Adam Smith wrote in The Wealth of Nations, “The most decisive mark of the prosperity of any country is the increase of the number of its inhabitants.”
And if this statement is true, then America is headed for more economic problems. You see, the population increase in America has come to a screeching halt.
According to figures recently released by the U.S. Census Bureau, population growth is crashing. During the last year, it was a depressed 0.71%, or barely 2.3 million people. This is the slowest growth since the Great Depression.
Two factors are slowing our population growth. One is that the baby boom population bubble is starting to deflate. The oldest baby boomers are now approaching 70 and, in the next decade, will see their mortality explode higher.
The other is that immigration is slowing because immigrants can’t find the economic opportunity in the United States that they once did.
This was hammered home to me recently when I learned the story of an enterprising towel boy in Cabo San Lucas. As he presents a towel to his guests, he greets them in flawless English, which he perfected growing up in Los Angeles. Yet he makes more money and tips around the pool in Cabo San Lucas, Mexico than he could from any of a series of jobs he held in his hometown in California.
The Problem With Population Decline
At this point, you may be asking yourself: why should I care when a population decrease will result in less traffic, lower competition for scarce resources, housing, food, etc.?
Well, the reason you should care was summed up by Simon Smith Kuznets, who won the 1971 Nobel Prize in Economic Sciences for his theory of “tested knowledge.”
As Kuznets explained, “More population means more creators and producers, both of goods along established production patterns and of new knowledge and inventions.”
We directly benefit from the products and services created by people, and especially from the energy they direct toward solving the problems of life.
On the other hand, a declining population will exacerbate the problems America already faces. For example, we’re nearing a point where Social Security insolvency becomes intractable. A declining population compounds this problem. If we need 10 workers to reasonably fund one retirement, what do you do when the number of retired workers grows and the number of new workers is in decline?
Our modern welfare state is predicated on a growing population paying the government’s ever-expanding bills. If you don’t grow the population, the growth of government becomes increasingly difficult. And with a declining population, the welfare state becomes unaffordable.
Since the 1970s, American women have aborted over 50 million children; but these lost people were replaced by immigrants. They willingly came to America because our free market system afforded them outstanding opportunities.
However, five-plus years of Obama’s tax and regulation increases have permanently slowed our economic growth engine. The socialism that has replaced the free market doesn’t offer enough opportunity to attract and keep immigrant workers here today.
If Congress doesn’t begin to reverse the Obama policies soon, we’ll never regain our economic leadership. Our population growth, which has slowed to a trickle, will reverse and then begin to shrink with profoundly negative consequences for us all.