[A READER’S VIEW]The economics of bearing childrenEconomics is a young science, so it is not surprising it has been turned on its head a few times. And here we are again, with Ricardo and Malthus not even 200 short years in their graves, and the Koreans are upending their wisdom once more.
Our race is in danger, the early sages agreed, of extinguishing itself through over-procreation. And if this did not happen, then starvation and misery would await those who are left.
The solution is simple: Develop an economy that provides sufficient food for the workers, and the workers will reproduce. If the economy is successful enough to provide surplus food and greater comforts, the number of workers will multiply faster. The growing number of workers would then face two outcomes, both unpleasant. If the economy (the food supply) took a downtown, then many of them would starve. If there was no downturn, the increased number of workers would drive down wages to the point where pay was just high enough to survive, and they would drastically cut their production of offspring.
Simple, logical, classical ― and utterly wrong, it seems. Since 2000 the population growth rate has halved from 0.8% to 0.4%, while the GDP has continued growing at around 8% in Korea.
“Because more Korean women are working,” is the common reply. And yet, in only three OECD nations do fewer women work than in Korea. Something has clearly caused a sudden, drastic and alarming drop in the demand for children, and it isn’t because the economy is too weak to support them or that Korean women are too busy to have them.
Maybe the problem with the early sages is that they lived in a world where hunger and poverty were normal, consumer goods were unknown and simple sufficiency of food was considered wealth. Food was the only economic output they needed to consider, at least for its effect on the population at large. Not enough food? Then don’t have kids.
Nowadays there are obviously many outputs besides food: cars and smart refrigerators, LCD televisions and designer clothes. There seems to be abundance, but if we gauge it by the birthrate, we must conclude that Koreans feel there aren’t enough goods to go around. That Koreans feel they are not getting enough of the basics of survival.
Or maybe the answer lies in investment returns.
Children are a means of providing for one’s old age. Following the IMF crisis, when the stock market declined and asset values dropped, there was a spike in the birth rate, perhaps indicating that Koreans in that troubled time thought children were a better investment than the KOSPI.
But lately, with investments in stocks and real estate multiplying rapidly, it seems more rational to ensure one’s retirement comfort by enlarging one’s holdings of property or securities rather than children.
Where does this leave us? Should we choke the economy, restrict imports, ban weekend shopping and shorten business hours in the hope that reduced consumerism will lead to more children? Or raise the capital gains taxes to strangle the stock and real estate markets, thereby making children a better investment? Obviously unacceptable.
If economics has anything to contribute to the debate, it is only the assurance that if it becomes cheaper or more rewarding to have children, then more children will be had.
While daycare, maternity leave, and tax credits may all have some effect, I suspect that nothing will be as productive as education reform. This is by far the greatest cost to parents, and by far the area where the government could have the greatest effect.
Any number of solutions are by this point worth a try, as we are only 15 years away from the start of a slow national suicide. 2021 is the year that the National Statistical Office forecasts the population growth rate will grind to a halt, and begin a steady descent toward the depopulation of South Korea.
Dismal science, indeed.
* The writer is president of JDLINK, a financial consulting firm based in Seoul.
by Brendan Hillson