There’s Nothing Wrong With A Shrinking Population

03 Jun 2004

A version of this article appeared in The Scotsman on 3rd June

Theres Nothing Wrong With A Shrinking Population

Scotland is the place to be. So says the Scottish Executives web site, in the Fresh Talent section. This is where the Executive is actively seeking a flow of Fresh Talent to flourish alongside native-born Scots and secure its place as an essential part of the global economy.

Why? Because the powers that be are terribly worried about Scotlands declining population. This is due to fall to below the totemic five million mark by 2009, reaching 4.96 million in 2014. But politicians should surely not concern themselves with how many children couples choose to have, and where they want to live. Besides, there are numerous advantages of having a low population density. Here are a few of them:

X House prices are lower. With fewer people needing space, the cost of land falls. Everyone can afford cheaper and bigger homes. Even at the current rate of decline, the number of households is set to increase by 20% over the next 10 years, as family units get smaller. So anything to alleviate the house price explosion must be good news.
X Business development becomes easier. One of the great business gripes is that it is so hard to build new office, factory and retail space in Scotland. Our supermarkets blame this for the high cost of food. Part of this is caused by our sclerotic planning laws, of course. But with a low population density, planing becomes less of an issue, and industrial development less controversial.
X Traffic congestion eases. No more jams on the Forth Road Bridge and the M8!
X Less pollution, and ruination of the countryside. Kiss goodbye to those ghastly new bungalows, the power lines and wind farms!

Some of the richest and most pleasant countries to live in have population densities far lower than Scotlands. To achieve the level of gorgeous New Zealand, for example, we would need our population to fall to 1.2 million. The dynamic USA has a density half that of Scotlands. Neighbours Norway and Sweden would need 20 and 30 million people respectively to become as crowded as Scotland. They currently only have 4.5 and 8.9 million.

So why is the Executive not encouraging more of us to leave, and fewer babies each? After all, the same web site points out that one of Scotlands great attributes is the unspoiled countryside and world-renowned scenery, which is seldom more than half an hour distant. Why put this under threat?

The answer is that there are problems associated with population decline V but these are entirely of the governments own making.

The Executive pretends that economic growth will be slowed unless we can find more workers to fuel it. But per capita growth depends not on population size, but on productivity increases. We can get richer as the country gets emptier.

No, the main problem the Executive has is that as a population declines, its average age goes up. If couples have less than two children, there will be fewer young people around when they get old. Also, any emigrants tend to be younger.
So what has the Executive got against old people? In many ways, older people make better citizens. They commit less crime. They work harder. They even vote more. So an ageing society has much to be said for it.

The trouble is, of course, that old people also cost more. Primarily, they require pensions to fund their retirement, and often also need more medical care.

But this need not be an issue to worry heads in Holyrood and Westminster - if government would only allow people to take more responsibility for their own affairs. Takes pensions, for example. According to the Pensions Policy Institute, there are nearly seven million retired people UK wide who are fit enough to work. Many of these would like to carry on working, especially if this would increase their pension entitlement. But they are prevented from doing so by an artificial retirement age which was first set by Bismarck in the days when life expectancy (and so pension needs) was vastly lower than it is today.

Meanwhile, at the other end of their careers, millions of young people are being subsidised to attend universities for three or four years where they make no contributions to their future pensions. Nor do they learn much of economic benefit to the country, according to a growing consensus of academics, including Professor James Heckman, who gave the most recent lecture to the Allander series. If the government removed these two great obstacles to saving, the pensions crisis would disappear.

Science has not yet found the elixir of eternal youth. Until it does, old age will remain an expensive luxury. But the health problems which many of us one day face are symptomatic of this great boon of modern life. The costs associated with them should not be regretted, but regarded instead as a necessary expense in return for the blessings of long life. The NHS spreads the cost of healthcare, and being funded by general taxation, is subject to constant political pressure. Ways must soon be found to connect people more to the health costs they incur. Europe abounds with attractive insurance or fee-paying systems which encourage people to contribute at least something to their own healthcare. As a result people look after themselves better, and tolerate rising costs more. Scotland is now nearly alone with a communist-style monopoly health provider, free at the point of delivery and our atrocious health record is testimony to it. Even Blairs England is further down the continental road.

The arguments for and against mass immigration are difficult. This is not the place to examine them in detail. Liberals believe in freedom of mobility V if a Scottish company needs workers, why shouldnt it be able to hire them from wherever it likes? Others worry that mass immigration would undermine Scottish culture and institutions. It is a serious debate in which the public should be consulted much more. But one thing is for sure V there is nothing wrong per se with having a small population. And government has no business artificially encouraging migrants to cover up its own policy mistakes.