We Can't Stop Population Decline

People are having a lot less kids these days. This isn’t a new trend. It’s been happening steadily going down for over a decade. There were 600,000 fewer annual births in 2019 relative to 2007. That’s a 20% drop.

This isn’t just a United States issue. Every developed country is going through the same process. Birth rates are falling below replacement everywhere. Take Brazil for example.

This Twitter account follows this issue pretty extensively. You can see a full list of countries here.

It’s also an obvious phenomenon. Over 50% of people I went to college with aren’t having kids. I can see it around me as my generation ages into their 30s and 40s. Starting a family isn’t the normal thing to do anymore. Obviously many people are still doing it, but a large minority isn’t bothering with it.

Why Is This Happening?

No one really knows why birth rates are dropping so fast. Once a country reaches a certain level of economic development, fertility rates tend to fall below the level needed to maintain the population, 2.1 children per woman.

Many people have theories but if you critically examine them they fall apart.

1) People do not have money for kids. This is usually the first argument people make. But the world today is richer than it has ever been before. In America, large percentages of the population are paying $1k a month just for just car payments.

People had lots of kids when they lived in poor tenement housing.

2. The Government isn’t Providing pro-natal policies. While this maybe is true of America, this is not not correct for other countries. There are a number of countries whose governments have offered cash bonuses, tax breaks, paid leave and other benefits to convince people to have more kids. Almost always, the result is the same: The numbers barely budge. It’s very expensive, and nations aren’t even getting back to replacement level rate of population with births.

• Poland has had a program since 2016 and it’s TFR is still 1.3.

• Hungarian couples will receive $30,000 if they have three more kids. Not many couples have taken up this offer. TFR is 1.5.

• Finland's government has equalized family leave: 7 Months paid time off for each parent. TFR is just 1.3.

• Even a country like Sweden, that gave generous welfare benefits, paid time off and other financial incentives only moved the birth rate up just a little bit. TFR is 1.6.

3) This is happening only in societies that are not religious. Countries like Russia or Poland with more religious christians are having the same problem. Even the Pope is begging Catholics to have more kids. In Islamic countries, the same thing is happening. In Bangladesh TFR fell from 5 to 2 in 20 years. It’s still dropping. In the Islamic Republic of Iran it is below 2.

While it is true that niche religious groups are having more children (Chasids, Amish, etc) than the rest of society, these groups are closed to the public and are not really a model you scale.

4. Women are working and not having kids. Another argument is that women are working and do not have time to have kids. I’m not sure that is the issue either. Take a look at Switzerland. The TFR is 1.4 and

   only 56% of women work full time. Many choose to work only part time while their husband or boyfriend works full time.

No one has a convincing explanation for this phenomenon. But it’s clear that this is going to be the new normal going forward. Some people will have children. Some will only have one child and many others will not have any children. We’re passing through a filter right now.

In This Newsletter

There are a lot of consequences to a world with less children. Many of them known but also many unknown ones. Baby booms and busts have occurred throughout history but this time it feels different. It feels like we’re permanently entering a time where population will shrink. I’ll review a few emerging changes we can kind of already see happening.

1) How does the baby bust influence new construction? What is going to happen to the makeup of neighborhoods?

2) Are People Replacing Kids with Pets? Humans in rich societies today have more pets than ever. Some people say it is replacing kids. Is it true? How does absence of progeny change the way humans emphasize about other issues that they may not if they had kids?

3) Why Do Poor People Love Parenting More Than Rich People? 

Who is New Construction Being Built For?

The market is going to adjust to a world with less children. That means big structural changes are happening. Take real estate for example.

Americans are moving back into the cities. But if you walk around an American city you’ll notice a lack of small children around. You’ll see an environment catering to single urban professionals. This is because.Americans leave cities once they start a family. You can see this reflected in the demographics.

Could this be an understated reason urban professionals choosing to not have kids? Because they enjoy living in a city and a family puts a countdown clock on leaving the city? Maybe.

Real estate is also adapting. Developers are not creating buildings for families anymore in American cities. Demand for studio and one bedroom apartments far outpaces demand for three plus bedroom apartments. In all the cities I’ve lived in, the majority of families renting apartments seem to be people from immigrant communities that are more likely to have traditional family structures. Other than that most people renting apartments tend to be single or childless. In fact you’ll rarely see a family renting a new apartment. Those are built for singles and roommates.

The cost of adding bedrooms is not all that significant that if there was sufficient demand. The market would adjust and they would be building three beds all over the place. The fact is, the nature of how we form households has changed and single and two-person households have become the norm.

Take a look at the floor plans of these new big apartments they are constructing. These are for roommates not for families.

This is in stark contrast to the past. In the early 20th century, rapid urbanization and industrialization were driving people to cities in search of jobs and opportunities, creating an acute need for housing. As cities grew, so did the demand for affordable and conveniently located living spaces. Apartments and urban residential places became the solution for accommodating this new urban population. Apartment buildings were typically designed to house several families in close proximity, making efficient use of limited urban space. These structures often included multiple units within a single building, with shared common areas like hallways and stairwells. This form of housing offered a more affordable option for families, especially those of the working class, and was instrumental in the growth of urban communities.

The design of apartments during this era was usually functional and practical, with a focus on maximizing space for family living.

Are People Replacing Kids with Pets?

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