“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.