The term demographic-economic paradox refers to the inverse relationship between economic progress and birth rates. Education and wealth go up at the cost of birth rates. This has been observed in almost all developed and developing nations. Although countries like China and India have government-sponsored programs to restrict their populations, unbiased population metrics from the Western countries and industrialized Asian nations like Japan and South Korea confirm this.
In my economics and civics classes in high school, India's population growth rates were partly attributed to the farming community's labour-intensive trade, in which more children (especially male) meant more farmhands and therefore more revenue. As agriculture declined as a percentage of the GDP, and agricultural income for farming families began to be artificially kept low in India due to the presence of Government intermediaries and established "fair prices," besides the low per capita land holding that has been established, more children began to translate into more cost and much less revenue. India was one of the first countries to encourage family planning. This came to an undesirable extreme in the seventies when Sanjay Gandhi forcefully sterilized, some say up to a million people, in an attempt to control population growth. For an economy growing at a snail's pace of 2 to 3 percent a year from a poor base, more population simply meant fewer resources per capita and therefore a diminished standard of living. After Gandhi's forced sterilization program met with outraged protests and a change of government took place, the family planning program has been far more benign, playing the role of an advisor and encourager.
China has been another aggressive implementer of family planning, imposing stiff penalties on couples who had more than one child. Many have written about social problems and future economic problems that this has posed or will pose. Other measures like prohibition of gender determination have led to fewer female child abortions lately, but the gender imbalance in both these countries remains sharp.
The US has no such government program but has experienced the decline in birth rates that all industrialized countries have. Unlike some other countries, like Sweden and Norway, which experience declining population growth rates, the US has kept up a rate of over 2 percent due to better population replacement rates internally, as well as through immigration. Even so, the US has an aging population which will be supported by the younger citizens in the years to come. This is especially clear in the case of the Social Security funds which are now being propped up by payments made by those still working to cover the retirees. In 20 years there will be a small section of the population (younger taxpayers) supporting a larger group of aged retirees, meaning there will be insufficient funds in Social Security. This is expected to lead to need-based rationing and/or provisioning of funds, as well as a cut in the percentage of per capita allowance of these funds.
India has a rapid GDP growth rate, as high as 7.5 percent in the recessionary 2009-10 years. China too, has not skipped a beat in its blistering growth. However the economic effects of a smaller percentage of younger population are expected to show up in 30 years. This will mean fewer resources to deploy in critical manufacturing and services for export in which these countries have specialized, less availability of specialized labour to meet the growth rates needed to continue growth, a skewed distribution of labour in several fields and of course, the dangers of a gender imbalance. At present the danger of a small cohort of young people supporting the aged does not seem imminent, as the percentage of younger people is quite high in these countries. One-fifth of the total world population under 20 years of age is in India. As they enter the labour force the opportunities and resources are bound to be stretched, but the market that they represent as consumers in an expanding economy will be sizable.
Here is the paradox of population economics in simple terms. The world over, statistics on population remind us that hunger, disease, malnutrition, unemployment, underemployment, exploitation and other ills stalk the majority of the population. Countries that have sought to implement population controls have mostly been socialistic in the past or continue to be so today to some extent. It is easy to understand why. A socialistic view of population regards it as a partaker of the total wealth of the nation. The fewer the people, the better the per capita income. This is true for countries in which the buying power of people is less. When GDP rates remain low, resources get divided again and again, translating into smaller populations. Land is one such resource. But standards of living are based on many other goods than simply the limited natural resources of the world. India and China realized several years ago that their populations are an asset to them in an export-oriented, free trading, outsourcing world. Large teams in India could be deployed very quickly to provide application development services or financial and accounting services, while large masses of the rural population in China could find employment in the manufacturing boom towns on the east coast. In the past 15 years these workers have also increased domestic consumption in these countries, leading to stronger economies that have so far withstood the assault of the global recession. As income rates grew, and national GDP grew consistently over a decade, these countries began thinking along new lines concerning their populations, asking who are the employable people within their population.
Indian companies have had to implement stringent recruiting norms to avoid hiring fewer skilled employees in the face of burgeoning demand. They also began to face skewed labour distributions. Engineers in India wanted to work in IT and less in other fields. In China the long-predicted takeover of the services sector has not happened because they have not been able to train enough people in the English language, despite massive Government initiatives. People want to take the shortest route to wealth and do not toe the party line.
As these populations increase, the countries are looking to educate them better. After all, sustainable economic growth comes from domestic production, domestic consumption and domestic innovation. When the pie is fixed the impetus to share is limited. As the pie grows in size, the partakers realize that more the workers, mean a larger pie. The trick is to ensure better productivity.
This brings us back full circle to the old agricultural paradigm. At one time agriculture was relatively profitable, indeed, it may well have been the oldest profession. As other fields of endeavour eclipsed its position in the economy, its predominance declined and the number of employee/children farm hands also declined. These former farm hands moved on to manufacturing or services where the money was.
If one kept aside the limited resources our world offers, land, water, fossil fuels and others, one must ask the question, are all our population control programs barking up the wrong tree? Sure enough, there are several millions who are not part of the economic growth enjoyed by a section of the population of the emerging nations and the majority of the people in developed countries. If this were considered a reason to continue these programs, one must then ask, is there a real redistribution of resources, education, skill and other essentials needed for a safe, healthy and progressing life that is being shared with the have-nots? Of course there is, but only a trickle. Within the emerging nations, the have-nots are part of the economy. In a trickle-down sense, these people survive from the crumbs that fall from the tables of the haves. Despite the revulsion that this image may conjure up in our minds, the reality is that they are better off than the have-nots in countries that are laggards in this economic rat race.
Putting this question in another way: if economic jump-starts in the emerging nations worked wonders for them, why are the other nations left behind in this race? The reasons are plenty and obvious: lack of political cohesion, a population that is already riddled with horrors of war, AIDS, religious and other strife. It appears that many governments and even some of us may already have classified these people as "unemployable," or worse, "dispensable."
It is my view that population control programs in most parts of the world are predatory measures that are set up to eliminate the unemployables and the dispensables looking for a bigger bite of the pie before them. Perhaps the evil of any economic system is not so much that it exploits the people it employs, but that it leaves out the people it deems unnecessary. Well-meaning leaders could take a leaf out of rehabilitation programs that NGOs implement in areas affected by natural disasters. Their goal is to infuse capital into not just rebuilding homes, but creating sustainable communities of skilled people that can rise up from the ashes of destruction. The direction of capital into future opportunities is the spirit of free enterprise, but it takes visionaries to initiate this into populations deemed the refuse of the earth. Perhaps the failing of capitalism is that it has failed to recognize the ability of people to emancipate themselves and therefore stayed its hand in investing into their future.