“Demographics in the US are a source of power”

Is there a clear, simple rela­tion between demo­graphy and inter­na­tion­al power?

In the prein­dus­tri­al era, the answer to that ques­tion would be a def­in­ite yes. How­ever, even though today a large pop­u­la­tion seems to remain a neces­sary con­di­tion for being a glob­al play­er, it is far from the only defin­ing factor. Bey­ond head count, we must con­sider human cap­it­al and the com­mer­cial cli­mate to unlock the value of its cap­it­al. Today pro­ductiv­ity per cap­ita var­ies by a factor of 100 between low per­form­ing and high per­form­ing coun­tries, with con­sid­er­able vari­ation from one large coun­try to anoth­er. What defined China’s rise was not so much its pop­u­la­tion growth as its dra­mat­ic increase in urb­an­isa­tion, health, and edu­ca­tion, as well as indus­tri­al­isa­tion and tech­no­lo­gic­al advances.

Demo­graph­ics do mat­ter, though, as we can see from dif­fer­ent pat­terns amongst glob­al powers. Japan, Ger­many, and Rus­sia, for instance, have shrink­ing pop­u­la­tions. In Rus­sia, this decline is doubled by a para­dox: not­with­stand­ing a highly edu­cated pop­u­la­tion, the human cap­it­al is low. Trans­ition from the Soviet sys­tem has proven dif­fi­cult, and a klepto­crat­ic gov­ern­ment doesn’t help. One can infer that pop­u­la­tion decline and aging will be less for­giv­ing there than in Japan and Ger­many, whose soci­et­ies should con­tin­ue to prosper.

Moreover, the ques­tion of geo­pol­it­ic­al per­form­ance is dif­fer­ent: beside the fact that for his­tor­ic­al reas­ons Tokyo and Ber­lin have long giv­en up strong ambi­tions in this area, in demo­crat­ic coun­tries voters don’t favour mil­it­ary spend­ing – and this is even more true in age­ing and shrink­ing soci­et­ies. On the con­trary, demo­graph­ic decline or low human cap­it­al doesn’t seem to affect the desire by author­it­ari­an regimes to show strength on the inter­na­tion­al stage. Take North Korea, for example: its GDP is close to zero, but it man­ages to have an out­sized influ­ence in inter­na­tion­al affairs. The Krem­lin can still play power polit­ics in Europe (argu­ably, only as an out­side play­er in the game). Nev­er­the­less, in the long run its demo­graph­ic poten­tial will decline, and its share of the glob­al edu­cated pop­u­la­tion will decline too. For some time, the coun­try might com­pensate for that with more aggress­ive beha­viour; but it won’t last indefinitely.

China has already replaced Rus­sia as the main chal­lenger to Amer­ica as a super­power. But its pop­u­la­tion is age­ing too. Can its demo­graph­ic situ­ation under­mine its ascension?

China faces a dif­fer­ent situ­ation. First, it is ten times more pop­u­lous than the Rus­si­an Fed­er­a­tion and doesn’t suf­fer from the same human cap­it­al para­dox. After Deng Xiaop­ing, it bene­fit­ted from a strong demo­graph­ic tail­wind, but its demo­graph­ic is now slow­ing down its eco­nom­ic per­form­ance. It is an age­ing soci­ety with a strong imbal­ance between men and women of work­ing age, and where the exten­ded fam­ily net­work is dis­in­teg­rat­ing – all clearly neg­at­ive factors. As such, China’s era of ‘hero­ic eco­nom­ic growth’ is prob­ably over. A 2.5 or 3% growth in GDP over the peri­od ahead is pos­sible, which may seem ter­ri­fy­ingly low from Beijing’s point of view. On the mil­it­ary side, there is an unseen aspect of China’s demo­graph­ic pro­file that should not be under­es­tim­ated: with one-child fam­il­ies, the death of a young sol­dier extin­guishes the fam­ily lin­eage, a tragedy any­where but one freighted even more by meta­phys­ics in the Con­fucian tra­di­tion. I don’t know exactly wheth­er this might affect China’s read­i­ness for mil­it­ary ventures.

Fif­teen years ago, the eco­nom­ist and Nobel prize win­ner Robert Fogel attemp­ted a com­par­is­on between India and China in 2040, and he found that India might win the race (in terms of both GDP and glob­al status). As much as I admire him, I think he has already been proven wrong. Num­bers can be tricky and, in demo­graph­ics as else­where, we must pay atten­tion to dis­par­it­ies and dis­per­sion. India is a com­plex mix of very dif­fer­ent people, eth­ni­cit­ies, and lan­guages; and with­in its pop­u­la­tion there are very dif­fer­ent demo­graph­ic and edu­ca­tion­al pro­files. Under any cir­cum­stances, by 2040 a large frac­tion of India’s pop­u­la­tion will have almost no edu­ca­tion. Its eco­nom­ic poten­tial is lim­ited – the weird situ­ation being that at the same time its strategy in high­er edu­ca­tion was set out as a ‘nation-build­ing’ polit­ic­al success.

China’s situ­ation con­trasts with the US, which still enjoys vig­or­ous nat­ur­al growth and attracts tal­ents from all over the world. Does this dif­fer­ence kill the game?

The US is still the best in class in terms of demo­graph­ics, and as an Amer­ic­an I wouldn’t trade our situ­ation with the EU, Rus­sia, or China. The US demo­graph­ic pro­file (nat­ur­al growth, edu­ca­tion­al level, and qual­i­fied immig­ra­tion) still sup­ports its inter­na­tion­al power. Even with China, it has a com­par­at­ive advant­age. But twenty years from now?

Firstly, what I said about the demo­crat­ic coun­tries’ reluct­ance to engage troops abroad applies to Amer­ica too and might affect its influ­ence. And secondly, as for its demo­graph­ic dynam­ism, there might be trouble in para­dise. It is likely that in 2020 and 2021 the U.S. will see its slow­est years of demo­graph­ic growth ever offi­cially recor­ded. The Cov­id crisis is not the only cul­prit: since the crash of 2008 America’s fer­til­ity rate has fallen to a his­tor­ic low.

There is also the ques­tion of immig­ra­tion: the US has restric­ted immig­ra­tion harshly in the past—from the 1920s through the 1960s—and a reprise unfor­tu­nately is not unima­gin­able. That phe­nomen­on might lead to a pop­u­la­tion peak instead of the con­tinu­ous growth that has been a main factor in the ascent of the US to its cur­rent status of sole super­power. Besides, in the last twenty years we have seen wor­ry­ing stag­na­tion prob­lems in health or edu­ca­tion which, coupled to oth­er dif­fi­culties, might make it dif­fi­cult to unlock its human cap­it­al potential.