Billionaire baby boom

and its implications for the fertility crisis

I generally have strong views on important public policy issues. The recent drop in global fertility rates seems like a major issue. And yet I have a hard time coming up with any useful policy advice on the topic. In this post, I’ll try to explain why.

There are at least three ways of framing the fertility problem:

1. Too little global population growth.

2. Too little population growth in specific countries such as America.

3. Too little population growth of the “right sort of people”.

Given current trends, global population is likely to peak in the late 2000s and then begin declining. Even so, the total population in the year 2100 will likely be higher than it is today. So the world as a whole doesn’t face an acute problem of population decline in the 21st century.

The US population is also likely to continue growing for quite some time, although the rate of growth will depend heavily on immigration policy. In contrast, countries such as Japan and China are already facing population decline, which is likely to accelerate in the near future.

Part 1. Is the problem a lack of money?

I believe the global fall in fertility is mostly caused by a rise in the opportunity cost of raising children. It’s not so much that people are too poor to have large families (the highest birth rates are in the poorest countries), rather that people have found alternative activities that they prefer to raising children.

Those who deny this fact are engaging in wishful thinking. We are frequently told that children are the most important thing in the world. And in a sense they are. But people often behave as if they have higher priorities, such as freedom and the ability to engage in all sorts of fun leisure activities. In addition, high levels of education have led to social liberalism, and less societal pressure to have children. It’s not that people are becoming more selfish, it’s that they are now freer to express their selfishness in a wider range of lifestyles.

When you look at all of the upper middle-class families with only one child (including my own family), and then think about countries like Niger and Mali where the average family has 6 children, it seems absurd to argue that people are having fewer children because they cannot afford large families. On the other hand, there actually is some evidence that falling birth rates are caused by relative poverty. Upper middle-class people are poor relative to billionaires, and billionaire families average more than three kids.

Here’s Bloomberg:

Billionaires’ Baby Boom Has Lessons for Our Bust

If the developed world is turning against having more kids, nobody told the 0.0001%.

And here’s the Financial Times:

The ultimate status symbol? A big family

A flex of uber-wealth in 2025 is multiple children — all the while preserving pre-parenthood lifestyle, interests and physique

Fertility rates seem to follow a sort of U-shape. People in central Africa are too poor to afford very many luxuries, so children become the focus of their lives. Upper middle-class professionals have enough wealth to provide themselves with all sorts of fun activities, but not enough to provide full time caregivers for their children. Billionaires have so much money that they can farm out the difficult parts of raising children to servants, and just do the fun stuff like playing with their kids.

If you compare living standards over time, then you see an interesting shift in consumption patterns. Back in the 1920s, doctors and lawyers and businessmen often had servants, but they had no TV or internet or vacations in Cancun. Entertainment was fishing or reading a book or chatting with family and friends. Today, many professionals don’t have servants, but do have lots of fun things to do. So, it’s not just a question of getting richer; it very much depends on the way that you become richer.

Studies suggest that lifestyle patterns of the very rich eventually tend to filter down to average people. For instance, the most common names for children during any given decade tend to be the names that were popular with rich people 10 or 20 years previously. The middle classes like to emulate the rich.

Will the modern world’s middle classes eventually begin to emulate the billionaires and go back to 3 children per family? That’s hard to say. In the short run, I’m skeptical. But in the long run (say the 22nd century) I believe a baby boom is quite plausible. In any case, a problem that will not become acute until the 22nd century is not worth worrying about today. So much will change by that time that it’s almost impossible to predict how things will play out. In the 1960s, almost no one would have predicted the current panic over low fertility rates.

If my analysis is correct, then the best way to get middle class people to have more children is not to give them more money, it’s to give them more servants. And the only way to make servants widely available to the broad middle class is to create artificial servants.

I’m not as optimistic as many people about the likely rate of future progress in AI. But even under my relatively pessimistic assumptions, it’s almost inconceivable that we won’t have cheap, widely available robot servants by the 22nd century. For that not to occur there would have to be some sort of catastrophic shock to the global economy. So perhaps the fertility problem will resolve itself over time.

Part 2: Who are the “right sort of people”?

Some people on the right are not satisfied with the observation that America’s population will keep rising throughout this century due to immigration. Yes, we’ll have more people (they argue), but not the right sort of people. They often advocate policies such as a $5000 cash bonus given to mothers that produce children, so that we don’t have to rely so much on immigration.

I’m not necessarily against child subsidies (I see good arguments both ways), but I’m very skeptical of this specific nationalist argument for child subsidies. To begin with, not everyone will respond to a $5000 subsidy by having more kids. Who will respond? That’s unclear, except in the tautological sense that the type of person who will respond is the type of person who will have a child if given $5000, and not otherwise.

Now let’s think about the phrase “right sort of people”, and consider two groups:

1. People willing to go through the difficult transition of leaving their homeland and traveling to America to seek a better life.

2. People who think, “I wasn’t planning on having a kid, but if you’re going to offer me $5000 then sure, I’ll pop out a kid.”

You might object that my framing of the second group is sort of offensive. I agree, it is offensive. But this shows the importance of framing effects. It is also offensive to tweet out some horrible crime committed by an immigrant, and then say, “See, we shouldn’t be allowing immigrants to come to our wonderful country.” Especially if immigrants have a lower crime rate than the native born (as in America.)

So, let’s get away from crude emotional appeals, and think about this in a more dispassionate way. It’s fairly obvious that a $5000 child subsidy is not going to induce very many highly paid professionals to have more kids. I’m not even sure if it would have much effect on the birthrates of people in the bottom half of the income distribution—indeed I’d expect the effect to be pretty small. But those advocating child subsidies for the purpose of boosting the birth rate presumably believe they do work. And if they do work, they almost certainly do so by shifting fertility toward the poor.

To be clear, I don’t see higher fertility for the poor as a problem. I am not a fan of eugenics. My point is different. If you are arguing in favor of subsidies to boost domestic fertility as an alternative to immigration because you believe that immigrants are not “the right sort of people” (which seems to be the view of the nationalist right), then you need to think very hard about what it means to be the right sort of person. And on this point, I see a lot of very lazy thinking by people on the right.

Contrary to widespread belief, among the four major ethnic groups the people who have been in America the longest are African-Americans. The second longest is whites. Then you have Hispanics, while Asians have been here for the shortest time, on average. (Yes, a few whites came before the blacks, but the average white person’s ancestors were here for a shorter time than the average African-American’s ancestors. The slave trade ended in 1808.)

Notice that the most long established American ethnic group also happens to be the poorest of the four major groups. (And you could add Native Americans as a fifth group and make the same observation.) In contrast, the most recent immigrants also happen to be our richest ethnic group.

Personally, I like living in Orange County, which is mostly composed of Hispanic and Asian immigrants, or their descendants. Unfortunately, lots of people on the right don’t seem to want more immigrants because their vision of America is like that white upper middle-class family from a 1950s sitcom, say “Father Knows Best”. But that family is probably not going to be induced to have more kids by a $5000 child subsidy. Sorry.

To be clear, there are many good arguments for child subsidies, even if they completely fail to solve our fertility problems. So don’t take this post as a critique of child subsidies. Rather I’m criticizing the view that child subsidies can solve America’s population problems more effectively than immigration. That’s the specific argument that seems very weak. Nor am I arguing that this critique applies to all countries. Perhaps the situation in Japan or South Korea is different; that’s for them to decide.

PS. Almost every single day we see fresh outrages in the news. As noted earlier, I’m subcontracting political commentary to pundits that are more skilled at this sort of thing. This week, Matt Yglesias had an excellent piece on how to think about America’s shift toward authoritarianism.

Over the past decade, Yglesias has become increasing disenchanted with the left as I’ve become more and more disenchanted with the right. Perhaps it’s no surprise that our views are gradually becoming more similar, as we seem to share an approach to politics that is ultimately based on Richard Rorty-style philosophical pragmatism.

Richard Hanania has an excellent piece explaining why the Republican Party has even darker days ahead.

Sorry to end on such a bleak note—now you know why I’ve cut back on political commentary.