The Flying Frisby
The Flying Frisby - money, markets and more
Demographics, Destiny and Decline. Oh, and Dumb Economic Models

Demographics, Destiny and Decline. Oh, and Dumb Economic Models

Yet more reasons to ignore experts. Your Sunday morning thought piece.

Back in 2011, a landmark study by the United Nations Population Fund warned that the global population would reach 15 billion by the end of the century, “putting a catastrophic strain on the planet's resources unless urgent action is taken to curb growth rates.”

Cue lots of subsidies, initiatives, hand-wringing, wasted money, damaging narratives, damaging policy, and articles in the Guardian.

Here we are today, and suddenly the issue is population decline. By 2100, 97% of the world’s countries will have a shrinking population, according to a study published in The Lancet, leading to “staggering social change”. The Telegraph followed with a ludicrously sensationalist headline: "World population to fall for the first time since the Black Death."

Cue, no doubt, lots more subsidies, initiatives, hand-wringing, wasted money, damaging narratives, damaging policy, though, perhaps not so many articles in the Guardian. The last thing that publication wants is westerners reproducing. Not white ones, anyway.

The problem is economic modelling. It is wrong as often as it is right. Tossing a coin or consulting a psychic is just as reliable. Economic models commonly rely on extrapolating trends, which can work for a bit - trend-following is a highly effective investment strategy, after all - but they are largely based on the assumption that current conditions will persist, when they usually don’t, particularly when projecting decades out. Something unforeseen happens, such as lots of people making decisions an economist didn’t expect, and this changes everything.

Yet such flawed models, even though nothing more than projections that only carry more weight than Mystic Meg because they were delivered on a spreadsheet by a bloke with a PhD, become the basis for huge and expensive decisions by policymakers. We have seen it with climate change, with Covid, with economic policy, and with anything the OBR touches. The consequences are sometimes really harmful to people: lockdown policy being the most obvious recent example. It was based on flawed data and it was deeply destructive. Net Zero is the next one. Everyone can see it, yet still policy-makers persist.

I was, broadly speaking, persuaded in the early 00s by the arguments that population growth was inevitable. I am less persuaded by the idea that we will now see population decline, though perhaps I shouldn’t be. Fertility rates are coming down: globally, between 1950 and 2021, they fell by more than half: from 4.8 children to 2.2 - and there is not a nation where they haven’t fallen. Annual global births peaked at 142 million in 2016, falling to 129 million by 2021.

But whatever. Nobody knows what’s going to happen. There could be a nuclear war and the population might sink below a billion. Global planning laws could be eased, just as the world abandons fiat money for gold and bitcoin, with the result that house prices come down, just as people realize that seed oils, processed food, and tap water have all been making them infertile, and, as a result, we suddenly get a population boom.

So much of this is economic. In Developing Countries, people tend to have fewer children as they get richer and live longer. Irony of ironies, in the richer, Developed World, the main reason people have fewer children is that they can’t afford them.

Italians, being Catholic, are associated with large families and lots of brothers, sisters and cousins. But when Elon Musk, himself a prolific reproducer, observed yesterday that Italian birth rates hit their lowest level since the country was unified in 1861, he got this reply:

The main reason people are not reproducing is expense. What is the biggest expense in your life? Your government. It takes roughly 50% of everything you will ever earn. The next biggest expense is a house, something few can afford. With less government and cheaper housing, westerners would pretty quickly start reproducing again. What government is going to stand for less of itself and cheaper houses? Not one that I can see, except maybe in Argentina.

The idea that government is going to fix a problem of its own creation. Please. It will only make it worse.


I do know that stuff often happens for reasons we can’t explain, so the last thing we want is the planners meddling, especially with something as significant as this, when their models are so flawed.

It doesn’t matter if the global population goes up or down; human beings will find a way of coping. We always do. The last thing we need is more government intervention based on spurious data.

So what if growth falls? GDP growth is a bogus measure, anyway. Dimwitted, short-sighted obsession with GDP has been one of the major reasons mass immigration has gone so unchecked, if not encouraged, with such terrible consequences to local culture, history, and tradition, never mind locals’ opportunity and earnings.

GDP focuses on quantity not quality. It neglects individual quality of life. It ignores income and wealth distribution. It ignores unaffordable housing and high levels of taxation (if anything high house prices are seen as a good thing). It creates societies based around spending and consumption, rather than making stuff and saving. It incentivises government activity - please, no more intervention - and short-termism. There are other better measures. Or, better still, take the John James Cowperthwaite positive non-intervention route1 and ban the Office of National Statistics altogether.

The Returning Soldier Effect.

After World War One - itself a monumental government cock-up - which saw the death of countless young men across Europe, the number of boys born relative to girls increased. It happened after World War Two as well. This phenomenon has been noticed so many times after wars that it now has its own name: the Returning Soldier Effect.

All sorts of explanations have been posited, ranging from changing female hormones during wartime to divine intervention to a surprisingly persuasive argument that "taller soldiers are more likely to survive battle and that taller parents are more likely to have sons".

On the other hand, it could just be Mother Nature. There is plenty that Mother Nature gets up to that we don’t even notice, let alone find a credible and proven explanation for. Yet she determines much of what we do, without us even realising it.

Our instincts come from Mother Nature. Our first instinct is survival: to find water, food, and shelter, for ourselves and then those close to us. Next is the survival of the species: the urge to have sex and reproduce with the best possible mate. These instincts come before nice houses, cars, and clothes. But even the urge for those derives from a need for safety and to make ourselves look more desirable to a potential mate - aka Mother Nature. We are animals.

At the birth of my children, I came away with the thought that a woman is nature’s vessel, subservient to the species as a whole.

So back to population levels: it really would not surprise me to discover that some kind of Natural Law is at work, in the same way that plants talk to each other, and it will deal with the population issue way better than any government.

But even if not, the human population will be what it is as a result of a plethora of individual decisions, many of which will be guided by Mother Nature, and many of which by economic circumstance. As the great man Cowperthwaite set, “A multiplicity of individual decisions will produce a better and wiser result than a single decision by a Government or by a board with its inevitably limited knowledge of the myriad factors involved, and its inflexibility.”

So please let’s keep Positive Law and meddlesome planners with flawed models out of this.


My first book, and many readers’ favourite, Life After the State - Why We Don’t Need Government (2013), which fell out of print last year, is now, thanks to the invaluable help of my new buddy Chris P, back in print (Amazon, Apple Books), with the audiobook here:

Audible UK
Audible US
Apple Books

And if you are in the Guildford neck of the woods this Friday, there are still some tickets left to my show, which, among other things, will feature me playing Elon Musk’s new favourite song. Bath on Saturday is sold out.

Thank you for being a subscriber to the Flying Frisby!


John James Cowperthwaite was Hong Kong’s Adam-Smith-loving Financial Secretary, who oversaw Hong Kong’s extraordinary growth in the second half of the 20th century. His policy was based on “the hidden hand”, as he called it: positive non-intervention. Government staying out of it.

The Flying Frisby
The Flying Frisby - money, markets and more
Readings of brilliant articles from the Flying Frisby. Occasional super-fascinating interviews. Market commentary, investment ideas and more.