as booms that China could not afford.
China was, in effect, trying to accomplish in a few decades what had taken most Western countries over a century to achieve – and it was trying to do so in a way that ensured extremely low unemployment. Social and political stability was not just a policy goal for the Chinese government – it was an existential challenge. Birthrates and fertility rates declined organically in the West beginning in the latter half of the 19th century as a response to changes in the structure of national economies over the previous 50 years. China did not have time to wait, and so the government began to impose lower birthrates on its population so that it would have fewer mouths to feed and fewer people to employ. The fewer children in China, the more wealth would be available for Chinese adults. The country’s one-child policy, from this perspective, has been overwhelmingly successful. In 1980, Chinese population growth, measured as the crude birthrate minus the crude death rate, had reached 15 per 1,000 people. By 2015, when the one-child rule was lifted countrywide, it had dropped below 5.5 per 1,000 people. Meanwhile, fertility rates have been below replacement level since the early 1990s, bottoming out at just 1.18 in 2010.
The result of this policy, however, has turned China’s population pyramid into a demographer’s worst nightmare. China industrialized faster than any economy in history, but now it is also aging faster than any economy in history. The number of working-age Chinese has been declining since 2013, and the PRC’s own projections suggest the overall population will begin to shrink as early as 2020. This is regularly described in the mainstream press and in academic circles – indeed, even at GPF – as an impending crisis. There is no denying that China, though it has achieved substantial enrichment since 1979, remains a country with hundreds of millions of poor people, many of whom have not enjoyed the success of Chinese coastal elites and for whom future prosperity seems a more dismal prospect today than at any time in the past 39 years. It is not a coincidence that Chairman Xi Jinping is now speaking of “self-reliance” in China once more.
But there is something too simplistic in the argument that China’s aging population consigns it to doom. Such prognostications were not true about Germany in the 1930s or the United States in the 1970s. Nor can it be true that China’s overpopulation in the 1980s was an inevitable crisis and its aging population in 2018 is also an inevitable crisis. Indeed, while China’s population pyramid has become inverted in the past 30 years, its GDP has increased by a factor of 63, from $177 billion to $11.2 trillion. Chinese society has enjoyed these monumental gains more evenly than it would have without the one-child policy, considering that according to at least one expert, the policy prevented the birth of some 400 million Chinese. The Communist Party of China might not still be the ruling power in Beijing if 400 million young Chinese citizens were added to the current combustible economic environment in which the country finds itself. The World Bank’s international poverty line is $1.90 a day, and as of 2015, only 700,000 Chinese citizens fell below the line. Imagine if 400 million more were added to the equation.
This is not to say China’s aging population poses no challenges. The burden of taking care of the increasing number of elderly Chinese will fall on the younger generations. And yet, those generations will likely never want for a job. Worker shortages will be a problem for the Communist Party, not worker surpluses, and they are a problem the party is far better equipped to handle. Technology, immigration, imports and foreign conquests are all potential solutions to help bridge the gap. The more important point is that China is about to embark on a period of its history in which there will be more than enough jobs to go around. The issue will no longer be employing the poor at unprofitable jobs but making sure that Chinese workers are sufficiently trained and prepared for the jobs that will be needed. Considering the accomplishments that China’s centralized, autocratic governing structure has managed, this is not an impossibility. Dictatorship has many flaws, and in the long run is often brittle, but one of its primary advantages is that policy changes like the ones China needs to make can be decided and implemented rapidly, as the one-child policy demonstrated.
In reality, if China’s future is precarious, it’s not because of its aging population. It is because of the high concentration of wealth on the Chinese coast and the transfer of that wealth from the coast to the interior that must happen if a replay of Chinese history – namely, a revolution by the relatively less well-off – is to be avoided. Considering past Chinese history and the center of gravity of China’s problem, a smaller population may be a net benefit. That Chinese families have not entered a baby boom since the repeal of the one-child policy in 2015, rather than an indictment of China’s virility, may be evidence that the country succeeded in modernizing its economy in 36 years and now has the demographic profile of any modern industrialized economy. At the very least, it is not an accurate predictor of China’s national power over the next 20 years.
Demographics are a crucial part of geopolitics, and yet for all their importance it is notoriously difficult to predict their consequences. Despite this difficulty, it has long been asserted that a country with an aging population and a declining fertility rate is destined for national catastrophe. The claim does not hold up to scrutiny. The age and fertility of a population can still offer significant insights into how a state will behave and evolve, but an aging population does not presage in and of itself an imminent decline in national power. The conventional wisdom was wrong about Germany in 1933, and it was wrong about the U.S. in 1980. This should be considered when thinking about China’s future.
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