March 31, 2005

Two Quick Points

Two interesting points from Dean Baker's Economic Reporting Review this week. First, about falling birthrates:
There is no plausible scenario in which lower birth rates will reduce human capital in any meaningful sense. At present only a minority of the U.S. population receives a college education and a very small minority gets a post-graduate education. The percentage of the world’s population that receives an advanced education is tiny. It will be easy to get as many skilled workers as necessary by providing higher education to a larger portion of the population, even if the population were to decline substantially from current levels.
Makes sense. I've never quite understood how our lives are supposed to suck in any meaningful sense if birth rates start declining. Assuming we can afford all the pension stuff, which it seems we probably can. Or how about a population decline, which is already expected in a number of countries (Russia, Japan, etc.)? Fewer people on a fixed amount of land means standards of living go up, no?

Well, that, plus all sorts of quality of life indicators go up too—my bus is less crowded in the morning, less congestion, less pollution, more living space. (Come to think of it, in the future, if the population ever did start declining, I would imagine you'd have an influx of people moving into the now-more-attractive cities, the reverse of what you see now, meaning that urban property prices would continue to rise). Plus, more importantly, the labor pool shrinks, so the capital/labor ratio rises, and productivity and wages go up. And crappy jobs go unfilled. Maybe there's something else I haven't thought of... The more serious question, at any rate, is what we can expect the macroeconomic effects of telepathy and flying cars will be. Pretty goddamn massive, I would imagine.
-- Brad Plumer 7:55 PM || ||