We’ve Gone from Baby Boom to Bust. There’s No Easy Way Back

From the 1960s to the 1980s, there was panic about global overpopulation. Paul Ehrlich’s The Population Bomb forecast mass starvation, ecological collapse and civilisation’s end. He offered even-odds that England wouldn’t exist by 2000. Policymakers took such warnings seriously. Poorer countries were pressured towards population control through coerced sterilisation, mass contraception and, most notoriously, China’s one-child policy.

Now the panic has flipped: we are on the cusp of a global baby bust. Jesús Fernández-Villaverde, an economist, recently laid out the stark arithmetic, estimating that the world’s total fertility rate (TFR) has probably already slipped below replacement levels. He thinks the UN’s population forecasts are too rosy. Instead of peaking in 2084, global population may top out as early as 2055.

This is truly uncharted economic territory. Since the dawn of capitalism, a growing population has fuelled output: more workers, more ideas, larger markets, more specialisation. Now, falling fertility is turning that demographic tailwind into a strong headwind.

And not just in rich countries. Yes, Britain’s TFR is down to 1.44 and America’s is stuck at 1.60, well below the 2.1 kids needed for replenishing their populations. But TFRs are, remarkably, below one in South Korea and Thailand, and lower than ours across Colombia, Sri Lanka and much of eastern Europe. This isn’t a post-industrial blip. It’s a global trend.

Japan highlights what happens to output. From 1991 to 2019, the country achieved fairly respectable productivity growth. Its GDP per hour worked grew in line with the rest of the G7. But its working-age population shrank. GDP per person thus grew at half the UK’s rate, while headline GDP increased 0.8 per cent per year compared with our 2.1 per cent.

When your labour force shrinks by half a per cent annually, the arithmetic is brutal. It gets harder to service debts. There’s constant budget pressure as elderly welfare becomes harder to fund. The tax base narrows. And as societies age, there’s less appetite for risk, reform or experimentation.

That’s why population issues will become political, if they aren’t already. Reform UK is already pitching its family policies as pro-natalist, after all. Last week the Conservative MP Neil O’Brien highlighted demographic decline as part of a confluence of British challenges. On current birth rates, he said, we might see 55 grandchildren per 100 people alive today, down from 95 if 2010 fertility rates had held. The social impacts of that alone are profound.

Politicians might seek solutions, but there aren’t obvious fixes. Immigration can’t solve the global issue, even if it could ease domestic pressures. In any case, huge migrant flows have become politically toxic, with unclear fiscal benefits depending on who moves here.

What about baby bonuses, tax credits and childcare subsidies to encourage fertility? The global evidence suggests policies can shift births earlier, or nudge fence-sitters into parenthood or having another kid, but come nowhere close to restoring replacement-level fertility. That would require vast money transfers we’d struggle to finance, much of it flowing to people for children they’d have had anyway.

True, maybe technological change will bail us out. Perhaps AI will lead to a surge in productivity growth, easing fiscal pressures. Maybe radical longevity improvements will delay peak population or artificial wombs alter the cost-benefit calculus of having kids. Yet betting on these innovations would be foolish.

From Ehrlich to Elon Musk, we’ve thus gone from panic over population bombs to pleas for more babies. And it’s obvious why: the remorseless compounding effects of low fertility rates could reshape our world. Once you ponder the effects, it really is hard to think about anything else.