Monday, October 30, 2006

Auf Widersehen, Pet

by Edward Hugh


This, as many readers may well know, used to be the title of a UK TV sit-com about British building workers seeking to improve their fortunes by working in Germany, but now the times, it seems, have changed.

In 2004 more than 150,000 Germans reported to their town halls that they were going abroad—the highest number since 1884. The real figure is almost certainly much higher. Germany, once the economic engine of Europe, is on the point of becoming a country of net emigration. The museum in Bremerhaven may soon need a new wing with an aeroplane cabin or high-speed railway carriage, today's mode of departure.

This turn of events is not without irony. Until recently, politicians bickered about too many immigrants. Now it is emigrants they worry about. “A terrible development,” said Roland Koch, the premier of the state of Hesse, who once won an election by opposing a proposal to allow dual citizenship for Turks living in Germany. Business leaders are even more anxious. “More and more young people are turning their backs on Germany,” fretted Ludwig Georg Braun, president of the German Chamber of Industry and Commerce.

On the surface this may look like a case of overdone German angst. In the first six months of this year 69,000 Germans left the country, but 47,000 came back. The net outflow was 22,000 people, almost insignificant in a country of 82m people. However, according to Simone Eick, director of the Bremerhaven museum, emigration is likely to become a long-term trend.

The modest figures mask a more serious problem: brain-drain. Hard numbers are difficult to find, but anecdotal evidence suggests that many more academics are leaving Germany than are arriving, in contrast with countries such as the United States and Sweden that have a net “brain-gain”. According to a German medical organisation, about 12,000 German doctors now work abroad, many of them in Britain and Switzerland, which last year replaced the United States as the workplace of choice. Austria now ranks as the third-favourite destination.


What is curious about this situation is that the Economist doesn't seem to connect this outflow with the general demographic situation of Germany. This is, unfortunately, a lose-lose situation. Lack of internal demand inside Germany (which I argue is very much age related) produces slow growth and a stagnant labour market. Germany is suffering from a shortage of young people, and ironically this shortage is leading to more of them emigrating, and so the circle it seems continues. And as the Economist notes this outflow is even greater is you take cerebral cubic capacity (or, in economists terms, effective labour hours) into account.

Again, this situation is quite simply not sustainable: something at some point will break. This is not the first time we have here, at Demography Matters drawn attention to the knife-edge character of the situation Germany finds itself in, unfortunately I fear it will aslo not be the last.

The overall picture is however rapidly becoming clearer: in this 'population' game there will be winners and losers. Those who succeed in attracting population will be the winners, and those that don't, those whose population actually declines, will become the losers. Would that more people would stop trying to suggest that 'Demography Doesn't Matter' and started to do something before some of these countries enter an irreversible process of decline.

20 comments:

CapTVK said...

Seems DM had the first scoop, interesting that the Economist has also has noticed that Germany is slowly becoming an emigration nation, at least when it comes to native Germans.

More interestingly will be how it affects the new population projections. The new projections by the Statisches Bundesamt are scheduled for now 7th. I´ll be keeping an eye out for it.

With net immigration coming in far below the previous estimates (+200.000 net/yr) it could mean a huge difference in the long run. One 100.000 net immigrants less means 4.5 mln by 2050. And finally the people leaving are exactly the age cohorts* you DO NOT want to leave.

*I should point that it´s not only young people trying their luck elsewhere the elderly are also starting to move, this is a trend that will continue as well.

S.M. Stirling said...

Note that 'attracting population' is not a solution to ultra-low fertility.

The process potentially results in ethnic 'hollowing-out' if taken too far. Which is why the Japanese are quietly determined not to admit more than tiny numbers.

As a sage observed long ago, "It is the people who make the ground English, not the ground the people." Same thing for Germans; just living there doesn't necessarily make you one.

And even in strictly economic terms, attracting immigrants just delays the consequences (and shifts them around geographically).

If the problem is sub-replacement fertility, the only possible solution is increased fertility.

Everything else is wheel-spinning and issue-dodging.

And saying it's impossible is to say that humanity can't survive, or at least that civilization can't.

Randy said...

"As a sage observed long ago, "It is the people who make the ground English, not the ground the people." Same thing for Germans; just living there doesn't necessarily make you one."

True. Different immigrant populations assimilate into different countries at different rates.

"[S]aying it's impossible is to say that humanity can't survive, or at least that civilization can't."

Don't humanity and civilization coexist by definition?

On the subject of very long-range projections, it's noteworthy that the demographic transition appears to be a phenomenon that manifests itself across the board though with various delays. A Der Spiegel article I recently came across suggested that German Turks now exhibited sub-replacement fertility.

What's the solution? All I can do is to point out how northwestern and northern Europe to some extent, and the United States and Australasia to a greater extent, have managed to exhibit fairly high and apparently sustainable--if subreplacement--TFRs over decades-long periods. What are they doing right that their counterparts elsewhere aren't?

Anonymous said...

Possibly the largest flow of internal migration in the United States consists of retired people living in cold-weather climates moving to places where it's warm in winter. This flow accounts for a substantial percentage of the population growth in states such as Florida and Arizona. Could Germany be experiencing a version of this, with retired people moving to warmer parts of the EU such as Spain?

Peter
Iron Rails & Iron Weights

CapTVK said...

"All I can do is to point out how northwestern and northern Europe to some extent, and the United States and Australasia to a greater extent, have managed to exhibit fairly high and apparently sustainable--if subreplacement--TFRs over decades-long periods. What are they doing right that their counterparts elsewhere aren't?"

That´s one of the big questions Randy. I think it has something to do with the weaker family patterns that are more prevalent in NW Europe (UK, Scandinavia, France, Belgium, Netherlands and Denmark). Basically the extended family pattern (at least for the last 500-700 years) was never dominant there. When industrilization and urbanization started NW Europe was more ready to "adapt" to this model then the rest on the world.

Anonymous said...

"Would that more people would stop trying to suggest that 'Demography Doesn't Matter' and started to do something before some of these countries enter an irreversible process of decline."

Hate to be tiresome but you guys really need to address the question of pro-natalist policy. Demography does matter, so how about some more of it?

CV said...

'Hate to be tiresome but you guys really need to address the question of pro-natalist policy. Demography does matter, so how about some more of it?'

You are right Do but I think the reason why we are not forwarding any particular scheme is that any pro-natal policy effort is way more simple than just giving women money to have more children. Actually, pro-natal measures addressed at the quantum effect would be of little effect I think. At least initially the incentive could more meaningfully be put into place encouraging women to have their children earlier; that is the tempo effect.

In essemce, we are not saying that this is not an important and potential working solution here but that it is not a clear cut solution.

I think we have debated this before and as such I think that Edward's point about the fiscal outlook on the countries in most need of pro-natal measures is the key issue here ... pro-natalism costs!

But once again; yes it is definitely a path we want to seek out at some point.

Randy said...

For whatever it's worth, most of the heterosexuals I know personally who are interested in long-term relationships aren't interested in having children. This isn't necessarily only because the women I know are interested in pursuing their own careers, mind, but also because their male partners and the couples collectively find it difficult to get a good start in life. Frustration is key.

Anonymous said...

Edward, this is not true, however much the industry associations tried to exploit the numbers for political benefit. The figures have to be read with much more than a single grain of salt. Most German immigration researchers apparently agree that Germany is a net beneficiary of adjusting European migration patters, particularly as far as "brain drain" is concerned. Germany does have a problem as the income structure for doctors is much narrower than in most other countries, even the UK now, after the recent adjustment. English isn't big barrier anymore, so there's a particular case of brain drain that is important. But apart from that, it's just another example of the problematic quality of the Economist's reporting from Germany.

Tobias

Anonymous said...

Randy: selection bias. I suspect it's particularly strong in your case. In fact, surveys about desired fertility, show that most young Canadian women want children.

I've heard you express the opinion that young Canadians are frustrated about the economic opportunities available to them. I would be seriously interested in the quantitative evidence behind that assertion. A simple proof would simply be data showing that young Canadian school-leavers earn less in real terms and are more likely to be unemployed than young Canadians were at a similar age 20 years ago.

I'll also explain Steve's comment. (Steve, please correct me if I've got you wrong.) As far as we know, the demographic transition is a side-effect of urbanization, sexual equality, and economic growth. A reasonable definition of "civilization" would be societies that are urbanized, sexually equal, and rich. Permanent subreplacement fertility in such societies means that at some point in the future they will disappear. Humanity as a species, of course, might survive.

Everyone: it may or may not change your assessment, but you all really do want to be watching the completed fertility statistics and not the TFR. As Edward has mentioned on many occasions, tempo effects make it very difficult to interpret TFRs in countries where the age at first childbirth is changing rapidly.

CV: I'd like to second Do's point, although I understand your reluctance.

Steve and Edward: here's something you might not have considered in your earlier exchange --- isn't the delay in first childbirth providing strong selection pressure to increase the female (and, hell, male) fertile lifespan?

This isn't my idea. See "Opossums and career women" in The Economist, 10 February 1990.

Anonymous said...

Sorry! Many apologies. That's me above.

Noel

Edward said...

Hi Tobias,

"Edward, this is not true"

I'm really not sure what you are saying here Tobias, that the numbers are not correct (but they seem to come from the Federal Statistical Office) or that there are more unskilled leaving and more skilled workers arriving. This I find hard to accept.

The FT had a very interesting and relevant piece on the German labour market this morning, highlighting the distinction between first and second class jobs, and the fact that the German labour market was now producing more (proportionally, and as a trend) of the latter, and this is consistent with the skilled and educated leaving theory. Basically the important point is that this runs completely counter to the direction you need to be moving, which is towards higher value work (Italy of course has the same problem). You simply cannot pay for an increased elderly dependent population with a reducing labour force by outsourcing - one way or another - the higher value work. In this way living standards can only fall.

As Thomas (CapTvK) indicates it "Seems DM had the first scoop". He is refering to his post back in March on this topic. You say:

"Most German immigration researchers apparently agree that Germany is a net beneficiary of adjusting European migration patterns"

Well I'd like to see the argument and the evidence for this. The consensus view over here at DM seems to be that this is a path dependent dimension of the ongoing demographic transition. It is path dependent since to some extent things depend on the initial conditions like rates of economic growth and attitudes to immigration and family policy, but that if you get the wrong mix here, which Germany definitely has got, then you have the possibility of a self-reinforcing negative process.

European migration patterns seem to imply winners and losers. Germany, Denmark, the Netherlands (maybe Belgium) seem to be on the losing end, while the UK, France, Sweden, Ireland, Spain (and maybe Greece) may well be net benificiaries of the re-adjustment.

My general feeling is that Germany is still in denial about the importance of all this, and about the fact that we are living through a demographic transition of important dimensions. I fear this denial leads to inaction, and that inaction will lead to more and more problems. Let's hope people start to wake up before things go into tailspin.

Edward said...

Hi Noel,

"As far as we know, the demographic transition is a side-effect of urbanization, sexual equality, and economic growth."

OK, if we are talking about the 'second' part, the part the developed societies are passing through now, then this formulation is fine: it is a side effect, and will continue so to be, so it will continue.

If we were talking about the first part of the transition, the one from high-fertility/low-life-expectancy down to modernity, I would say that the transition itself may well do more of the causal work. The key point would be that once the first part is set in motion the second part seems to follow in a way which is reasonably forseeable.

"Permanent subreplacement fertility in such societies means that at some point in the future they will disappear."

Yes, that is what this means, if it remains permanent. But permanent is a long time, and the future is hard to see (in general). So how sub replacement fertility will evolve is hard to say at this point.

The reasons for the phenomenon are surely complex, which means we should be wary of the idea that there are any simple 'fixes' available.

"isn't the delay in first childbirth providing strong selection pressure to increase the female (and, hell, male) fertile lifespan?"

Well this is just one of the issues Noel, age at puberty has moved downwards significantly, while age at menopause has remained stubbornly constant. So there is no evidence for any rescaling of female reproductive lives as we live longer.

In general, of course, "selection pressure" doesn't operate over simply one or two generations, but there are much bigger issues about life expectancy and ageing lurking in the background here. I have been thinking a lot about these in recent months and at some point posts will appear. Basically we are living longer, but are we ageing any more slowly. To date the evidence seems to suggest that we continue to age at the same rate (eg menopause, but there is a lot moreuwsji) so we have extra years, but not necessarily extra quality years.

Anonymous said...

Edward,

As you recognize, the change in age at puberty is due to changes in the immediate environmental conditions, while the change in fertility that I hypothesized is a long-term change due to selection pressure.

In other words, it's just another hypothesis as to why the human race (or, more limitedly, "civilization") is very unlikely to die out because of subreplacement fertility.

Your prose conflates the two issues, although I don't think that you conflate the two.

Best,

Noel

pvnam_3 said...

«««««« mini------spam»»»»»»
ETNIC SEPARATISM OF NATIVES
--- Don't be Idiots!!!
--- The way to go... it isn't 'lick-the-boots' to the Majority of the Europeans!
--- The way to go... it is 'make war' against the White Parasite... i.e., the ETHNIC SEPARATISM:
(... before being too late...)
-1- a space (50%) of Total Competition (i.e., a globalisation space);
-2- another space (50%) of Natural Reserve: for the preservation of Natives Ethnic Identity.
{ see: 50-separatism-50 }


NOTE 1: The Space of Total Competition (50%)... will be for the Europeans (the majority: i.e., White Parasite)... that... want to be in the Parasite-Enjoy ... i.e.:
-1- they claim to enjoy immigrant servile labour at 'price of rain';
-2- they claim to enjoy the existence of persons to pay the retirement pension [ in spite of... they doesn't make a Society where exist Demographic Renewal!!! ]

NOTE 2: The Space of Natural Reserve (50%)... will be for the Europeans (a minority)... whom they intend to be in the Planet - with dignity, courage and determination - fighting for the Survival of his Ethnic Identity.

Edward said...

Thank you pvnam for your most interesting and revealing comment. Your language is rather strong, but perhaps we could leave that on one side for the moment.

You talk of a "white" majority, but of course not all Europeans by any means are white these days, and in particular down here in Southern Europe you would have to have a rather peculiar definition of white to call us "white", but again we'll leave that by the by.

Lee Kuan Yew (about whom I do have my reservations) once put it like this: globalise or die.

He didn't mean this to be taken literally but after reading your comment I can now see how it could be.

Maybe those of us who are in what you call the Total Competition group are what you would consider to be total cowards, but we aren't ready to die, at least not yet we aren't.

"with dignity, courage and determination"

Thank you for making this clear, with all of this, but without pensions, health systems, and most probably without employment: ie in the most miserable poverty.

Thank you for this most noble gesture - in a world which is short of resources I am sure in India and China they will be appreciative of your generosity and spirit of sacrifice, but forgive me if I prefer to go another way, and try to save - in the fairest and justest way possible - what we have.

S.M. Stirling said...

I doubt the significance of age at first childbirth.

This isn't significantly different now than it was in the early-modern period, at least as far as northern and western Europeans and their descendants are concerned.

It was always (except for a period in the 18th and 19th centuries) rare for women to start reproducing before their mid-twenties. And a significant proportion always married later than that.

What's changed, of course, is the number of _subsequent_ children.

nz conservative said...

One thing a lot of people seem to forget is that an aging population is not a declining population.

If we respond to population aging through immigration, we will end up with more crowded countries- and the negative factors associated with that.

Look how well lightly poulated resource rich states like Norway, Australia and Canada are doing at the moment - fiscally strong while still enjoying a high quality of life.

An aging poulation does have a positive, which is that we can pull all the stops to raise productivity without increasing unemployment.

Germany should not respond to its demographic problems with immigration. Instead it should introduce more labour market flexibility.

Countries like Australia have shown that shown that labour market flexibility can be introduced without undermining poductivity and wage rates.

If wage rates are protected the workers will buy into labour market flexibility.

When Germans think of labour market flexibility they think of the "pay peanuts get monkeys aproach" that you see often see in parts of the the UK economy- it doesn't have to be this way.

Edward said...

Hello NZ Conservative.

You have a valid and reasoned point of view, I just don't happen to agree with it.

The key question here is median ages, and their relentless rise. All this is argued on a more recent post, so by and large I refer you to that.

"One thing a lot of people seem to forget is that an aging population is not a declining population."

No, you are right, but there is a large and significant rise in the elderly dependent population and a significant rise in median ages (which does have macro consequences as spelled out in the above mentioned post).

The key question is the generational transition. We cannot stop ageing, nor should we wish to, it is after all good news for all of us. But we do need to address the economic dynamics of the transition, and soften the blow if we can, this is IMHO where immigration comes in.

"Germany should not respond to its demographic problems with immigration. Instead it should introduce more labour market flexibility."

I don't agree. But let me be clear, Germany obviously needs ongoing labour market, structural and welfare reforms, otherwise it will, quite simply, go bust.

The macro consequence of Germany's very high median age (43) is that it cannot generate enough internal demand to produce the economic growth needed to honour its responsibilities to its elderly population (health and pensions). It therefore needs to export to achieve the growth. This creates an ongoing global situation (the so-called imbalances) as it needs to run ever greater trade *surpluses*.

Having more young people via immigration would help balance this domestic imbalance a bit, but only a bit.

"Countries like Australia have shown that shown that labour market flexibility can be introduced without undermining poductivity and wage rates."

You need again to think about median ages here. Australia and New Zealand are still comparatively young societies, so you still have the opportunity to 'age with grace'. A judicious use of immigration policy can help a lot here. You need to do something before you start to reach the age which Germany, Japan and Italy now have.

"An aging poulation does have a positive, which is that we can pull all the stops to raise productivity without increasing unemployment."

This is very much a wish rather than a demonstrated reality. The jury is obviously still out, but what evidence we have suggests that this is going to be difficult. There is a biological dimension to ageing, and it is hard to avoid this. More posts to come.

Anonymous said...

I think that technically alot can still be done to increase productivity, however, I realise that just because something is technically feasible doesn't mean it will happen in practice.

For example, in an aging democracy, it may be politically difficult to sustain the high rates of saving and investment that are essential for increasing productivity.

About the only thing I can suggest to raise fertility is to make housing cheaper - but again, measures like heavy taxes on property speculation won't be politically popular.

In the long run fertility may end up being raised 'bio-politically' with social conservatives outbreeding social liberals, and clustering geographically in areas with conservative pro-family federal governments.

There are signs this may already be starting to happen in North America. Obviously, though outmigration adds a extra layer of complexity in Europe. It would be very difficult to guess where a breeding upturn might occur in Europe.