Fewer Kids = Economic Decline

Just a few years ago, overpopulation was the greatest "threat" to humanity. What changed?

Demographics.

That's the stark conclusion from James Stock and Mark Watson in this fascinating, and occasionally depressing, new paper. In fact, they say, the future is now. For the last few years, we've weathered the beginning of what demographers have called the grey tsunami. "Most of the slow recovery [in today's job market] is attributable to a long-term slowdown in trend employment growth," Stock and Watson write.

The authors blame two demographic demons for our uncertain future: (1) the plateau in the female labor force participation rate, and (2) the aging of the U.S. workforce. Their underlying logic is that without continued growth in female workers or a significant boost in population, employment and GDP growth will slow, leaving us vulnerable to recessions with "steeper declines and slower recoveries." In such a future, jobless recoveries will be the only recoveries we know.

Turning to Imports

The BBC is reporting this as being caused by a surge in energy prices, but my sense is that it's simply part of a greater general trend: after decades of running trade surpluses, China will go on an importing spree that will last many years.

Side note: every time I see a prediction that China's demand for raw materials is about to collapse, I wait for something like this right around the corner:

According to the trade figures released over the weekend, crude oil shipments hit a record-high of 5.95m barrels per day. China's imports of copper and iron ore also rose during the month.

One last point: if China really does become a voracious importer, expect the complaints to be almost as loud as the complaints against China's exporting. It's irrational, but you can expect to hear things like "China is driving up prices for everything." Just the exact mirror complaint of "China is selling everything too cheaply for us to compete," but the complainers will never see their own irony.

Africa's Singapore?

Go Rwanda!

Yet Rwanda has one huge advantage: the rule of law. No African country has done more to curb corruption. Ministers have been jailed for it. Transparency International, a watchdog, reckons Rwanda is less graft-ridden than Greece or Italy (though companies owned by the ruling party play an outsized role in the economy). “I have never paid a bribe and I don’t know anyone who has had to pay a bribe,” says Josh Ruxin, one of the owners of Heaven, a restaurant in Kigali, the capital.