Archive for the ‘Economic growth’ category

Economics and birth rates

October 28, 2012

Do religious conservatives actually think before expressing their views on demographics?

I ask, because there seems to a sizeable percentage of religious conservatives who believe that birth rates are inversely related to prosperity.

Certainly birth rates tend to be lower in rich countries than poor countries, but that doesn’t mean they’re lower because of greater economic opportunities.

The recent recession is a strong case in point. According to the logic of religious conservatives, westerners should have been having more children over the last five years since jobs are scarcer and wages are lower, so there’s been more incentive for women to stay at home and have children. But this hasn’t happened. Instead, women in both Europe and North America have had even fewer children, and the modest increase in birth rates that occurred just before the recession has abruptly ended. According to one estimate, at least 20 percent of US adults between 18 and 34  have consciously delayed having children because of the recession.

This is basically the same pattern that occurred in the Great Depression of the 1930s. Birth rates fell significantly during the tough times, and then increased when the economy picked up at the end of WWII. They then continued at a high rate until birth control arrived and the 1970s recession slowed down the economy.

Similarly, birth rates are now also declining in the Middle East, which is struggling with high food prices, and a lack of jobs for young males.

So religious conservatives are wrong – people do have more kids when the economy improves and less when the economy gets worse. It’s also important to bear in mind that just because we live in an affluent age doesn’t mean we live in an age of economic security. Out-sourcing, free markets, and the increased use of temporary labour, may not had reduced prosperity per se, but they have made a lot of people’s work lives much more insecure, and economic insecurity is a big turn off for young people contemplating having children.

Some conservatives cite the high birth rates of immigrants from poor countries as evidence that prosperity reduces birth rates. Newly arrived immigrants from poor countries have lots of babies, so poverty must increase fertility. The difference here is that these immigrants are moving from a poor country to a rich country, so they having rising economic expectations, as well as access to health and welfare services that may be unavailable in their home country. So this line of reasoning doesn’t hold when you’re looking at affluent natives who are facing the depressing prospect of getting poorer.

Education is another overrated factor in birth rates. Sure, university does take up time and money that could otherwise be spent on family formation, but if all the men and women who went to university got high-paying jobs when they graduated, then they would still have plenty of time and money to pay off their debts and raise families, and would have more money with which to do it.

The problem is that education is in many respects a symptom of economic decline – people go to university in the increasingly desperate hope of getting a higher paying job in a competitive job market, only to find there aren’t enough high paying jobs for graduates either.

If education is lowering birth rates, it’s because too many people are getting unmarketable degrees in a weak job market and the combination of being over-educated and underemployed is making it even harder to start a family

I don’t what the best solutions to the West’s population decline are, since population  decline is due to a range of factors that are difficult to untangle, but I’m pretty sure that impoverishing people isn’t one of them.

Another hole in the white privilege argument

June 26, 2012

Over at Oz Conservative, Mark Richardson highlights some fascinating stats on global economic development in an article about whiteness studies.

According to left liberal arguments, the economic success of Europeans has been based on exploiting other parts of the world, a process which began about 1550 with their colonial expansion into America and Asia.

However, there’s a big problem with this argument – Europe started pulling ahead of Asia as early as 1100 AD, 400 years before Europeans started conquering other parts of the world.

From what I’ve read of economic history, a major reason why Europe started to overtake Asia during the Middle Ages was labour scarcity. Europe’s less intensive style of agriculture and factors such as the Black Death meant that labour was a lot more expensive in Europe than Asia, so in Europe there was a much greater incentive to develop labour-saving technology. This is why Europeans in the Middle Ages were focusing more on things like water wheels and windmills and new types of ploughs, while East Asians were inventing more elite-orientated technologies like silk and porcelain.

Technology and jobs

April 5, 2012

Ever since the Luddites were defeated in the 19th Century, we’ve pretty much assumed that technology creates more jobs than it destroys. Through most of the last 150 years technology has led to greater productivity in primary industries which in turn has created greater prosperity and a bigger demand for a wider range of goods and services.

But today the old rules don’t seem to apply. In just about every sector you look at, technology seems to be slashing the demand for labour.

The industrial revolution did liberate people from drudgery without causing mass unemployment, but early machinery was inefficient, unreliable and unintelligent. Most machinery needed constant supervision and maintenance. It often needed to be repaired and many simple finishing tasks still needed to be done by hand.

Now the reliability problems which plagued early factory machinery, motor vehicles and electronics are no longer a big issue. Modern machines can function without problems for long periods of time, and when they do breakdown, they can be repaired more quickly, thanks to diagnostic tools and modulated components.

Technology is also much smarter than it in the past. Machines and computers can be programmed to do a wide range of tasks and often reminds users when they need servicing. A single computer can now handle complex tasks that previously would have required a small army of clerks to complete.

These days just about sphere of economic activity is scientifically organised to run smoothly and efficiently. Vehicle maintenance is divided into a number of sub-specialties, like wheel balancing and tyre fitting, and most tasks can be completed quickly by semi-skilled workers. In the past such tasks were by a skilled mechanic who needed to know all aspects of motor vehicle repair, and rarely had the necessary parts in stock.

In recent times the construction and service industries have soaked up a lot of unemployment created by rising productivity and efficiency in other parts of the economy. But even in these sectors technology is steadily shedding labour.

Automated checkouts are reducing the need for retail staff and librarians. Online websites, ATMs and electronic ticketing are doing away with much of the need for bank clerks, ticket inspectors, travel agents, government clerks, and bricks and physical retail stores and warehouses. Pretty soon you’ll be able to buy a customised car and have it delivered to your door from a national delivery centre without visiting a show room. Construction is more resistant to change since most houses aren’t mass-produced, but CAD programs for architects, tool improvements and low-maintenance fabricated components are steadily reducing labour needs.

The health sector is regarded as a growing area of employment due to the aging population, but as health care becomes less affordable to access, there will be greater pressure to introduce more labour-saving technology to make it more affordable.

Of course, new technology is creating some jobs, but increasingly these are highly skilled jobs which only a small percentage of the population are willing or able to do. So with all this labour-saving technology reducing the total amount of employment in the economy, we need to reconsider how much economic activity we outsource to other countries.

One activity that I don’t think should be out sourced is call centre work. Not only does outsourcing call centre work destroy jobs, but it provides a poor service to the consumer. Discussing technical issues is difficult over the phone at the best of times, but discussing technical problems with people from a different culture who don’t even speak English particularly well is an exercise in mental torture.

Recently in Australia, redundant Westpac call centre staff have been forced to train up Indian workers who are going to replace them. This is not only de-moralising for staff, but from a wider perspective it’s long-term economic suicide.