Nancy Folbre is an economics professor at the University of Massachusetts, Amherst. She recently edited and contributed to “For Love and Money: Care Provision in the United States.“

The birth dearth/empty cradle/baby bust is upon us, threatening consequences just as dire as the overpopulation bomb that Paul Ehrlich predicted would cause mass global starvation in the 1970s. The growing percentage of elderly in the population, the root cause of many of our problems, will soon render the United States economically feeble.

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This dire prophecy of underpopulation has gradually made its way from the pages of Foreign Policy to The New York Times and, most recently, The Wall Street Journal. The alarmist fear-mongering is no better founded than Paul Ehrlich’s earlier panic.

Oddly, both sides of the humans-as-bombs debate share certain assumptions. Both seem terrified by the costs of caring for human dependents, whether young or old, describing them as a threat to economic welfare.

Both seem convinced that demography is destiny – that if we just raised the correct number of children, our problems would be solved.

Both typically blame the state for interfering with the relationship between the family and the economy, either subsidizing too many births through public assistance or providing social insurance to the elderly, making them less dependent on their own children for support in old age.

All three assumptions are staggeringly wrong.

Critics of the standard measure of gross domestic product (myself included) have long pointed out that it includes only the value of goods and services purchased in the market. Reducing the dependency “burden” would free time and money to spend on other things. Yet most of us place enormous value on our commitments to family members, friends, neighbors and fellow citizens, whatever their age. Otherwise (my inner economist urges me to add) why would we spend so much time and money on them?

Fertility decline is not some precipitous event. Under way for more than 150 years in the United States and many other parts of the world, it began long before the advent of modern birth-control methods or the so-called welfare state. Potential for young adults to migrate to new areas, along with the growth of wage employment, increased the economic independence of the younger generation and weakened family-based farms and enterprises. The gradual empowerment of women gave them more voice in marriage and family-size decisions.

Recent changes in the average number of births per woman in the United States have been quite modest. As the demographer Philip Cohen points out, the average number of births per woman in the United States declined steeply in the early 1970s, rose in the 1980s and leveled out before heading back down when the 2007 recession hit.

Economic growth, improvements in public health and advances in medical technology, in concert with fertility decline, are increasing the share of elderly in the population. The elderly are more prone to disability than other groups, so this demographic shift will impose costs. But let’s not forget that improved life expectancy represents a huge gain in living standards. How much would you be willing to pay for an extra year of life?

Complaints about the graying of the population sometimes imply an inevitable loss of economic dynamism. But I know of no historical evidence that either the productivity or the creativity of a society is determined by the age structure of its population.

The interaction between demographic and economic change is so much more complex than the simplistic doomsday scenario implies. Some interesting – and not always optimistic – efforts to grapple with it can be found in an open-access special issue of Population and Development Review, recently published by the Population Council in honor of its retiring editor, Paul Demeny.

In retrospect, Mr. Demeny stands out as one of the first demographers to consider seriously the problems that below-replacement fertility poses for the sustainability of public and private pension systems. This is a far more specific and, in my view, more realistic concern than the others described above. It calls attention to the need to rethink some fundamental institutional arrangements that shape the distribution of the costs of caring for dependents.

Several articles in the special issue, including one I wrote with Douglas Wolf of Syracuse University, “The Intergenerational Welfare State,” point out that modern social-insurance systems have socialized some benefits of child-rearing by taxing the younger generation to help support the older one.

As I’ve pointed out in previous posts, both employers and those who devote relatively few resources to raising children are able to indirectly capture some future benefits from the labor power that committed parents nurture.

Yet public support for parents compensates them for only a small share of the costs they incur and outmoded institutional arrangements make it difficult for them to easily combine wage employment with care provision.

The uneven and partial socialization of family costs is probably not a major factor driving fertility decline, which unfolded in many countries – including India and South Korea – long before the establishment of public pensions.

In the absence of those pensions, individuals might choose to invest in private annuities for support in old age rather than in raising children, whose ability and willingness to help parents in old age would remain difficult to determine even if parents were given a strong legal claim on their earnings, as Mr. Demeny and others have proposed.

Regardless of its possible impact on family size decisions, the current distribution of the costs of children seems conspicuously unfair to parents, with particularly negative consequences for single mothers, whose access to good jobs and public retirement benefits remains limited.

Jonathan Last, in The Wall Street Journal, concludes his article on “America’s Baby Bust” with a simple plea for more babies. I conclude with a plea for public policies that could help parents raise healthier, happier children into ever more productive adults.

Article source: http://economix.blogs.nytimes.com/2013/02/11/the-underpopulation-bomb/?partner=rss&emc=rss