Sex and the City: Not an Economics Textbook!
Kay Hymowitz has a very entertaining, if extremely silly, City Journal piece on how self-indulgent, childless women portend the economic collapse of the world. Buy your it-bags now, ladies, because you'll die poor and your single child will hate you:
…you can find her in cities across Europe, Asia, and North America. Seek out the trendy shoe stores in Shanghai, Berlin, Singapore, Seoul, and Dublin, and you'll see crowds of single young females (SYFs) in their twenties and thirties, who spend their hours working their abs and their careers, sipping cocktails, dancing at clubs, and (yawn) talking about relationships. Sex and the City has gone global; the SYF world is now flat…
With fewer children, the labor force shrinks, and so do tax receipts. Europe today has 35 pensioners for every 100 workers, Longman points out. By 2050, those 100 will be responsible for 75 pensioners; in Spain and Italy, the ratio of workers to pensioners will be a disastrous one-to-one. Adding to the economic threat, seniors with few or no children are more likely to look to the state for support than are elderly people with more children. The final irony is that the ambitious, hardworking SYF will have created a world where her children, should she have them, will need to work even harder in order to support her in her golden years.
Yes, demographic changes are hurtling us toward an economically unstable situation. But the constraints on that situation are not natural and God given; they're institutional and malleable. Hymowitz wants to blame empty wombs, but she really ought to blame the policies that render declining fertility rates problematic: paygo entitlement programs and draconian immigration restrictions. Europe has put itself in a difficult position, but the blame doesn't rest with the "SYF"s; it rests with the architects of unsustainable welfare schemes.
Even barring increased levels of immigration, there is nothing about a declining population in itself that entails a decline of average incomes. If workers continue to become more productive, average incomes will rise even if the GDP falls. Yes, the economic pie may shrink, but individual slices will continue to grow.
Also, having fewer people leads to declining markets, and thus less business investment and formation. Where would you want to expand your cosmetics business: Ireland, where the population continues to renew itself, or Japan, where it is imploding?
Good question! Here's another one: Population is growing faster in Nigeria than in South Korea, so where will you expand your cosmetics business? Nigeria is undergoing a population explosion, but, as it turns out, Nigerians are not projected to be leading the world in terms of facial cream consumption. Increases in demand are tied to rising incomes at least as closely as they are to rising population; there are three times as many Indians as Americans, yet Americans consume more than twice as much.
There's a lot of other weirdness going on here, such as Hymowitz's assumption that the Single Young Female is an inherently American phenomenon being reproduced around the world. Hymowitz's stereotype probably best fits young single Japanese women, who spend far more on luxury goods and have fewer children than American women. And indeed, she does a bang-up job of explaining the Japanese disaffection with family formation:
Peggy Orenstein, writing in the New York Times Magazine in 2001, noted that Japanese women find American-style sentimentality about marriage puzzling. Yoko Harruka, a television personality and author of a book called I Won't Get Married—written after she realized that her then-fiancé expected her to quit her career and serve him tea—says that her countrymen propose with lines like, "I want you to cook miso soup for me for the rest of my life."
Surprise! Most Japanese women between 25 and 54 don't want to tie the knot.