Is America in decline?

Low birth rates point to slower economic growth and higher taxes unless policy makers consider demographic issues

The fertility rate in United States has dropped to where population will decline and age (except to the extent offset by immigration). The decline in birth rate is striking with 5.7 million fewer births (compared to 2007 birth rates) from 2007 to 2018.

While population has grown, the rate of growth has fallen and is now pretty well flatlining.

If population remains constant or declines, economic growth suffers, the population ages, and transfer payments to support an aging population rise requiring higher taxes or greater borrowing by governments.

About two to three million deaths occur in the United States each year, so live births or immigration must meet or exceed this level of population declines.

The birth rate has been insufficient to maintain America’s population for over 20 years. Population growth reflects net migration.

Abortion has played a role with about 600,000 to 900,000 births aborted every year since 2007. While the issue of abortion is controversial, from an economics perspective it would make sense to encourage women to have children and enact support programs to ensure they have the resources to raise them.

Regardless of one’s views on abortion as a women’s health issue, it is an economic issue for society as well. In a democracy, policy ultimately reflects what voters want and voters should be informed as to the implications of the policy options political parties promote and try to find a balance between the individual’s health decisions and rights to privacy and the costs to society at large. It is clear that if 100% of pregnancies resulted in abortion society would suffer, to make the extreme case for finding the right balance, and if no pregnancies were aborted many women would suffer or lose their lives as a result. Neither extreme makes any sense but the political debate sets the debate close to the extremes rather than trying to find a balance that protects women’s health, ensures healthy babies have a chance at life, and does not compel economic damage to everyone.

Demographics are a dismal science. Policy makers need to take demographic trends into account since they have little control over population increases or declines, yet the economic outcomes are material. Republicans need to recognize and embrace the need for higher immigration. Democrats need to accept that letting everyone cross the border without appropriate process and screening is harmful. Both parties need to compromise on abortion and women’s health issues.

But they won’t. Under the Democrats, specious claims that CO2 causes climate change will see the administration perpetuate policies that are outright stupid, like the Inflation Reduction Act which will increase inflation and deepen the global shortage of fossil fuels, harming millions. Under a Republican administration, antithesis to immigration will see the population trend worsen and economic decay set in with a decade or two. Tough choices, not much chance of an acceptable outcome.

America is in decline.