The issue of distribution isn't going to go away

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The view that a falling birth rate is a ‘problem’ which needs to be addressed might be being expressed most forcibly by the political ‘right’, but it isn’t confined to that wing, as evidenced by this article last week from Polly Toynbee in the Guardian. Whilst (justifiably) demolishing the arguments of some Reform Ltd figures, she ends up agreeing with the objective (increasing the birth rate) but giving a different rationale.

There is a fringe element amongst those who support increased birth rates which is tinged with both misogyny (men controlling the fertility rate of women) and racism (a belief that the ‘solution’ to the economic drivers of immigration is to produce more native-born workers). Given the roughly twenty-year lead time involved in producing more workers, the latter is economic nonsense, but then racism and xenophobia have never been about logic or economics.

More seriously, the economic case for increasing birth rates revolves around the fact that the ratio of ‘productive’ to ‘unproductive’ adults is changing as the population ages. In an economy built around the assumption that the product of economic activity belongs to those engaged in it rather than to society as a whole, the fact that there is a problem is undeniable. Fewer workers supporting more non-workers – with no other changes to the economic model – will clearly lead to difficulties. Rebalancing the ratio by increasing the supply of people, even if we ignore the 20-year lead time, turns it into something of a Ponzi scheme, in which any increase in life expectancy (generally a good thing) has to be balanced by an increase in population size (not such a good thing in a finite world where resources are already being exploited unsustainably). Another solution, pursued in the UK by governments of both colours, is to reduce the number of non-workers by making people work longer. That would certainly rebalance the ratio and cut the cost of maintaining retirees: fewer pensioners = lower pension costs. But it also makes retirement (and even more so, a lengthy and healthy one) increasingly a privilege for those who have good occupational pensions and are not doing physically demanding work. It’s a ‘solution’, in short, which favours the better-off at the expense of the less well-off.

There is another approach, but it involves a change in paradigm – a shift away from seeing the output of economic activity as belonging only to those actively engaged in economic activity. If, instead, we see the ‘economy’ as being something which belongs to the whole of the society in which it operates, then the question becomes one of how the output of that economic activity is used within that society. A properly functioning society (including the economy which is part of it) needs to meet the needs of all its members – old, young, sick, and disabled members as well as productive workers. The idea that we only need to worry about how big the pie is, rather than how it is shared, has validity only so long as any increase in the size of the pie is both sustainable in terms of its use of finite resources, and equitable in terms of how the extra pie is used. Falling back on ‘growth’ in the abstract – the default position of Labour, Tory, Lib Dem and Reform Ltd politicians alike – is thus no solution at all if, as is the case at present, that growth is not only not sustainable within the resources available, but also the benefits are overwhelmingly captured by a tiny proportion of the population. We cannot simply avoid indefinitely the question of distribution.

How many people is too many?

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Politicians are increasingly worried, it seems, about the low birth rate in the UK – a situation mirrored in many other developed countries. For some of them, there’s an element of racism in the argument: they are concerned that if we don’t have a locally-born workforce, the gaps will be filled by migration. The 20-year plus lead-time on sourcing new employees by increasing the birth rate is a bit of a problem, of course, but one they largely seem inclined to ignore. The other motivation is an economic one – a concern that a falling birth rate coupled with a rising population of older people means that fewer people are working to support more who are not. But the extent to which that is a ‘real’ problem, rather than one based on a particular ideological construct about economics, is a question which largely goes undebated.

There are various theories around about how many planets’ worth of resources would be needed if we were all to live at the standard of, say, the UK in 2025. There are problems with the detail of all of these, dependent as they inevitably are on a series of assumptions and guesses. The basic underlying point, though, is almost certainly true: the resources of the Earth, as currently being utilised, are inadequate to support extending the lifestyle of the richest countries to all humans. Increasing the population will only make that worse, and inequality is the inevitable result. The sort of inequality, in fact, which is one of the biggest drivers of migration.

There is an article on the Guardian’s website by Larry Elliott which challenges the prevailing consensus that a falling birth rate is necessarily a bad thing. It even suggests that a falling birth rate could be a good thing. He sets out some economic theory behind that: whilst a falling population might reduce GDP in total, it could increase GDP per head, a much more useful way of measuring economic performance as it affects individuals. He also suggests that it would require policy changes. I agree, but I’m not sure that changing a few policies such as getting more people into work will be radical enough. We also need to rethink what the economy is and how it works.

Capitalist ideology posits that there are only two productive forces at work in the economy. The most important (and therefore the one to be most handsomely rewarded) is capital itself, and the second is labour (which is what actually creates value). The political parties don’t often put it in such stark terms, but the persistent references to ‘working people’, as though the rest of us don’t count, are more than a minor clue. In such an economic system, those who provide neither capital nor labour – the young, the old, the sick, the disabled – are a ‘burden’ on those who do, who must give up part of ‘their’ wealth or income to support the non-productive.

It isn’t the only way of looking at an economy, however. An economic system is a human construct, not the result of some divine law. From an alternative perspective, the question is not how we maximise the return for those who supply capital and labour, and squeeze the living standards of everyone else to achieve that, but how successful an economy is in serving all members of the society which hosts it. If the output of an economy ‘belongs’ to all, then tax is not an imposition taking money away from those who’ve ‘earned’ it, but a mechanism for sharing and distributing the rewards of economic activity within the society. ‘Tax’ might not even be the best word to describe that. In such a scenario, a change in the age balance of the population doesn’t require a higher birth rate: that’s an answer to the wrong question. The question we need to be asking is how we shape an economy and share the benefits in such a way that it meets the needs of all. Productivity and equity are more important than demographics, but few seem to be asking the right questions based on that.

The problem isn't the birth rate, it's inequality

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It has been calculated that the population of Earth is currently consuming natural resources at a rate which requires 1.7 planets to sustain it; that if everyone lived like the average European we’d need three planets; and that a US lifestyle for all would require the resources of five planets. Now there are many problems with such calculations, because they inevitably depend on a lot of assumptions and estimates. They also hide a multitude of differences within countries as well – not all US citizens live a five-planet lifestyle, and some are probably living a ten planet or more lifestyle.

For the purposes of debate, it’s reasonable to ignore the arithmetical detail of the calculations and concentrate on the key message which is that, given that the natural resources of the Earth are finite, there is an unavoidable relationship between two factors: the size of the population and the lifestyle which that population can sustainably live. To the extent that that circle is currently being squared, the ‘solution’ is in two parts: inequality of access to resources, both between and within countries: some must live in poverty so that others can enjoy a wealthy life; and a willingness to use resources at an excessive rate, thereby denying them to future generations. A situation where many live in poverty isn’t some divinely ordained outcome, it’s a necessary condition for the few to be wealthy. It is inequality of access to resources which largely drives those euphemistically referred to as ‘economic migrants’ to seek to escape poverty by going to where the wealth is or, to use a corollary, the desire of some to hold on to their unfair share of the Earth’s resources is a major driver of population movements.

At a global level, it appears likely that the birth rate will stabilise by the end of the century. It is likely that longer lifespans will mean that the total population continues to grow, albeit slowly, even if the birth rate falls below the replacement level, but that growth will not be universal. Europe’s population, for instance, is projected to start falling by then. Looked at globally, a falling population is probably a good thing overall; whilst a stable, or even falling, population does not in itself address the inequality of access to resources, it does create a better opportunity to adopt a fairer approach. The question, in political terms, is how to respond to a situation where the population of a country is stable or falling but in which the age profile is changing, with the average age increasing. It’s an issue which needs a great deal more discussion than it's currently receiving.

The one thing that we definitely do not need is the sort of response put forward yesterday by Robert Jenrick at the Tory conference, which is to encourage more people to have more children so that there are more younger people to support the continuation of the giant Ponzi scheme which passes for the UK systems for care and pensions. Predicating the whole economic structure on an assumption that if more people live to be older we need to grow the population to support them, and do so indefinitely, may be viable for one country in the short term (although even that viability depends on a willingness to invest in homes, schools, hospitals to support an increasing population, something which his government is noticeably unwilling to do, preferring to blame immigrants for any deficiencies), but is, in global terms and in the long term, utterly irresponsible. The alternative necessarily involves looking at total available resources and how they are shared, both within and between countries. It’s easy to understand why those (like Jenrick and his colleagues) keen to defend and maintain huge disparities in wealth will recoil from such a suggestion. It challenges their whole outlook, to say nothing of their privilege and wealth. But it’s the only way forward in a resource-constrained world, even if it’s going to take some time before enough of us realise that fact.

Maintaining the human stock?

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Population size is one of the hardest questions for politicians to tackle. But using the simple and obvious truth that it is impossible to make unlimited use of limited resources, the relationship between an ever-increasing human population and the impact of humanity of the planet is inescapable. Malthus may have been wrong with his specific prediction two centuries ago that rising population would necessarily lead to famine, but he had a point with the underlying principle.

Just a few days ago, Jake (or ‘Sirjake’ as we should probably now call him) was telling us that the UK needed more babies, and he had done his bit by producing six. It was now time, he said, for younger people to take over and produce more children. We should perhaps be grateful for small mercies – it’s hard to think of much that the world needs less than a few more Rees-Moggs. He probably thinks Boris Johnson has also done his bit by producing eight children (other numbers are, apparently, available). Given his support for the two-child cap on Child Benefit, he presumably wants to limit large families to the wealthiest in society, rather than encourage just anyone to have more children, echoing the concerns of the late Keith Joseph about the breeding proclivities of social classes four and five, which, as a later acolyte put it in even blunter terms, threatens the quality of the ‘human stock’. Quite apart from the racist and exceptionalist undertones, I can’t help thinking that they haven’t really thought this through. Coupled with their aversion to immigration, a population growth imbalance between the poor and the rich means that either the children of the rich have to do the jobs which the poorest are usually expected to do (Sixtus Rees-Mogg and Wilf Johnson flipping burgers or sweeping the roads together for the rest of their lives makes an unlikely picture) or see such jobs go undone. But then, people living very comfortable lives and measuring everything in terms only of its cash value have never been able to understand the real worth of the myriad of tasks performed by ‘the little people’ which are necessary to sustain their comfort.

What we do know is that the wealthiest countries in the world sustain their life style by using more than their fair share of the planet’s resources – and we find the same imbalance within the populations of those countries as well. Whilst there are arguments to be had about the methodology and assumptions used to arrive at the detail of such conclusions, there is no real argument about the basic message: if everyone lived the lifestyle of the richest, the earth’s resources would be depleted instead of sustained for the use of future generations. For those of us who can see that obvious truth, it is clear that continued population growth – particularly amongst the ‘most entitled’ demographic groups – depends on maintaining and increasing inequality and inequity (and that is, of course, core to the political philosophy of the Sirjakes of this world). From their perspective, human aspiration in the many is to be resisted at all costs; people should know their place, and stay there. Comfort and wealth for the few, drudgery and poverty for the many, is the golden thread of their political philosophy – it underpins their attitude to refugees, wages, cost of living pressures, public services and much more. They get away with it by persuading the slightly less poor that the even poorer are the problem, and the extent of their success in doing that was underlined by this article in the Guardian on Tuesday. It should be shocking to realise how many believe that the poorer should not be allowed any luxuries, hobbies, or leisure, as though poverty is entirely their own fault and sufficient to deny them any sort of life outside of their existence as workers. But it actually merely underlines how easy it is for those who control the levers to manipulate opinion and turn us against each other.

Exporting a problem isn't the same as 'solving' it

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One of the problems with referendums is that, in reducing complex questions to very simple ones, they can lead to a situation where there may well be a majority for a particular proposition, but the reasons why that majority voted as they did are many and varied (and, of course, the same applies to the other side).  I don’t doubt that immigration and xenophobia were factors in the EU referendum, but even if most of those opposed to immigration voted to leave, it doesn’t follow that all of those who voted for leave are opposed to immigration.  The government, though, has chosen to behave as though they were, and instead of promoting a reasoned debate around immigration and the reasons for it, has opted to try and implement schemes which appear to be aimed at cutting the numbers.  I say ‘appear’; for all their bluster, I don’t think that people like Johnson are actually convinced that immigration is a problem, nor do I entirely believe that the proposed schemes themselves will reduce numbers – they just want to look as though they are doing something to appeal to that particular group of voters. 

It’s not an enormous surprise to be told this week not only that the EU has never prevented the UK from operating a ‘points-based’ system but also that the UK has actually been operating such a system for years.  Saying it out loud got the chair of the Migration Advisory Committee sacked, but hey, ‘taking back control’.  It’s possible, however, that simply making potential migrants think twice before seeking to come to the UK by increasing the number of bureaucratic hoops which need to be jumped through and tanking the economy will act as deterrents, but that isn’t quite the way that the policy is allegedly intended to work – and those things are likely to deter precisely those that the government says that it wants to attract.  Little will deter those who are simply desperate from trying all means.

I start from the position that, in principle, people should be free to travel, live and work wherever they wish and that it’s for governments to justify why that should exceptionally not be allowed.  (However, it’s clear that many others start from the principle that no-one should be allowed that freedom, and that it is for the individuals themselves to justify why they should be excepted.  The result is that many of those who supported Brexit are not just supporting, but actively demanding, the removal of their own rights.)   But support for the principle isn’t the same thing as arguing either for mass migration or for actively going out and seeking inward migrants.  If, given the freedom, people seek to migrate en masse, we should be looking at why that is the case, and the most usual causes are war, famine, persecution, and economic inequality.  It’s strange, but not really surprising, that most of those opposing mass migration also oppose doing anything about those causes.  Real freedom of movement depends on real equality of opportunity, and there is quite a large overlap between opponents of freedom of movement and opponents of equality.

I’m opposed to the way in which the government is seeking to recruit immigrants selectively to come to the UK, which they do for two reasons.  The first is that we need certain skills in larger numbers than we possess them – doctors, nurses, engineers, and so forth.  And the second is that, with an ageing population, we need more young workers to be paying taxes to support the older members of society.  But both of these point to failures of the economic system under which we live, and my real objection to filling the gap by recruiting migrants is nothing to do with the migrants themselves, it is that we are simply exporting the problem, often to countries which are already poorer than ourselves.  Taking the best-educated, the highest-paid, and the most productive in terms of their working age may solve some of our problems – in the short term at least – but it simply makes other countries’ problems worse.  And that is not good world citizenship.  It is, as Simon Jenkins argued this week, not ethical.

A rich economy which cannot develop the skills it needs amongst its own citizens, and which cannot support its own citizens without continued population growth (either from organic growth or from immigration) is an economy built on sand.  It is not sustainable in the long term, and we need to rethink the way we do things rather than seek to move the problem around.  It was disappointing this week to see the Scottish Government arguing for its own visa system, not on the basis of wanting to be fairer and to implement a different approach, but on the basis of addressing the perceived ‘problem’ of the falling Scottish birth rate.  That’s a ‘problem’ that we need more of, not one to be ‘solved’.  In a world where over-population is a serious and growing problem, a country with a low population density and a falling birth rate has major potential advantages – the question is how to adjust the economy to exploit that opportunity, not see it as a 'problem' to be fixed by moving it somewhere else.

Problems and opportunities

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Last week, one Labour MP told us that we should leave the EU because the shrinking working age population in the Eurozone is a “ticking time bomb” which means that taxation inside the Eurozone will need to rise to pay for an ‘army of retired people’.  She’s right on the demographic issue, that’s undeniable, but what is unclear to me is why anyone would not understand that the UK faces exactly the same issue, or why leaving the EU makes any difference.  It is a simple fact that a falling birth rate coupled with increased longevity will create a problem for any country, including the UK, where the state pension is paid for out of current revenue rather than out of past savings.

Such a pension fund has some similarity with a giant, state-sponsored, Ponzi scheme, where payments to the increasing numbers of pensioners depend on recruiting ever more people to contribute to the scheme.  The logic of that is that maintaining the level of the state pension requires that the population continues to grow (which is, incidentally, one of the ways in which immigration by people of working age brings a net fiscal benefit); that the level of taxes paid by those of working age continues to increase; or that the age at which people can claim their pensions continues to rise.  The real question should be about how we move away from a Ponzi scheme towards a properly funded pensions system, but that would be a major project requiring long term political consensus rather than the regular chopping and changing which characterises UK Government pension policy – under both parties.

The issue of population growth, or lack of, was also referred to in the recent Government Expenditure and Revenue Wales (GERW) report.  The report drew attention to the disparity between the population growth in Wales since 2008, at 2.2%, and that of the UK as a whole, which was 4.5%.  This has a number of impacts for those of us concerned about the fiscal gap in Wales.  A higher proportion of pensioners coupled with a lower proportion of people of working age means both that the demand for public expenditure (on pensions and health) is disproportionately high, whilst the revenue raised from people in employment is disproportionately low (without even considering the wage differential). 

The fiscal problem in Wales is exacerbated by a flow of retirees into Wales and a flow of young people out.  Some claim that we cannot be independent until we have resolved that issue; but I’m in the other camp which is inclined to believe that independence is actually a key part of the solution.

Given the impact of humanity on the planet, and the aspiration for ever-higher material living standards, an overall policy which depends on continual population growth is pure folly.  I’m not alone in believing that the falling birth rate in developed countries is a good thing rather than a bad thing; stabilising the world population is a sensible, not to say necessary, aim.  But much of what passes for economic policy seems to be ignoring the demographic, and implicitly assuming that falling population growth is a temporary problem.  In reality, it’s a long term opportunity, but it requires adaptation.

Tackling inequality, not immigration

Tweet The 19th-century French radical Alexandre Ledru-Rollin probably never said “There go my people. I must find out where they are going, so that I can lead them”.  Many of the best quotes turn out to be less than entirely accurate.  But that doesn’t reduce their value – and in the case of this one it seems a good description of the approach of many contemporary politicians.  The question is not what they believe (even they seem not to know that) but what they think they have to say to get elected.  And in pursuit of that utterly unprincipled aim many of them are prepared to do and say almost anything.

It’s hard to think of a single political issue which better illustrates the point than immigration.  Politicians seem to be falling over themselves to demonstrate that they will be tougher on immigration.  Are they doing it because they believe is right?  I doubt it; it’s more a case of following opinion than of leading at.  But the net effect is to reinforce rather than challenge prejudice.

All of the discussion around immigration seems to start from the perspective that migration is, or should be, a privilege granted only to a few.  And the competition between parties and politicians is about who can keep that number the lowest and set the highest bar for qualification for that privilege.  But what would happen if we stand the principle on its head?  Why not start from the perspective that freedom of movement and residence is not a privilege for a few, but a right for all?  On that basis the the question becomes not to whom the privilege should be granted – which is all the UK’s parties seem able to discuss - but from whom the freedom should be withheld, and on what basis.

There’s a danger of oversimplifying the reasons for migration.  Of course people have different reasons for seeking to move from one country to another, and I wouldn’t want to understate the impact of conflict and famine for instance.  But the one single cause which has the greatest influence on the movement of people is economic inequality; in essence people believe that they can have a better life, a better quality of life, in a country other than their native country.  And responding to that by raising barriers is not only managing the symptoms rather than the cause, it’s also an attempt to embed and perpetuate inequality rather than reduce it.

Freedom of movement as a starting point is hardly populist, although it strikes me that there are plenty of people who, when pressed, believe that they should be free to move and that it’s only other people’s freedom which should be restricted.  But being popular isn’t the same as being honest or principled, and prejudiced opinion can only be changed by challenging it, not by pandering to it.

We live in a world of finite resources.  The world’s population is growing and that population aspires to the living standards of the richest.  There are two possible policy responses to this – the first is to accept that resources need to be shared more fairly, and the second is to create fortresses to protect the haves from the have nots.  Much of the debate about immigration owes more to that second policy position than the first.  But only the first is tenable in the long term.  It is delusional to believe that current levels of inequality can be sustained for the indefinite future, and even more so to believe that it can be sustained by building barriers.