Wealth and demographics

The contradiction of capitalism

I’ve been doing some work on demographics recently. I thought I’d share some of it here very briefly. The following is a second order polynomial fitted line on a scatterchart that has total fertility rate (TFR) on the Y-axis and per capita GDP on the X-axis.

We see here that, as wealth rises past around $25,000 per person per year, the fertility rate drops below the replacement rate (2.1).

Now, recall that long-term economic growth has two components: productivity and labour force growth. Productivity is mostly driven by technological change. Abstracting from immigration, labour force growth is a function of the TFR.

This seems to me to introduce a paradox into our economic systems. Capitalist economies grow up to a certain point, then the TFR collapses, labour force growth slows and growth diminshes.