The Declining Birth Rate: What to Do?

We Simply Need More Babies to Keep Our Economies Humming

Well, you've heard the news. Average lifespans are falling. They fell again for the second year in a row. We're now only going to live to age 76 years of age, according to the CDC. And the reason for the decline, the pandemic and the opioid crisis. So I guess the message is don't get COVID and don't take opioids (as if life were all that simple).

South Korea has got the worst situation regarding longevity. They have the world's lowest fertility rate. In 1970, women were producing, on average, four and a half babies. Wow. Four and a half children per woman in 1970. Now it's 0.8. The average woman is not producing children. That is a real problem because you need women to produce on average, 2.1 babies in order for the population to sustain itself. This is why the Korean population was growing so dramatically over the past 50 years. But now the Korean population is shrinking because women are having such few number of babies. 2.1 is the magic number. 

What's the number in the United States? 1.7. Our population is shrinking as well as a result of all this, I don't know if you've noticed it. It might be hard to observe. But think about it, schools have fewer students. 

The military in South Korea, for example, is expanding its eligibility requirements because it needs more people into the Korean army. There are fewer working age people. And this is a problem for older people because their pensions are dependent on younger workers putting money into the system. Fewer workers, that's less money going into the system. Lots of old people pulling money out of the system. This is why the pension crisis is a global one, indeed. 

What are some of the strategies that South Korea is using to help offset this incredibly low fertility rate? They're investing in childcare, basically saying to moms and dads, they will help pay for the cost of raising your kid. Something else they're doing: expanding job opportunities for young adults. They argue they're not making enough money to afford children. And along the way, the government wants to make housing more affordable. All of this sounds right, right? This is something we ought to be doing in the US. And I think a lot of people would argue we are doing this in the US. Invest in childcare, expand job opportunities, make housing more affordable. Check, check, check. There's a fourth one, however, that South Korea is doing, which I think would raise eyebrows here in the US. South Korean government officials recognize the need to encourage immigration. 

If we can't get women to have enough babies, let's import them. Well, not babies, but people. And that immigration issue is a hot potato in American politics. So if we can't produce enough people, we're going to have to get them from somewhere. Otherwise our population will shrink and that will create massive stress on our economy, a situation that is being faced by countries all around the world.

This is a mega-trend and you've probably been ignoring it how fast the population is aging. This is because old people are getting older and we're not producing as many babies as we were before. And half of the world's countries birthrates are falling below the replacement rate, as evidenced in the United States and South Korea. This is happening on a pretty much global basis, with only a few exceptions. At the moment, we have more retirees. We also have fewer workers to support them economically, and that's a bad combination. The result of all this, the global pension shortfall is now $106 trillion, three times more than global GDP. Now, there are a lot of beneficiaries, though, from this changing dynamic. It's called the aging boom. Home improvement businesses are booming right now as older folks install handrails, redo their bathrooms, etc. Retirement communities are surging. Life insurance companies are benefiting because you're not dying with a frequency that we all used to. People don't die, the insurance companies don't have to pay off.

By the end of this century, 90% of the world's workers will be coming from Africa and Asia with an emphasis on India, the Philippines, Vietnam and Indonesia. India already has 183 million more people of working age than Germany, France and Canada combined. This is a huge opportunity for immigration, with huge implications for societies worldwide.

By 2030, Gen Z will be the wealthiest generation. For 80% of them, the Internet's older than they are. Their shopping experience is online. It has been their entire lives. They're only going to go to the mall if they have to. They don't use credit cards or cash. They use payment apps like PayPal and Venmo. Also, they don't drive. Half of them don't have driver's licenses. I mean, if your entire life is on your phone, you don't have to go to the mall to meet your friends. 

And for those born in 2016 or later, we haven't even invented 65% of the jobs that they're going to have. Now, you're familiar with blue collar and white collar. What's coming? Green collar jobs related to renewable energy and also gold collar jobs based on technology, space tourism, 3D food printing, Biohackers, 6G quantum computing. All that, by the way, going to lead to nuclear fusion and drug development today. It takes 15 years, tens of thousands of dollars to create a drug. Quantum computing will be able to do it in minutes, virtually free.

We are going to see radical alteration of every aspect of society because of this changing aging demographic population scenario. This, in the meantime, is creating a huge staff shortage in nursing homes worldwide. We have so many old people who need to move into the homes and we have an incredible shortage of workers. So governments are trying to figure this out. The companies are trying to figure this out.

Babies: The Antidote to Loneliness and Lack of Social Interaction

In Japan, there's one solution that they've come up with. They're now hiring at nursing homes, younger people to work. Babies, actually. Well, they've got in nursing homes in Japan, 32 children at one nursing home all under the age of four. The youngest baby worker is two months old. Okay. We're being a little bit tongue in cheek here, but I'm really quite serious. This is what they're doing. What are these little babies and infants doing in a nursing home? And they're getting paid, by the way. They're getting paid to merely spend time with the residents who typically are over the age of 80. The parents bring their kids in and the kids get paid in diapers and baby formula and free photo shoots, and the parents get free meals at a nearby cafe. The residents love the visits. The kids are allowed to roam around the nursing home and the parents help them circulate. The kids decide when they're ready to go home, typically by crying.

And the studies are showing this is really very fascinating. Social interaction reduces loneliness, it delays mental decline, it lowers blood pressure, it reduces the risk of disease and death. So this is a huge benefit for the elderly who are in these nursing homes. And the socializing across generations helps older people smile more, talk more. And for the children, the intergenerational interactions enhance their social and personal development. And all of this improvement for everybody involved is at virtually no cost.

This is the kind of thinking where we're going to have to reimagine how we live, how we work, how we engage because of the changing demographics that are occurring on a global basis. And you need to make sure your investment strategy is focused on the future. The changing demographics are going to be altering the kinds of companies that profit and which of those companies are going to be the most successful. Make sure you're working with a financial advisor who's helping you focus on the future. Make sure your investment strategy is aimed in that way so that you have the portfolio that reflects the future you're going to be living in.