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Precipitously declining Western populations will not support growth without greatly increasing immigration, bringing with it huge social change. Ultimately, the growth model itself will have to be reconsidered. By Mike Seccombe.

Immigration essential to replace populations in critical decline

Give me your tired, your poor,

Your huddled masses yearning to breathe free,

The wretched refuse of your teeming shore.

Send these, the homeless, tempest-tost to me,

I lift my lamp beside the golden door!

 

The famous lines, written in 1883 and later engraved on a bronze plaque mounted inside the lower level of the pedestal of the Statue of Liberty, are not much heeded these days, whether in the United States or elsewhere in the developed world.

But when Emma Lazarus wrote them, they celebrated the prevailing liberal world view that freedom to move between nations was, as subsequently declared by the 1889 International Emigration Conference, a “fundamental liberty”.

Around the same time Peter Dodds McCormick extolled the same freedom in the second verse of “Advance Australia Fair”: “For those who’ve come across the seas, we’ve boundless plains to share.”

It was not simply an altruistic notion; it was an economic one. It harked back to the views of the great economist and moral philosopher Adam Smith that labour – people – should move as freely as capital. And until surprisingly recently – only about 100 years ago – people did.

Not now, though. Not in this era of sovereign borders and offshore gulags. These days we turn the tempest-tost around and send them right back where they came from. No one in the developed world believes Adam Smith anymore. Except maybe Angela Merkel.

The German chancellor is prepared to take 800,000, perhaps even a million, of Syria’s displaced. Many of her citizens are reluctant, as are other European governments, that she is pressing to take in hundreds of thousands more.

It is a generous humanitarian move, although it might have been better handled had her government announced that it would take a certain number of people through the United Nations High Commissioner for Refugees system.

But the bigger point is that it was not just humanitarian. It was also economic. It may well be a harbinger of things to come, in which people move much more freely, and developed nations – Australia included – are much more open to accepting the huddled masses of the world, because they provide much needed human capital.

The median age of Germans is 46-and-a-half, and is rapidly increasing. They are neck and neck with the Japanese as the oldest national population in the world – except for Monaco, which is less like a nation than a large retirement home for the elderly rich.

And Germany certainly doesn’t want to emulate Japan, which has been stuck in a state of economic stagnation for the past 25 years. One in four Japanese is over age 65. In 20 years, it will be one in three. Sales of incontinence pads now exceed the sales of nappies. The country is looking to robots to care for the growing number of elderly, for there will not be enough young people to do it. The Japanese population peaked a decade ago and, at current rates, will decline by 25 per cent by 2050 and 60 per cent by the end of this century.

In order for any society to keep its population stable, each woman needs to produce an average of about 2.1 children. Demographers call this statistic – the average number of births per woman – the total fertility rate (TFR). The population of any society with a TFR of below 2.1 for more than a generation will begin to shrink, and will also get older on average, unless its numbers are made up through migration.

Japan’s TFR has been below the replacement level of 2.1 for 40 years, and now stands at 1.4. Germany’s is about the same.

But the Japanese are not keen on migration. Unlike Merkel’s Germany, they take almost no refugees. The xenophobia and low fertility rate of the Japanese could render them extinct in a few more generations. Even with its increased intake of migrants, Germany’s population will decline, but at a more manageable rate.

Japan is the canary in the demographic coalmine. Its present situation is the future Merkel is trying to avoid. Her humanitarian generosity may help Germany at least defer it for a while, but ultimately all of us in the developed, depopulating world will have to address the same problems. In the short term, those will be about integrating a lot of very culturally different people into our societies. In the longer term, it will mean re-engineering entire economies that have been based for centuries on ever more people consuming ever more goods and services.

“Population decline is a whole new era for us,” says James Raymer, professor of demography at the Australian National University.

“All the systems we have designed – house prices, everything – are based on growth. Ultimately it means we’ve got to change these systems, change the whole way we structure our society.”

Developed world fertility rates droppping

We’ll come back to those consequences and adjustments. First let’s just concentrate on the facts of fertility.

Japan is not the lowest. That distinction goes to Singapore, which also fell below replacement fertility in the mid-1970s, and which now has a TFR of 0.81. Another dozen or so nations are also more reluctant breeders than Japan. In all, 119 of 224 world countries – and a majority of the people of the world – are reproducing at below-replacement rates. The tipping point was passed some time in 2011, according to the United Nations.

The UN still thinks it most likely that the world’s population will keep growing until about 2100, topping out at about 10 billion. But other credible projections suggest the peak may be much lower and sooner – eight or nine billion in 20 or 30 years.

It’s hard to predict human behaviour, which is subject to so many influences – educational, economic, environmental, religious, you name it. But the decline in fertility rates has been surprisingly rapid.

As of now, almost all of Europe, most of the Americas, Russia and much of East Asia, including the world’s most populous nation, China, have below-replacement fertility rates. Not all have yet begun to shrink – it takes about 30 years for that to happen. China’s population, for example, will start declining five or 10 years from now, but then will fall by probably about 30 per cent by the end of this century.

This unprecedented demographic shift is happening, too, in unexpected places. At The New York Times, Nick Kristof noted in a column last month that better education and healthcare and a rapid decline in extreme poverty are driving it.

“There’s a well-known path from declining child deaths to declining births, which is why Bangladesh is now down to an average of 2.2 births per woman,” he wrote.

Australia's migrant population ageing

As for Australia, its fertility rate has been below 2.1 since 1976. Earlier this year the Bureau of Statistics published a report noting that for a decade immigration had been “the main driver … of population growth in Australia”.

“The proportion of Australians who were born overseas has hit its highest point in 120 years, with 28 per cent of Australia’s population – 6.6 million people – born overseas,” it said.

That’s an extraordinary proportion – more than twice that of the US and three times that of most of Europe. The fact that Australia has carried it off with so little social friction really does mark it as probably the most successful multicultural nation, as Malcolm Turnbull has recently been saying.

Immigration is what has kept this country growing, but it has not stopped it ageing. Over the past couple of decades the median age of Australians has increased four years, to 37.3. By world standards, we are an old country, among the 30 nations with the highest proportion of people over 65.

The huge numbers of European migrants we encouraged after World War II – the idea was to fill our sparse land with Europeans who might deter an Asian invasion – are old now, at best, as are many of their children. The average age of the 200,000 Italian-born Australians is 68. The German-born average 63. Even the biggest group of all, born in Britain, average 54.

Among Australia’s top 10 source countries, only the Chinese and Indians are younger than the median age of the population as a whole, simply because they are newer arrivals and a faster-growing cohort of the Australian population. There are now some 450,000 Chinese- and 400,000 Indian-born Australian residents, as well as significant numbers coming from other Asian nations, as the ABS noted.

“Of the top 10 countries of birth, the number of Australian residents who were born in India increased the most, almost tripling from just 132,800 people in 2004 to 397,200 people in 2014,” it said.

Arthur Calwell, Australia’s postwar immigration minister, who justified the selective recruitment of white European migrants with the slogan “Populate or perish” and who once declared that “no red-blooded Australian wants to see a chocolate-coloured Australia,” must be spinning in his grave.

But the fact is, European nations can no longer populate themselves, let alone other countries.

Unless the developed countries can find a way to get their citizens to produce more babies again – which, as the Pope and policymakers know, is very hard to do – the first, obvious, solution is to import people from other places.

But, as Raymer points out: “Migration is only a short-term solution. Migrants age, too.”

If you bring them from other countries with similarly low fertility rates, you just end up with a larger ageing population. If you bring them from high-fertility countries, they are less likely to have useful skills, for high fertility correlates with low education and skills.

Says Raymer: “Increasingly there will be competition for skilled labour.”

Africa the new global labour force

In 10 or 15 years, India will pass China as the most populous nation, and while it will continue to grow for several more decades, its fertility rate is falling dramatically, too, from six children per woman 50 years ago to fewer than 2.5 today.

The really spectacular population growth is occurring elsewhere: Pakistan and the other “stans” of central Asia, the Middle East and, most of all, in Africa.

Of the top 40 countries by fertility rate, all but four – Afghanistan, Timor-Leste, Gaza and Iraq – are African. Africa’s population is on track to quadruple by the end of the century. Africa is going to be where the biggest action is in coming decades, because it is the place on Earth with the greatest untapped resources, both natural and human.

The International Monetary Fund, in a 2015 report, makes exactly that point.

“Over the next 20 years, as both infant mortality and fertility rates decline, sub-Saharan Africa will become the main source of new entrants into the global labour force,” it said.

“In fact, by 2035, the number of Africans joining the working age population (ages 15–64) will exceed that from the rest of the world combined. This is a trend with significant ramifications for both the region and the global economy.”

To the extent most of us think about Africa at all, we think of it as a tragic continent. In fact, the rates of economic growth of much of sub-Saharan Africa are much greater than ours. Significant improvements are happening in health and education. No doubt things would improve faster if more help were offered. The Abbott government cut aid to Africa by 70 per cent in the most recent budget. More far-sighted governments, charities and others, though, are investing in the future. The biggest investor and largest trading partner with Africa is China.

The thought that Africa could be the last deep well of skilled labour seems preposterous, perhaps. But who would have thought 20 years ago that the biggest contributor to Australia’s skilled workforce would be India?

The change won’t be easy, as we see in the current European example, for it will necessitate integrating people culturally unlike ourselves.

Right-wing nationalists are on the rise. Even moderates are accusing the Merkel government of going too far, too fast. And the resistance is greater in other countries.

The Hungarian prime minister, Viktor Orbán, for example, was very blunt. Speaking outside the European Union headquarters in Brussels a few weeks back, he said: “I think we have a right to decide we do not want a large number of Muslim people in our country … We can’t guarantee that you will be accepted.”

As if the hastily constructed fence his government has built, as well as strict new asylum provisions, penalties for illegal entry and a plan to close permanent refugee camps, have not already demonstrated his point, he continued: “We Hungarians are full of fear.”

So are others, such as the Catholic hierarchy in Poland. Even if they are less prepared to say it out loud.

Here in Australia, the Abbott government deemed it necessary to stress the fact that our relatively modest response to the Syrian refugee crisis would focus on oppressed minorities, code for non-Muslims.

The reality is, though, that the source countries of most of the current wave of refugees into Europe are mostly Muslim.

The focus of most attention on the European situation has been Syrian refugees. They are mostly Muslim, of course, but they also make up only about 20 per cent of asylum seekers. A more comprehensive breakdown of the numbers shows Kosovo, Afghanistan, Albania, Iraq and north African nations account for most of the rest. Most are Muslim, male (72 per cent), and relatively young (more than half are aged 18-34).

And when one looks at the likely pool of migrants over the coming decades, they will be heavily Muslim, too.

Projections released recently by the Pew Research Centre in the US showed the global Muslim population was likely to increase by 73 per cent by 2050, compared with 2010, from 1.6 to 2.8 billion. Their number would grow twice as fast as world population overall, and by the second half of this century they would outnumber Christians.

“The postwar migration patterns have changed radically,” says social commentator David Chalke. “Because they were essentially white Christians, integration was not all that hard. The difference was language and food basically. Culturally they were relatively similar. The intermarriage rates outside their nationality group were high.”

That is less true for more recent migrants, both Muslim and others, says Chalke.

“People are coming from more culturally distinct countries, with greater cultural prohibitions against out-marriage, for example.”

And they are more geographically concentrated. In Western Sydney, for example, the population grew by 111,000 people in the five years to 2011. Of those, more than 75 per cent – about 85,000 – came from overseas. The biggest source area was south Asia, with 30,000-plus new arrivals from India, Pakistan, Sri Lanka and Bangladesh.

And as they move in, others move out, says Chalke.

“Essentially it’s white flight out of the western suburbs – all the tradies packing the kids into the four-wheel drive, hitching the boat or jet ski on the back and heading up to Queensland. Or down to Victoria or somewhere. It’s the old Aussies leaving.”

Integration challenges

Other demographers are more sanguine. Farhat Yusuf, emeritus professor at Macquarie University, concedes “the current Islamophobia” is making integration more difficult. “But as to whether Muslims tend to remain more distant from the local culture, I can’t say. I don’t think that is the case.”

Yusuf says he tells the various ethnic groups with which he has contact, “your values will only last for one generation, maximum two, then you will be a typical Australian.”

He points to past examples: the Afghans of the 19th century, and more recently Turkish migrants.

Of course there will be cultural tensions, says James Raymer. But there always have been in Australia’s migrant history. Think of the British Protestants and Irish Catholics, then the southern Europeans, and more recently Asians. In any case, integration is not the major issue in the longer term. The big issue is dealing with the consequences of falling birthrates.

“No doubt the world’s population has to decline to be sustainable in the long term,” says Peter McDonald, another professor of demography at the Australian National University and former president of the International Union for the Scientific Study of Population.

“But it has to decline in an orderly way. Countries need to have a birthrate not too far from replacement level, somewhere in the 1.7 to 2.0 area. Once you drop below that, you cause too much damage to your age structure.”

In other words, you have too many old people for the young people to support.

“If the Japanese keep their birthrate where it is they’ll quickly become extinct. For 60,000 years people have been moving around the world. And they will continue to do it.” But, says McDonald: “If you are looking to migration to offset the low fertility rate, you are talking absolutely enormous numbers. Way above any capacity to actually absorb them.”

Ultimately these big demographic changes will mean recasting our whole economic system, which is at base a global Ponzi scheme, based on recruiting ever more consumers.

“We measure success by pretty much one metric – economic growth – the increase in the amount of stuff we make and consume,” says Matt Grudnoff, senior economist for the Australia Institute.

“Well, that is a particularly poor measure of wellbeing. All it measures is market activity. It doesn’t measure depletion of the environment, for example, or how things are distributed within society. The problem will be when population peaks and starts to fall, we will likely see ourselves, by the measure we use now, as failing.”

What happens to the price of real estate, for example, when there are fewer people than dwellings? In Germany, they’ve taken to knocking them down and creating new green space. Or putting refugees in them.

What happens when we need less of all the material things we’ve hitherto laboured to produce more of? What becomes of the people who provide those things? What happens if fertility falls too far, as has already happened in Germany, Japan and 70-odd other countries?

It’s a problem humanity has never faced before and the elderly Japanese and unemployed young of Europe are experiencing the consequences already.

While we can defer it by shifting to a service economy, changing retirement ages, recruiting more women to the workforce, and being more accommodating of the world’s huddled masses, in the end it’s a matter of managing our own decline, by producing just the right number of babies. In the meantime, it will involve accepting a lot more of the migrants who make our politicians nervous.

This article was first published in the print edition of The Saturday Paper on Oct 17, 2015 as "People who need people". Subscribe here.

Mike Seccombe
is The Saturday Paper's national correspondent.