The Washington Post is apparently concerned that there are not enough real problems in the world so it decided to invent one of its own, telling readers that a "looming population crisis" is forcing China to rethink its one-child policy. What reads the article in vein for anything resembling evidence of a population crisis. At one point the Post tells readers that: "the number of residents 60 and older is predicted to explode from 16.7 percent of the population in 2020 to 31.1 percent by 2050. That is far above the global average of about 20 percent." This cries out for the obvious "so?" Later the piece tells quotes the director of a Chinese population and family planning commission as saying: "Shanghai is about to be 'as old -- not as rich, though -- as developed countries such as Japan and Sweden.'" This would be a big problem if the elderly in Shanghai had the same living standards as the elderly in Japan and Sweden. But guess what, they don't. The relevant issue is how well the elderly can be supported relative to their living standards during their working lives. Because China has had extraordinary per capita GDP growth (more than 8 percent annually over the last decade), it is possible for both the working age population and the elderly population to enjoy sharply higher standards of living, even if the ratio of retirees to workers rises sharply. For example, if the rate of per capita GDP growth slows sharply to an average of 5 percent over the next 40 years, then per capita income in China will be more than 7 times higher that it is today. This means that if we taxed workers 30 percent of their wages to support retirees, then they would still have an after-tax income that is more than 5 times higher than it is today (assuming that there is no tax today). This would also allow retirees in 2050 to enjoy living standards that are several times higher than workers in China enjoy today. What exactly is supposed to be the problem? The article also warns about labor shortages. It would be interesting to know what it means by this. There are no labor shortages in market economies, just rising wages. Employers may not like to see wages rise, but then the Post is just concerned that profit shares of income can fall. That is bad news for owners of capital, but it is very good news for the overwhelming majority of the population. Also, if the Post had heard of global warming it almost certainly would not have printed this piece. If China had not taken steps in the 70s to curb its population growth then there would be no point in the current meetings in Copenhagen. If China had 2 billion people today, the probability of curtailing greenhouse gas emissions at levels that prevented serious harm to the planet would be virtually zero, so there would be no point in discussing the issue. It is remarkable that the Post somehow failed to notice the connection.
--Dean Baker
