Paul Krugman published an Op-Ed recently in the New York Times in which he suggested that the slow job growth in the US might be a long-term trend, not just a blip, and that one cause might be the slowing of population growth in this country that has lowered demand for consumer goods. His column generated a string of generally well-thought-out responses, none of which exactly disputed his thesis about population growth, but nearly all of which pointed the finger at the increasing income inequality in the US as the major cause of slow job creation--rich people are increasingly richer and are sitting on their money instead of creating jobs--no sign of trickle-down.
But let me address the issue of slow population growth. If that really were the cause, then the economic theory behind it would simply be that the population has to grow for the economy to grow, without any regard for the increase in the standard of living. It is the latter that people seek, of course. If population growth were required for an improving economy, then we are in serious trouble because that is clearly not sustainable. The same economy with slowing population growth should be equal to a higher standard of living per person, not higher unemployment. What the economy needs is higher productivity per person, not more people. This brings us back to the growing income inequality as the real issue here. Population growth in countries like China, India, and elsewhere has attracted manufacturing jobs that used to be located in the US. Those jobs are probably gone for a long time--until the wage gap is reduced significantly. Finance has replaced manufacturing as a source of income for the elites of society, but on its own that does not create much in the way of jobs for the middle class. What to do? Several of those commenting on Krugman's had the same answer--some form of "redistribution" that puts the wealth of the nation to work for everyone, not just an elite few.
This blog is intended to go along with Population: An Introduction to Concepts and Issues, by John R. Weeks, published by Cengage Learning. The latest edition is the 12th (it came out in 2015), but this blog is meant to complement any edition of the book by showing the way in which demographic issues are regularly in the news.
If you are a user of my textbook and would like to suggest a blog post idea, please email me at: email@example.com