Declining birthrates from an Economic and Politcal standpoint can have devastating consequnces in the medium and long terms. If we think about the causes of decline in birthrates, we learn that the primary factors are an increase in national secularization, increase in the percentage of women in a national workforce, a lack of proper incentives to encourage couples to have children, and the availablity of contraceptive technology. If we look at countries like Japan, Italy, Greece, Sweeden, we see all four factors to some degree at work. Japan and Sweeden are highly secular, Greece pays lip service to its orthodox traditions, Italy pays lip service to its catholic roots. All have a higher percentage of women working today than they did thirty years ago. Most of these countries don’t want to address low birth rates or are actively pursuing the wrong policies to deal with it…
On the consequences front we have to remember that the factors that lead to lower birthrates tend to more prevalent in indusitralized nations and therefore exist in countries that have generous public based pension systems or some type of social security. As the percentage of retireees increases in terms of percentage of population, that leaves fewer workers to bear the tax burden necessary to maintain not just the previous level of pension payout, but an increased rate of pension payout since most of these systems are tied to cost of living increases and the sheer volume of retirees in this model has gone up. Of course, when you increase taxes on a smaller number of people, their standard of living decreases which causes two problems. One, they’re less happy and less inclined to work since more of they’re wealth is transfered into the public security net which they do not get to use for an extended period of time which leads them to make one of two choices.
Work more (I.E. less time for baby making) to maintain their previous standard of living, or work less (Further decreasing their standard of living). Now individuals will each make those decisions, but if you’re decreasing your standard of living, you are going to be less inclined to bring children into the world since that would further decrease their standard of living and if you work more, you’re less likely to have children because you don’t have the time to emotionally invest in them (This is particularly true in European countries where we find that couples may actively choose not to have children because they do not feel they can provide the same emotional environment for their children as they had growing up, i.e. the big greek family or italian family)
So this creates a depopulation spiral which can have a circuitous impact over the long term to an economy. Greece right now is burdened by tons of public debt because they can’t afford their existing pension system and have had to borrow for years to try to make it work (that’s part of the story of Greece’s debt, but its an important one)
Politically, particularly in representative democracies, older people tend to be over represented as it is by public interest as they have more resources to spend on lobbying, donating to campaigns, they have more effective interest group integration etc. in large part because they tend to vote in a higher percentage than other voters. Now, what happens to a democracy that becomes even more in tune with the desires of an older population as their percentage of the population increases and their political competition is decreasing? The government becomes even more apt to listen to their concerns and to enact legislation central to the retirees agenda to maintain their political power. So instead of being able to pursue policies which might reign in public pension spending and move towards a system that would be more equitable, they are likely to maintain the status quo or to pursue an agenda of even more wealth transference which amplifies the economic problems listed above.
Maintance of a population is really very important. Even slight population decreases can be dealt with over time if policies are put in place to make this adjustment easier, but that doesn’t tend to happen very often so we see depopulation really causing problems in many industralized nations.
Now for the United States, we have a lower level of secularization than any other devleoped nation, and religious couples tend to have more children than non religious couples. This helps offset some of those impacts. But even with that said, the average births per couple in the United States has continued to drop and now is at around 2.3 children per white couple which is the minimum necessary to maintain a population level, and that number reflects the tendency of reliigious couples to have more children. Where the United States continues to experience significant population growth is in immigration. Particularly hispanic immigrants continue to make up a larger and larger portion of our immigrant population and because they tend to come from less developed nations they tend to have more children, hence the average amount of children per hispanic couple far higher. This of course could have notable sociocultural impacts for the country in the near medium term, but that’s a small lesson on the problems of depopulation.
(Disclosure: My Ph.D. Dissertation in Economics was on the sociopolitical impacts of population effects on constitutional governance and open market policies)