Precisely because our demographic future is uncertain, we should be even more careful and consider all scenarios. Many children grow up surrounded by a high number of adults, but with very few children in their family environment. Many regions, especially rural ones, will begin to run into problems in providing basic public goods, such as universities or hospitals, which require certain minimum sizes to operate with reasonable efficiency. The housing market, higher education, and electoral distribution will all be dramatically impacted by these demographic changes.
Author: Jesús Fernández-Villaverde (Jesús Fernández-Villaverde)
For the last three centuries, humanity has been participating in a race in which, on the one hand, it is increasingly difficult to come up with new ideas, but on the other hand, there are more and more of us engaged in research. So far, these two forces have counteracted each other, leading to economic growth. With a falling population, however, we will start to lose the race.
The world’s demographic future is highly unusual. Those younger than age fifty will witness a prolonged decline in the human population. The decline will not be caused by an epidemic or climate change, but rather by the collapse of fertility around the world.
The COVID-19 pandemic provided us with many real-world examples of timeless economic principles.
The only reliable method we have found to aggregate preferences, abilities, and efforts is the free market. Through the price system, it aligns incentives with information revelation. This method is not perfect, and its outcomes are often unsatisfactory. Nevertheless, like democracy, all the other alternatives, including “digital socialism,” are worse.
When it comes to healthcare, economics tells us that we can do better. Distributive justice demands from us that we do better. A judicious combination of market forces, regulation, and transfers can provide us with more efficient healthcare for all, at a cheaper price.