A lot took place over the past few years that have the world turned on its ear. Between COVID, war, inflation and incompetent governments, you would think the world is coming to an end. The reality is that very little has changed. In terms of longer trends, they are still on course. If anything, there was an acceleration of what was already in place.
This is important when looking at the economic factors around the world. It is easy to get caught up in short term outlooks. However, if we maintain a broader perspective, we will not be surprised.
What drives most financial activity is demographics. It is unavoidable: people = economic activity. There is no way around it. Lose people and that declines.
Actually, a lot can be explained by the demographics of a country.
Russia Had To Attack
Putin is making a lot of waves with his invasion of Ukraine. The reality is he had very little choice in the matter. Russia is a country without much in the way of geographic defense. In fact, it is so easy to invade that even Canada is able to do it. This shows how vulnerable Russia, as a country is.
Here is the question: are you going to send a bunch of 40 and 50 year old soldiers out to win a war? If that is your situation, it seems that loss is guaranteed.
Therefore, Russia has to make a move now simply due to demographics.
If you expand the Russian demographic chart, you see that there was a baby implosion in the early 1990s. That means that those who are in their 20s, especially males, are smaller in number. The larger parts of the tree were people were people born in the 1980s. They are now between the ages of 30-40. Hence, even waiting a few years was not much of an option.
This is just one example of how world events are often driven by demographics.
What about the Russian economy?
Again, it is not looking very prosperous over the next 20 years. To start, the average life expectancy of a Russian male is very low. This is why the females in their 60s start to outnumber the males, by a wide margin. We also have a big group who are in their mid-50s and up who are going to be gone over the next decade or so.
Of course, the bottom of the tree is what tells the story. Look at how slim it gets. This economy was going to take, sanctions or not. There is no way that such a small workforce can sustain the requirements for the rest of the population.
Therefore, Russia was screwed regardless of what it did with Ukraine.
Germany Is Screwed No Matter What Russia Does
It is interesting to see how Germany finds itself in the middle of some conflict. On one hand it is siding with the West. However, it has to keep doing business with Russia since it is so dependent upon that country for its energy needs. This is even to the point where Boris "The Blowhole" Johnson is tossing out the idea that Germany should be sanctioned.
Whatever the politics of the European continent, is it actually laughable to see the Russia-Germany situation. The latter is just as screwed as the former.
Here is the German demographic tree. Keep in mind this one is 4 years old so the situation is worse now.
Source
German women in their 70s outnumber the ones in their teens. That is how upside that country is.
No matter what the source of energy, or where it comes from, there are going to be a lot less people to use it. This year is the largest the German workforce will be. From here on, it will suffer from a steady decline.
This is not good when a country is an exporter. The reason is that experts are a way to offset decline in demographics. However, since Germany already gets about 50% of its GDP in this manner, it is unlikely they will be able to increase it. This is only compounded by the fact it does not have a trade agreement with the US.
In other words, the Germans are also in for tough times not matter how the short-term events pan out.
Population Cliff Throughout The Developed World
Do a quick demographic search of any of these countries:
- Canada
- Japan
- South Korea
- China
- Italy
- Spain
We see the same story told repeatedly. The challenge is these are some of the largest economies in the world. Over the next 20-30 years, we are going to see major economic contraction in these areas.
In other words, we are going to see Japan 2.0. And 3.0. And 4.0.
It is just going to keep happening. Even in China, they are now facing a medium age of 50 by 2050. This is going to cause major issues with things such as pensions.
As we can see, no matter what takes place, a lot of these countries are headed down a path of major economic contraction. It is simply unavoidable.
Keep this in mind the next time someone spouts off about overpopulation. With China, and perhaps India, leading the way day, we are going to see a massive decline in the number of people on the planet by the end of the century. This will have a host of ramifications, very few of them good.
The demographics tells the story.
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In what you say, it makes a lot of sense since both people, let's say young people under 30 years of age, and the economy have a lot to do with it. For example, Venezuela, the country where I live and I think that in other countries for different reasons the young population travels in search of new opportunities to progress and in some cases help the family, this means that the resident population is older and that means that the economy it sticks much more.
Migration out of a country is certainly another issue. This takes a bad situation and makes it worse. Russia is now seeing that with an estimated 1 million people having left since the start of the situation with Ukraine.
Where this tends to show up is in the brain drain. Often it is the education and skilled who are able to leave.
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I think this will finally end the few decades long dream of the modern welfare state that takes care of everything, takes much of the responsibility from the people for how they live their lives, etc. Most notably this will completely crash pension systems in most of the developed countries, which were dependent on young generations paying for the pesions of the older generations. With the decline and crash of that system I think we will see a domino effect, where all other pieces of modern state will tumble. I think this will be a slow and painful process (that has already started), with a lot of civil unrest. And it’s hard to tell whether the world that will unfold after that will be better than the current one—I am afraid not, and there are hints of that. The parties in power will not easily let go of the power they have, and they will do ANYTHING to try to keep it.
Thanks for an inspiring post!
I think you hit upon a lot of what we can forecast taking place. It is also why the EU, in my opinion, is at the head of the class on all this.
The demographics situation is coupled with major promises that cannot be fulfilled. The banking system is well aware of this, evidenced by the fact that the NY banks will not buy EU debt. It realizes that this is going to collapse.
Civil unrest is going to be a part of it as the younger generations, I expect, will rebel against the higher taxes the older ones will place upon them.
We also will see major economic contractions in these areas.
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Great insights. Population drives economic activity. Less population equals less economic activity. Maybe genetic engineering will help us. If not it'll be a grim situation in the future.
Well there are still countries that are on the way up. However, they are in areas that historically have not done well. So they will have to figure it out, like Africa.
But there are going to be a lot of changes in the years ahead. We can forecast a general trend but hard to decipher how it all exactly plays out.
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The aging economy is quite bad and I have a feeling we will try to rely on robots or technology to solve our labor needs. It makes me wonder if there is anything that can solve the demographics issue.
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Production can be offset with technology, that is true.
However, consumption cannot be replaced. Thus, if you produce it, someone needs to consume it. That means you are dependent more on exports.
Yet if you can use technology to manufacture stuff, odds are the country where you export to also can do the same thing.
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The overpopulation shit was something I once believed in. Thankfully I’ve come to my senses but I also fear for the future of my son and those after that, for what that will mean with automation and eventually weening out people intentionally.
It makes no sense in so many ways that these psychos in their 60’a and 70’s are pushing depopulation. The younger generation is the one keeping you in business you fucks! They are also the ones taking care of you, feeding you, the list goes on. This is certainly asinine.
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Bill Gates is one of the biggest proponents. Yes this is leftover from the 1970s when people believe that, within 10 years, the world would be starving.
The developed world, for the most part, is going to fall off a demographic cliff. As mentioned above, there are towns in Japan and the EU that are basically ghost towns. The idea of overpopulation being a problem is absurd in light of the fact that both China and India, the two most populous countries, are below replacement fertility rates (China way below).
Couple that with the rest of the developed world tanking and you see how the next 40 years will see a massive drop in those areas.
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Musk tweeted out about Japan and its population problem.
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I remember a few articles about how some of the rural towns are now ghost towns. I wonder if this is the future for us.
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Spain has also a lot of ghost towns, the population is just old. And the young ones are going to the large cities… nobody want to be in rural Spain anymore. Most of the European countries have a larger older population. It is spreading.
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The EU is screwed demographically. Most of the countries are fucked when it comes to the population time bomb.
Spain is really screwed because there is the Rolls Royce (forget Cadillac) of pension plans. No way that is sustainable with the population demise that is set to come.
Here is Spain's chart. Very ugly.
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I see what you mean.
Although not much people do have pensions, let alone large or even sustainable ones. And not in Spain alone.
It will be a mess.
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The same thing is happening in Italy and Germany.
We saw a massive push towards urbanization (due to the jobs situation) that rural areas got old. Of course, after people get old, they die. So too are these towns.
In Japan it is called Akiya, which is an abandoned home. Usually it is the result of the homeowner dying and the heirs who live in a city somewhere do nothing about it.
A lot of countries will give people homes if they make a commitment to live there.
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