June 13, 2015
Regular readers of the NYT opinion pages must really be wondering what is going on in China. Just a few days ago the paper ran a piece giving us the terrible news that robots are taking all the jobs. According to a column by Martin Ford, China is rapidly bringing robots into its factories, leading to massive displacement of manufacturing workers. Ford tells readers:
“Chinese factory jobs may thus be poised to evaporate at an even faster pace than has been the case in the United States and other developed countries.”
This left us all wondering what China would do with all these workers displaced by robots. But today we discover that China is relaxing its one-child policy, not out of human rights considerations but because it doesn’t have enough people:
“Something had to be done. China’s population has stabilized at around 1.4 billion, but people over 60 now make up more than 13 percent of the population, and the percentage of people 14 years of age and under shrunk at least 6 percent between 2000 and 2010, reaching a new low of 16.4 percent in 2013. The rapid decline of China’s fertility rate — which has plunged to 1.6 percent, way below the 2.1 percent replacement rate — could stunt the country’s future economic growth. The declining working-age population will no longer be able to support the increasingly older Chinese population.”
Let’s contemplate that last sentence for a moment: a declining working-age population won’t be able to support a growing population of retirees. This is the sort of tripe that gets repeated endlessly by the folks who want to cut Social Security. Remember the robots? We don’t need as many workers to support retirees today as we did 20 or 30 years ago because of productivity growth. That has always been true. The robots and other improvements in technology allow each worker to be more productive.
In fact, productivity growth has occurred at an incredibly rapid pace in China over the last three decades so there is no reason that retirees can’t maintain the standard of living they had during their working years while still allowing future generations of workers to experience rapid increases in living standards. The people who can’t understand this fact need to do some more homework in economics before they start writing op-ed columns on the topic.
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