The 2011 revolutions - How demography is sweeping away the old order

8 February 2012

“Europe’s steady population growth once spread excess people all over the world. But now Europe is shrinking,” said Jack Goldstone, Hazel Professor of Public Policy and a Fellow of the Mercatus Center at George Mason University.

“For the first time in history, people in rich societies are producing fewer children than required by those societies to survive. These are exciting but uncertain times,” said Goldstone, who has a Ph.D. from Harvard University.

“It also has implications for pensions. Relatively few people used to live beyond their 70s. Now, European societies have more people aged over 60 than under 20,” he said.

“More investment in looking after old people will be necessary. But the problem is, that’s ‘sunk investment’, which doesn’t bring growth,” he warned.

Young and old both have compelling cases to receive government spending, as “both deserve better lives,” Goldstone said.

Meanwhile, recent decades have seen extraordinary population growth in China, India and Brazil, catapulting them into the ranks of major economic powers too, the professor explained.

“In 1980, French GDP was twice that of China’s. China was still largely an impoverished nation. Until recently, the Dutch economy was still bigger than China’s,” Goldstone said.

But China’s rise has seen it eclipse both European nations.

In the middle of last century, Europe’s population was twice that of Africa’s – by the middle of this one, Africa’s will be twice that of Europe’s, he predicted.

“Africa has huge growth potential. The number of potential migrants to Europe is also huge,” Goldstone said.

Europe’s declining population has implications for international security, the professor warned, expressing his concern over European countries’ ongoing commitment to NATO.

He warned that the number of humanitarian crises and conflicts was likely to increase in the next 30 years, making alliances like NATO more important than ever.

“Weak, corrupt regimes will be unable to fulfil the expectations of young and growing populations, for example in North Africa,” Goldstone said.

“Governments can’t promise jobs for all these people, not even for all graduates, because unemployment in North Africa is twice the global average,” he warned.

“Unemployment is even higher among young people, because long-ruling regimes reserve the fruits of the economy for their cronies,” he added.

“Control slips away when legitimacy is challenged by protest. More such movements for change are inevitable,” the professor predicted.

“Demography poses challenges, but doesn’t determine whether populations will solve them. If the turmoil in Syria continues, then we might see a surge of migration to Europe,” Goldstone said.

Moreover, “as Africans become richer, more will want to come to Europe. This is a challenge. But the EU needs growth to retain its prestige and sustain its values,” he said.

“Economic growth is about making the pie bigger. You can either get more people working, or make workers more productive. Europe’s challenge lies in getting more people working,” Goldstone argued.

“Future demand in Europe looks iffy as populations are declining. To keep the pie growing, we need to keep people working and keep them productive. We can’t take the future for granted,” he said.

“Retirement was once seen as disgraceful. Now it’s seen as the reward at the end of the day. But frankly those days are pretty much over and they’re never coming back. Western societies can’t sustain current expectations regarding retirement, because the rest of the world is catching up in terms of innovation and industrial capacity,” Goldstone said.

Europe could respond by boosting female participation in the workforce and individualising retirement ages, the professor suggested.

“It’s a terrible waste of resources to have people retiring before they want to, just like it’s a waste of human potential to have so many young unemployed in Africa,” he lamented.

The professor spoke out against economic protectionism of all kinds.

“Protectionism doesn’t make a society more productive or more dynamic. Cities with migrants are boom towns. The problems faced by cities with migrants are smaller than those faced by cities in structural decline,” Goldstone argued.

“Cities are becoming multiethnic drivers of global change, which is both positive and negative. You see inequality more starkly,” Goldstone said.

“Meeting the demands of the one billion young people growing up today in terms of education and employment will be challenging. But turning away in fear will deny us our next wave of economic growth. Even ageing societies benefit from changing demographics,” he concluded.