The complaining about fertility rates, mostly done by the chunk of the population hoarding more and more of the wealth, will continue until people's ability to afford rent and children improves.
The complaining about fertility rates, mostly done by the chunk of the population hoarding more and more of the wealth, will continue until people's ability to afford rent and children improves.
> will continue until people's ability to afford rent and children improves.
National fertility rates don’t correlate with any measure of average income. The only thing that does is the average number of years a woman spends being educated; this probably isn’t causal because the decline in fertility occurs across all income and education levels.
> the average number of years a woman spends being educated;
Have you a recent reference for that? I think even that correlation has broken down, but I do not know
The main researchers associated here are Samir KC and Wolfgan Lutz. Their latest update (with a long list of coauthors) is from 2024 [1]; this is a followup of the important 2013 paper [2].
[1] https://pure.iiasa.ac.at/id/eprint/19487/1/WP-24-003.pdf
[2] https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2344470
I don’t have any structured references saved, sorry.
My understanding is that the only real correlation is years in education, but this is at the national level; the very rich and very poor (which imperfectly correlates with level of education attained) tend to have more children than the middle class, but fertility rates are down across every income level. What this means is that if you look at two countries and see that one has a higher level of education than the other, you would expect the country with the higher level of education to have a lower fertility rate, but within both countries you would expect to see a relatively uniform decline in fertility across every income level, with a more pronounced decline around middle income levels.
This is maybe what’s being referenced when people saying they’ll have kids when capitalism gets sorted, but this isn’t seen in countries where standards of living have improved considerably.
The simplest theory is that more people are using contraceptives because they simply don’t want children. Some people might subjectively feel like they can’t afford to have children, but by world historical (and contemporary) standards of living this argument looks incredibly silly.
At some point years of education crimps into childbearing years - I know two women who could easily have obtained their degree even after having a child, but quickly got to a “fuck this shit I’m a mom” and left the program never to return.
I don’t even know if things like FMLA apply to college classes.
This was my theory initially but it doesn’t pan out due to the decline being observed among all income and education levels; you would also expect to observe a steeper decline among women with advanced degrees, but women with master’s degrees and doctorates actually have a slightly higher fertility rate than those with just a bachelor’s degree. Taking even 5 years at college still gives a woman around 15 to 20 years to find a partner and have children.
Rent is the bigger issue than affordability per se. My wife pointed out the other day that we had our second and third kids shortly after we stopped living in apartments and bought a house. We didn't plan to have a significant age gap between our first (who we had in law school) and our other kids, and we earned a lot of money the whole time, it just happened that way. She's convinced that having the extra space subconsciously encouraged us to have more kids.
I've been encouraging my cousin who desperately wants children to have them in her two bedroom apartment but she feels that she needs to have a house first and she and her husband can't afford one. They're in their late 30s. My partner and I are mid-30s planning to have young children in our 2 bedroom apartment, we'd prefer a 3 bedroom but they DO NOT EXIST in our Los Angeles neighborhood. More space means untenable commutes which brings more complicated childcare logistics (can't get to daycare before it closes, less time with kids etc).
> we'd prefer a 3 bedroom but they DO NOT EXIST
This seems to be an absolute epidemic across the state. Same with condos. It's like they assume that apartments of any kind are only for single people and maybe a couple with one child. In other words, people who are dragging the fertility rate down toward 50%.
When I pull up Zillow and look at rentals across a huge swath of the East Bay, there are 8,309 apartments listed (I filtered out houses and townhomes). I add one filter: 3+ bedrooms. The number drops to 784. Fewer than 10% (!) of apartments listed have 3+ bedrooms. (Also, a quick spot check of these seems to show a nontrivial amount that are actually just houses with faulty metadata.)
This puts a tremendous burden on low-income people, to have to foot the higher cost of maintaining a home and/or of an absurd commute, just in order to have enough space[1] to have more than one kid. That, or overpay to compete for one of the few bigger apartments, many of which are "luxury" oriented.
Meanwhile, the high-income can afford a house or a luxury 3br apartment, but they are mostly high-income because they've deprioritized family, putting in 10+ years of being DINKs. In my circle of upper middle class tech types, many of them are 35-38 before having their first kid. 1 kid is much more likely than 3 for people starting in their late 30s, so this drags down fertility rates even among the "high income" subgroup!
[1] I know opinions vary on whether it's good and healthy to have kids sharing rooms, though imho I don't want a son and daughter forced to bunk together as they get older, and calls to 'just share rooms' is giving "Own nothing and be happy."
For what it's worth, we had our first child when we lived in a studio in our late 20s. One kid is really easy space-wise. The only reason we even got a 2BR before buying our house is that we got an au pair.
This did not stop people in the past. You read of three-room New York tenements holding families of ten, or families with half a dozen children living in a single-room frontier cabin, and this was considered commonplace.
My parents raised eleven children in a typical four-bedroom suburban tract house.
I wonder why modern people would be different?
Because we have an expectation for more space. Pretty simple, no one wants to go backwards to when we lived in single room tenements with a wife pumping out babies for a decade in a row. Also, no one can afford a four bedroom home with twelve occupants on a single income like in the 50s.
You couldn't in the 50s either. You just made do.
That’s the real key to all this - if you want it, you make do, and learn to grab what you can.
Much worse than housing is the vehicle when you cross the 5 or 6 kid boundary, your available vehicles begin to rapidly plummet.
They didn't have birth control then so it was much less of a choice.
Well, then we should say that it is something related to availability of birth control which has caused the change, not some novel preference for living space.
Raised 3 kids in a 2 bedroom apartment in NYC. It’s fine. When they go to college, they marvel at the space they have in a dorm room.
Some families make it work and survive but very few middle class Americans would consider this "fine". For better or worse, most people prefer to have more space and privacy. The notion of raising a family in a cramped apartment seems like torture to me, and the birth rates in urban areas indicate that others agree.
Hmmm... What if a wide variety of economic actors have somehow managed to slurp up all the surplus that previously went to "paying it forward" in terms of raising children?
Rent is a common complaint, but consider the costs of childcare, needing two incomes to stay afloat, etc.
The high cost of childcare also largely comes back to high rents. The management needs to pay for the space, and pay workers enough to afford to live within commuting distance. There are of course other costs to running a day care center (utilities, insurance, supplies) but rent is a major factor here.
This totally ignores the fact that the decline in fertility is measurable across the globe in the poorest and wealthiest nations in the world. It's clearly not a simple matter of affordability...
Poor countries reproduce more, it's not same everywhere https://en.wikipedia.org/wiki/Income_and_fertility
The rates are plummeting everywhere. Even countries that have 3 or 4 kids per woman used to have 5 or 6 and are on pace to drop below replacement within 15-20 years.
Look at slide 3 again ("TFR around the world").
those are not the poorest countries (e.g. no african countries are listed either)
Our World in Data: Fertility rate: births per woman - https://ourworldindata.org/grapher/children-born-per-woman?t...
To the surprise of demographers, African fertility is falling - https://www.mercatornet.com/to_the_surprise_of_demographers_... - September 19, 2024
> Previously in this space, under the heading “Africa Rising?” yours truly cited The Lancet’s latest population stats on sub-Saharan Africa: Sub-Saharan Africa is the world’s only region with an above-replacement total fertility rate (TFR), currently estimated from 4.3 to 4.6. They’ve gone from 8 percent of global births in 1950 to 30 percent in 2021, headed to 54 percent by century’s end. While the region’s TFR is falling fast, any sub-Saharan population contraction is at least a century out. However, according to Macrotrends, Africa’s TFR (4.1) has declined an average of 1.3 percent annually over the last three years. Should this trend persist, Africa will eventually plunge into below-replacement territory. Demographers believe fertility decline is accelerating faster than projected, especially in sub-Sahara Africa. Statista, the European aggregator of figures, projects Africa’s 2030 TFR at 3.8.
Fertility rates fall as education levels rise in sub-Saharan Africa - https://www.nature.com/articles/d44148-025-00026-3 - January 29th, 2025
yes those are true but the fact remains that despite the falling rate, sub-saharan TFR is 4.5, while brazil is 1.6, iran 1.7 etc. The correlation of TFR with wealth is a fact
Brazil is 1.47, and Iran is 1.43. Both are lower than the United States.
Other poor countries lower than America: Mexico, Columbia, Philippines, Thailand
Source for TFRs: https://cdn.xcancel.com/pic/orig/67E402B3A81D9/media%2FGxYAq...
The correlation between wealth and fertility is quickly breaking down, both between countries and within (rich people have more kids, poor people have fewer).
>The correlation of TFR with wealth is a fact
No one is disputing that... We are talking about declining TFR RATES which are happening across the globe universally.
While I generally agree with this and am angry at "the elites" who seem to both want increased fertility but also don't really target it in their companies ... I think the bigger unspoken issue is really the TFR skew. Global fertility can go down for a while and it isn't disastrous. TFR skew results in large problems if the least progressive and poorest groups systematically have much higher TFR over extended periods.
None of the solutions I can think of are very appealing or even tolerable. It really feels like it's a matter of carrying on and having hope. But perhaps we could start by merely describing the data and the situation.
The thing that collapses in a negative population growth environment is passive earnings from interest and asset appreciation, retirement, and to some extent social welfare states. The whole idea of things like social security is predicated on a growing population paying for the elderly. It's also very, very bearish for things like real estate long term. We are probably still in a real estate bubble.
I suppose I've never expected to ever be able to retire unless I get truly wealthy. It's not something I've ever included in my life plan because I've kinda seen the writing on the wall about this since I was in my twenties.
I don't think this crash in fertility is that unexpected, and it's not even all bad. It'll help us weather things like climate change and natural resource depletion.
Social security is solvent for at least the next 75 years if the US removes the payroll cap on contributions from wage income. We choose not to. The economic resources exist for these social programs, it will just diminish profits (the horror /s). It's a policy choice.
Every year total fertility rate remains lower than replacement rate further locks in the fertility curve, but there is no political will or desire to implement the fixes required. So, we keep kicking the can until we cannot anymore. It's unfortunate. Demographic destiny comes regardless, as each year total fertility rate continues to fall.
https://usafacts.org/articles/how-much-does-the-us-spend-on-...
https://www.pgpf.org/article/social-security-reform-options-...
By 2075, Medicare and Social Security will reach a over 14% of GDP combined, up from around 8% today. To pay that, we'll have to raise taxes by $1.75 trillion using today's GDP figures. That will require just about doubling payroll taxes from the present level.
That's probably an underestimate. As population shrinks, GDP will shrink as well, unless we have large gains in productivity, which have stalled. It's not clear to me that the projections about SS/Medicare as a percentage of GDP account for the effect of GDP shrinking due to population decline. CBO assumes a stable population through 2060, using quite arbitrary assumptions about immigration: https://www.cbo.gov/publication/60875.
I agree with your observations. The future will not be as bright as the past, the population boom was already squeezed for the gains. Immigration at the levels needed to change this are unpalatable to most electorates, and with total fertility rate dropping across the world, it's important to be mindful that net migration to Earth is 0 (slide 39). As the economic future deteriorates due to the ever increasing drag of these obligations, I'd expect total fertility rate to continue to decline at present rates (if not slightly accelerate). This creates a self reinforcing feedback loop. A "Demographic Doom Loop" [1].
Happiness is reality minus expectations.
[1] https://x.com/KenRoth/status/1753526235173450213 | https://archive.today/rY4WG
All that said, I agree with your general point that the situation with the welfare state is probably fixable, if we don’t enter a doom loop. It’s just more burdensome than lifting the SS cap.
I’m more optimistic about non-western countries. I suspect descendants of Puritans will be a historical curiosity in 2500 but I think Muslims and Mormons will still exist.
The welfare state has to collapse before people realize children are their retirement plan, and that there’s no guarantee the government will take care of them in old age.
There is no guarantee your children will take care of you. Walk through any nursing or care home and speak with residents, ask the last time a child saw them.
One quarter of adult children estranged from a parent - https://thehill.com/blogs/blog-briefing-room/4104138-one-qua... - July 19th, 2023
> There is no guarantee your children will take care of you
On the flip side, for those childless, it's completely guaranteed none will.
> One quarter of adult children estranged from a parent
That sounds like a 75% success rate.
doubtful 75% is all high quality. The one quarter is probably all really bad, then some of that 75% is bad enough that it won't make much difference. Probably 25% is so into their parents that they will actually take care of them.
Why does nobody ever factor in the gigantic growth in government?
"The government" is not actually accruing wealth in pretty much any western democracy-- in fact the exact opposite is happening everywhere.
To me it seems clear why government budgets have increase so much. Since the emergence of modern nation states, government responsibilities have grown tremendously, and mostly for good reason:
- Infrastructure basically went from dirt roads to highways/railways/airports
- Tremendously higher benchmarks for services/regulation (education, pensions, food safety, crime prevention, drinking/groundwater quality, lead pollution, mining/heavy industry regulation, healthcare/-regulation)
A lot of those things are new enough that I would argue we are still stabilizing on their total costs, and current government budgets (high AND red literally everywhere) are basically humanity finding out that all those things are not free.
But I would also argue that for a big majority of people, this is still a rather decent deal; I would rather pay current (or even higher) levels of taxes than to suffer from lead poisoning, have children crippled from quackery/insufficiently tested medication or needing to pay protection money to the mob.
But I'm quite curious: What do you think is the problematic part of government growth? Do you think that Doge, specifically, is successful in identifying and quelling it?
> "The government" is not actually accruing wealth
I tend to agree with that. But there's no doubt it is dissipating vast amounts of wealth.
> it seems clear why government budgets have increase so much
There's a vast amount of waste in government spending, and waste as a result of heavy regulation. If you're really interested,
https://www.theatlantic.com/magazine/archive/2009/09/how-ame...
I do agree with you that there is a lot of overhead and waste in the healthcare industry and government in general.
But this insight is, to me, just not really actionable.
Almost every large organisation seems to end up with a good amount of bloat/overhead sooner or later, and this even includes former super-lean and super-focused enterprises (Intel, Google, AWS, ...), so I don't see how you could ever sidestep this problem completely with the government.
Just cutting regulators and government responsibilities in general also seems a really bad idea to me. Reading that article, how many of its complaints would be solved by fully deregulating and letting the market take care of things?
1) Avoidable infections exacerbated by laziness/cost cutting
2) Lack of price/cost transparency
3) Healthcare costs being wasted on advertising/middlemen
4) Doctors specializing in fields that pay well instead of the ones that are most needed to improve health outcomes
I'd argue that none of those would be improved by switching to unregulated private healthcare, and a bunch of them would very likely get worse.
Another thing to consider when cutting regulation are huge possible negative externalities in general.
Just take leaded gasoline as an easy example (because the bill for CO2 emissions is not in yet). The industry basically "self-regulated" until the 60s (and only because it became infeasible to continue hiding lead toxicity by paying or threatening scientists, which it had done for the previous decades): Total costs/damages were enormous-- probably millions of lifeyears lost, but industry/shareholders did not pay a dime after reaping the profits.
How could drastic cuts in regulations avoid disastrous outcomes like that?
Every large organization does indeed accumulate bloat/overhead sooner or later. For a profit making company, this means it loses its competitiveness and then falls. For government, this means it gets a bigger budget.
The leaded gasoline example is also a disaster. That does not generalize to every regulation being good. For example, regulations prevent victims of the Palisades fire from rebuilding. For another example, rent control.
Reading the article, the bit about Lasik eye surgery resulting in major reductions in cost is pretty illustrative.
Some years back, Frontline did an episode on dental care fraud. It seems the government set up a program to pay dentists to do major dental operations on poor people. Clinics then set up solely to do major dental operations on poor people, and raked in the government money. The trouble was, those people did not need dental operations. Frontline's "solution" was to propose heavy regulation. That won't work, either, because medical fraud to get government money is rampant and pervasive.
You might also consider the software business, which has pretty much zero regulation. It is also a gigantic engine of prosperity in the US, despite having driven costs down to literally zero. There have been many proposals to regulate it, but fortunately none have managed to do so.
> For a profit making company, this means it loses its competitiveness and then falls. For government, this means it gets a bigger budget.
I would argue that with companies, the expected outcome is that they accumulate and then stabilize at a "typical" level of bloat. For software, Google is a good example: Much more bloated than they used to be, but still competitive enough, and looking stable.
Governments also have some ways to de-bloat, mostly from internal and external pressure (like Greece).
I think that consistently getting services at no-bloat prices is just not realistic in general over longer timeframes; Netflix, Google, Uber, Amazon, ... give countless examples of excellent early price/quality ratios that got inevitably worse over time.
My hypothesis is that for our current understanding of what a government is supposed to provided (which did expand significantly since WW2, but mostly for good reasons) we have now reached a "bloat-stable" budget, and there is just no "easy" way to slash this budget without hurting the services (even though in a hypothetical bloat-free environment these could be provided for less).
Here is interesting data which seems to kinda support my point, with government spending as GDP percentage for the US, Germany (less GDP/capita) and Switzerland (more GDP/capita): You can see budgets rising post WW2 across the board, and then stabilizing in the 30-40% range (slightly higher for the poorest country, which makes sense). I would have honestly expected to see those trending up even for the last decades (which they don't really) and Covid was also less prominent than I would have assumed:
https://ourworldindata.org/grapher/government-spending-vs-gd...
Google is currently in big trouble because AI is taking away their advertising business.
You can retire the other way around - since you need roughly $20 saved for every dollar you need in retirement, reducing expenses by a dollar is as good as saving $20.
That presumes knowing in advance what the dollar can buy you.
Here's a reductio ad absurdum: a couple live alone on an isolated island, they have and raise one child, and when they reach 67 they stop working and expect their progeny to provide for them as they were provided for in childhood.
Two parents provided for three people, became three adults providing for three people, became one adult providing for three people.
And when that kid reaches 67 and also decides to stop working? Now nobody's around to provide for them, so nothing is provided.
(What will happen in the non-reductio case is much more complex and unpredictable, between the never-ending potential of nuclear wars, and the ongoing but never guaranteed promise of technological progress currently dangling AI and robotics before us like a laser pointer to a cat…)
The drop in fertility rate is directly liked to migration into dense cities. They are just not a good place to have children.
The US resisted the fertility drop for much longer, because of higher suburban population.
> The US resisted the fertility drop for much longer, because of higher suburban population.
It was immigration, but next generation of all immigrants (native born) adopts host country total fertility rate in this context.
https://www.pewresearch.org/short-reads/2019/08/08/hispanic-...
https://www.pewresearch.org/short-reads/2016/10/26/5-facts-a...
https://www.pewresearch.org/wp-content/uploads/2019/08/FT_19... visually nails this.
Now, would these people have had a higher birth rate if they remained in their LATAM countries? The data indicates no.
Latin America’s Baby Bust Is Arriving Early - https://www.bloomberg.com/opinion/articles/2025-05-22/latin-... | https://archive.today/EPMAU - May 22nd, 2025
Population Prospects and Rapid Demographic Changes in the First Quarter of the Twenty-first Century in Latin America and the Caribbean - https://repositorio.cepal.org/server/api/core/bitstreams/dc5... - 2024
In 2003 the average fertility rate was around 2.03
It started falling to 1.6 around 2008 ( https://www.macrotrends.net/global-metrics/countries/usa/uni... ) which coincided with the millennials getting into the child-bearing age. And the millennials are much more likely to live in cities, even though they don't want that: https://news.gallup.com/poll/245249/americans-big-idea-livin...
Any data for this? I think this maybe the real answer because unlike other explanations, this one can actually acquire proof from before modern ages. Simply because it's known that cities fertility rates were always negative and have to constantly pull people from countryside.
It's a well-known phenomenon. E.g.: https://link.springer.com/article/10.1007/s10680-008-9163-9
It's been eroding lately, but mostly because fewer younger people can afford to live in suburbs. By "afford", I don't mean monetary cost, but the lack of easily accessible jobs.
I'm investigating that, and I believe that it's even _worse_ than the simple fertility rate shows. If you look specifically at the number of parents with two or more children, suburbs completely demolish cities when you control for the average income.
Controlling for the average income is needed because of the two poles of fertility: desperately poor people, and happy content people ("reversed J-curve"). And cities in the US disproportionally concentrate desperately poor people.
This is probably a factor, but I think it’s a mistake to treat cities not being suited for raising children as a hard, immutable fact. They’re bad because rent continues to soar which clashes on two fronts (kids are expensive already and increase space requirements) and we as a society have decided to build our urban spaces (suburbs included) to be explicitly not friendly to children, families, or anybody not driving and to instead favor adults with money to spend. These are things we could change, should we want to.
The other thing to look at is why people have migrated into cities, and the answer is pretty simple: it’s where the good employment prospects are. The further yet get away from urban cores the worse those get: fewer jobs, worse compensation and benefits, greater risk of being stuck between jobs for long periods of time. Anybody worried about birthrates should be embracing remote work and making sure they compensate their employees well.
It's not just rent, it's also transportation. Transporting young kids with a car is easy, public transportation is much harder until they are 10 or so.
For example try transporting a sleepy kid, or more than 1 young kid at the same time.
Cities are cars don't get along very well, which makes them less friendly to kids.
Suburbs are really nice for kids, basically zero car traffic, you can play in the street, easily go to parks. And when the parents need to take you far you have a car available.
Transportation can be a challenge, but I don’t agree that a car is a requirement. When I’m in Japan it’s common to see parents carting around a kid or two on an appropriately kitted out bike for example. That wouldn’t be as practical in a sprawling suburb, but it can work in denser cities.
> Suburbs are really nice for kids, basically zero car traffic, you can play in the street, easily go to parks. And when the parents need to take you far you have a car available.
This varies a lot depending on the suburb. There are many that are endless house-deserts where you’re not doing anything without a ride. The one where I live is much more broken up, but sidewalk coverage is patchy at best.
Fertility rates can be wildly swung by outliers, and while it is possible to walk with five kids under the age of six, it is a maneuver that requires substantial logistical support or specialized equipment (which can be as hard or harder to store than a car).
https://www.communityplaythings.com/products/outdoor/kinderv... Things like this are 1% or so of the cost of a suburban house! That’s noticeable!
> When I’m in Japan it’s common to see parents carting around a kid or two on an appropriately kitted out bike for example.
Yes, and now look at their fertility rates.
I’m not saying that Japan has it all figured out, just that cities can be built to allow many families to thrive without a car. Japan has their own set of issues w.r.t birthrate, but it’s partially a different set than those seen in the US.
OK. Can you get a double stroller into busy Tokyo subway during the rush hour?
Probably not, but I barely see strollers over there anyway, and it’s also rare to take kids on the train/subway during rush hour. Kids are usually carried or toted in one of those front-body-kid-carriers (sorry don’t know the name) until they can walk, after which they walk (or for longer rides, get taken on a bike). If I see little kids on the train it’s most often before or after rush hour during the slower times.
A lot of American norms don’t carry over.
Thank you for illustrating exactly why dense cities are inimical to having more than one child.
Suburbs might not be friendly to children but they're quite friendly to the parents of small children. When you're pressed for time and need to cook dinner or something it's super convenient to be able to send the kids into the back yard or their own separate bedrooms, knowing they'll be fairly safe and contained for a while.
Remote work is a great option for many people but it simply isn't feasible for any job that can't be done through a computer. We should set economic policies that encourage job growth in suburban and rural areas rather than trying to squeeze everything into a handful of dense cities.
I read some unsubstantiated claim about cities being bad for fertility because there’s an abundance of things to do that aren’t popping out children
And you'll be doing them, whether you like it or not.
Rational millennials who will have to work until 75 at current rates may also complain :)
'hoarding more and more of the wealth'. Sounds very much like you believe in the pie fallacy. A zero sum game? Maybe that's not what you meant though.
The pie has nothing to do with it.
The tide is rising and most ships are sinking. Productivity in the last 40 years has skyrocketed. The gains have overwhelmingly gone to a tiny minority while everyone else has seen rent, food, education, and more go up dramatically faster than wages. This has accelerated in the last 15 years and has destroyed any faith in the social contract.
Have you noticed the massive growth in government? You're paying for it, one way or another.
Inflation is caused by the government via deficit spending. It's another tax on you.
Inflation isn't the problem. Corporate consolidation, collusion, price fixing, and market capture are the problems.
In nearly every field where there used to be 10-20 competitors there are 2-4 and they're not doing much "competing" any more. They're using consultants and third parties to share data and fix prices, they're buying up the entire supply and dividing areas so they have monopolies.
Note how during the COVID "inflation" corporate profits soared faster than inflation.
> In nearly every field where there used to be 10-20 competitors there are 2-4 and they're not doing much "competing" any more.
I'm old, and I've heard that my entire life. Something's wrong with your assessment.
The pie isn't always growing and the pie isn't always static. There are times where either can happen. I think people are just feeling that we are entering a period where the pie will be stagnant for a while. In the short term the world might be a zero sum game.
> will continue until people's ability to afford rent and children improves.
Historically that's never been a requirement for people to make children. Poor people have tended to be pretty prolific.
> hoarding more and more of the wealth
In a free market society, wealth is created, it is not "concentrated".
Nice assertions, but where’s the content of your post? What’s your opinion here based on those two things? Those are just two statements, but do you believe things are different now than historically or are you arguing it’s the same as it ever was, or something else?
I’m probably not old enough yet to share my opinion on societal change across generations, I was a kid until recently.
Do you think the population of the US is all from immigration and rich people?
(A relative worked out our family tree. Lots of families with 8 kids in them.)
What amuses me is that once you’ve worked out the function to have a kid, it’s easy to have another.
In theory there should be tons of childless people and some balancing number of 10+ kid families. Then the average numbers work out, everyone is from a large family, but the means of production are centralized and efficient.
> In a free market society, wealth is created, it is not "concentrated"
That is incorrect
In a free market wealth has a definite tendency to clump together, to concentrate.
A moment's thought will make clear why.
> A moment's thought will make clear why.
Take a moment and elaborate, please.
I have a comment above about access to capital, which is much easier if you already have it, so the rich have more access than the poor to the main tool of capitalism.
But another example, equity: If I am raising money for my startup, and I have no traack record (I'm poor in this context) and Sam is doing the same after Sam made a successful exit from their last startup, who would you invest in, all else equal, Sam or me? Sam if you are rational
Thus the rich have more access to equity than the poor
This is a pattern that repeats over and over in free markets
There are many books on Amazon about starting a business with no capital.
'In a free market society, wealth is created, it is not "concentrated".'
That's a theory from economists. Economists have a lot of theories.
It's a fact, not a theory. The wealth in the economy did not exist 100 years ago. Therefore it must have been created.
And where did Musk's money come from? Who did he transfer it from?
Some wealth is created. People build new things and sell them. Video Games or Programming Languages for example.
Some wealth is just transferred, like rent or interest.
It would be nice if everybody had somewhere to live for free, unfortunately, most people have to pay rent or interest on a mortgage to those that came before them.
> Some wealth is just transferred, like rent or interest.
Both of those are an exchange, not a transfer. Taxation is a transfer.
They may be an exchange, but they are not "creation".
We are arguing whether wealth flows to people who already have it, rather people who "create it". My augment is both.
An artist creates wealth by painting a beautiful painting. Then he exchanges that wealth for money.
At no point was wealth "transferred" to the artist.
McDonald's creates wealth by designing and building a system to deliver hamburgers. McDonald's then exchanges that wealth for cash from its customers.
BTW, who gives money to people who already have it? Not me. I doubt you do, either. I don't know anybody who does. The transactions are always exchanges - you are getting something in return.
I think perhaps you are discussing too many threads simultaneously. I'm fully onboard with Maccas and Artists creating something thus creating wealth.
Also, yes, transaction are exchanges. Nobody is arguing that. You pay rent and in exchange you may use the land (productively or not)
My argument is that people are forced to pay rent to people who didn't create anything, but because they hold a piece of paper that says they own it.
The argument is, did the person who owns the land "create" anything. My argument is no.
The person who owns it bought it from person who created it.
The person who bought it then manages it, maintains it, organizes it, advertises it, pays taxes on it, etc.
And there's nothing wrong with that.
If rentable places were not allowed to be sold, very very few would exist. This is because people specialize - some build rentals, some manage them. Both are productive enterprises.
You can become a landlord if you want. Borrow the money, buy a rental, and rent it out. But you'll find out it's a lousy business.
I broadly agree with you, but there is really a point here about land ownership.
Although developments of the land do improve the value, and thus land ownership has significant utility economically by incentivizing this, there isn't really an economic justification for the owner receiving value for the land itself- why should someone have exclusive rights to a piece of land they didn't create? They bought it, sure, but why did the previous owner have perpetual exclusive rights?
I'd advocate for a small property tax as a replacement for other taxes, because the component that does tax "land value" won't cause economic harm, but all of income tax causes deadweight loss. (Note, Land Value Tax is great in theory, but impossible to define practically- property tax good enough, much harder to game!)
Note that in practice, the biggest abuser of land hoarding is local governments with extremely restrictive zoning that stops productive development of the land- from an economic perspective they own the land, and have sold (or in reality, seized) some but not all of the rights from the 'landowner'. Although this can have advantages to help with coordination problems, in practice it's caused enormous economic damage to many cities by preventing development. At its heart, it's a problem with land hoarding.
>The person who owns it bought it from person who created it.
The land was not created, it existed long before humans. It was taken by force and the strong began extracting rent from the weak.
I'll check out of diverting this into a 10,000 year old grievance.
If I cut down trees to build a house, then I may have created "wealth" but I've also destroyed trees. Now the net affect may be that wealth has increased, but it may also have an effect which actually destroys wealth like for instance if those trees existed on a hill, and the roots were holding the soil in place, the act of cutting down
"Free market" economics does not capture this destruction of value. It only cares that some value was extracted out of the trees in the form of a new home sale, etc.
I'm sure all those slaves brought over to the New World created tremendous wealth, but I'm also pretty sure they would have rather preferred to stay in Africa.
Your first example is completely wrong. Trees are a renewable resource. In North America, most of the trees that are cut down to build houses were intentionally grown for that purpose and are selectively harvested in a way that preserves the long-term value of the land.
Meh, sort of. Today's construction lumber is nearly all farmed, true. But CITES exists for a reason. The demand for certain woods greatly outstraps supply, and deforestation and smuggling is a real problem that's difficult to solve. And that's even without considering deforestation that's done to open up new farmland.
Madagascar is the obvious example here highlighting both issues, but it's certainly not unique.
> "Free market" economics does not capture this destruction of value.
Oh, but it does. It turns out that people who own land take care of it, so that it keeps producing. People who own timber land tend to manage it so it continues to be productive.
Destruction happens with government owned land.
For a related example, why are we not running out of cattle, hogs, and chickens, despite slaughtering them on an epic scale? And why are we running out of fish?
They might take care of their land, but they don’t generally care what happens to other peoples land. So excess fertilizer creating dead zones downstream? Well sucks to be them I guess. Markets are not good at pricing in externalities such as those
A proper function of government is to internalize the externalities (with fines or taxes).
Come on. Sometimes wealth gets created. Sometimes wealth just gets moved around. That is a fact.
Musk's wealth is mostly notional. Most of it is based on people's guesses about the future of electric cars and so forth. It's not clear yet whether that is creation or transfer or what.
Musk's wealth was transferred from nobody. It was created.
When wealth gets "moved around", that is not the market doing that. It's force. Like social security payments.
That's why I prefaced it with "free market".
Maybe a startup can have a high valuation for a while and ultimately be worth nothing. Maybe that has happened.
Maybe Musk will turn out to have created 10x more wealth than he has now. Maybe he will screw up and go broke.
Maybe both.
Where did Bernie Madoff's wealth come from before he got caught? Where did Sam Bankman-Fried's wealth come from? We can't just point to a unit of wealth and automatically applaud its legal owner as having created it. Maybe they created it. Maybe they stole it. Maybe we all wigged out and handed it to them voluntarily. It's case by case.
We all read Ayn Rand back in the day. And I can groove with that at a certain dosage, but you're taking way too much.
Bernie Madoff defrauded people by selling them fake investments.
Note that I remarked that free markets did not include fraud.
Excluding fraud, theft, and so forth, just by definition, means we're talking about a utopia. It's not a system, it's some beautiful subset of what's really going on. The subset would have to be carefully selected, using information we don't actually have until (maybe) much later. Maybe never.
This 'free market' is a bit like clean matter-antimatter power stations. They sound like a great idea. We could build them if we knew how.
I never claimed free markets were utopian. The purpose of government in a free market economy is to provide justice for acts of force or fraud, and provide enforcement of contracts.
There is no such thing as a perfect free market. However, history shows that the closer we are to them, the more prosperous the country is.
BTW, when the Soviet Union was formed, the communists did away with the police because there would no longer be a need for them. Oops.
> And where did Musk's money come from?
No body (?) is contending that in a free market wealth is not created.
The contention is that when wealth is created it tends to head to other wealth.
When a bank lends capital and has a choice of lending to, say, Elon Musk or me, I think the bank will make that rational choice and lend to Elon. Thus once you have some wealth attracting more wealth is less difficult than from before you had wealth
This pattern is repeated over a d over.
See Captain Grimes' boot theory of economics: https://en.wikipedia.org/wiki/Boots_theory
Lending money is not transferring wealth, nor is it creating wealth. It nets out to zero.
This is clear when one does accounting. Accounting is based on the idea that (Equity = Assets - Liabilities). When one takes out a loan, the assets go up by the amount of the loan, and the liabilities also go up by the amount of the loan. The Equity stays the same. That this balances out is literally called "balancing the books".
BTW, banks are happy to lend out money to people that have a track record of paying it back. This includes poor people. Poor people have credit cards, too, which is how they borrow money.
This part is true, and the folks who equate new borrowings with income are liable to do some real damage if anybody ever listens to them.
Totally and utterly wrong, a complete misunderstanding of capitalism
Let me explain.
Access to capital is key. If you have it you can do business, if you do not you cannot, in general terms
There is more than one way to access capital, debt is very common.
And to get rich you have to do business
So if you are already rich getting more money, in a free market, is easier than getting started, in a free market
That is the point, and one small example,e. This pattern repeates o er and over. Once you have money getting more money is much easier than getting the first money
So in free markets the wealth divides tend to increase.
This is very elementary, stage II economics
I don't know who you're writing this to. You're not addressing any point I brought up.
> the folks who equate new borrowings with income
Ah, the boots theory.
A Ferrari costs far, far more to maintain than a Ford, and doesn't last as long. I drove my used Ford Bronco II for 32 years before giving it to a scrap yard. Best bang for the buck car ever.
Expensive shirts wear out just as fast as cheap shirts. They just look nicer (and are often less comfortable).
P.S. I still regularly wear the combat boots my dad bought me 50 years ago. The boot black on them has long since disappeared, but they still keep my feet dry and warm.
The "Boots theory" of economics is garbage, just utter nonsense. I don't understand why people keep mentioning it here without applying any critical thinking. It simply doesn't apply to the vast majority of actual consumer products. Some of most durable, longest-lasting footwear I ever bought was also among the cheapest. By contrast the expensive stuff tends to be fussy, fragile, and impossible to repair. This generally applies to apparel, electronics, automobiles, appliances, bicycles, firearms, etc.
Where do you buy shoes?
That is the exact opposite of my (and Cpt. Vines) experience
Is there an upper bound to the creation of wealth? Is it infinite? Are there any limits to its creation? Is there any inherent value to it without being able to "transfer"?
> Is there an upper bound to the creation of wealth?
No
> Is it infinite?
Yes
> Are there any limits to its creation?
Government trying to crush it.
> Is there any inherent value to it without being able to "transfer"?
The only value it has is what someone else is freely willing to pay for it. There is no such thing as "inherent" value.
I find the belief that government is the only limit to wealth creation very intriguing. I also find it interesting that the talking points usually contrast "free markets", which I assume represents the best case, with just "government". Markets can be limited or impacted by forces outside of government (price fixing, monopolies, manipulation). Is there an equivalent best-case scenario for "governments" that we can use as a reference when discussing how they impact free markets?
Nobody has discovered any limit to wealth creation, but governments have been very successful with putting a stop to it.
> In a free market society, wealth is created, it is not "concentrated".
The free market hasn't figured out how to create more land. Especially arable land.
It has figured out how to make better use of the land.
How do you define "free market"?
Transactions based on free negotiations, not force or fraud.