Wednesday, February 27, 2013

The Shortgage of Bulgarians Inside Bulgaria

Oh, there's a hole in my bucket, dear Liza, a hole......

Wenn der Beltz em Loch hat -
stop es zu meine liebe Liese
Womit soll ich es zustopfen -
mit Stroh, meine liebe Liese

According to Angela Merkel, speaking in the German city of Mainz in mid February,  European countries struggling with the fallout of the euro-area debt crisis have much to learn from East Germany’s experience with economic overhaul following the fall of the Berlin Wall. In the main she was speaking about the need for reform, something on which we can all agree. “At the beginning of the 21st century", she said, "Germany was the sick man of Europe and that we are where we are today also has to do with reforms we carried out in the past. That’s why we can say in Europe that change can lead to good.”

But there was one tiny little detail she forgot to mention. During the post unification period East Germany's population went into melt-down mode. New York Times Columnist Nicholas Kulish put it like this:
Unemployment in the former East Germany remains double what it is in the west, and in some regions the number of women between the ages of 20 and 30 has dropped by more than 30 percent. In all, roughly 1.7 million people have left the former East Germany since the fall of the Berlin Wall, around 12 percent of the population, a continuing process even in the few years before the economic crisis began to bite.

And the population decline is about to get much worse, as a result of a demographic time bomb known by the innocuous-sounding name “the kink,” which followed the end of Communism. The birth rate collapsed in the former East Germany in those early, uncertain years so completely that the drop is comparable only to times of war, according to Reiner Klingholz, director of the Berlin Institute for Population and Development. “For a number of years East Germans just stopped having children,” Dr. Klingholz said.

The newspaper Frankfurter Allgemeine Zeitung reported recently that although 14,000 young people would earn their high school diplomas this year in Saxony, only 7,500 would do so next year. Since 1989, about 2,000 schools have closed across the former East Germany because of a scarcity of children.
Now this situation is quite serious, and needs a long term solution, but it is not as serious as what is currently happening to Latvia, or Bulgaria, or a number of the other former communist states. Unless, of course, the lesson Angela would like to draw our attention to is that East Germany managed to salvage something from what would otherwise be population wreckage by sneaking in under the shelter of another state, with a centralized system of support for pensions and health care. Somehow I doubt it, but perhaps this is what we need to think more about. The EU needs a pan European health and pension system, to distribute the burden equitably. This is the conclusion I reached during my last visit to Riga. It isn't just a Euro related issue, it is to do with having a unified labour market, with people able to move to where the jobs exist, and the pay is better. For years people complained about the absence of labour mobility in the EU. Now we have it, the flaw in the institutional infrastructure is obvious.

Young people are moving from the weak economies on the periphery to the comparatively stronger ones in the core, or out of an ever older EU altogether. This has the simple consequence that the deficit issues in the core are reduced, while those on the periphery only get worse as health and pension systems become ever less affordable. Meanwhile, more and more young people follow the lead of Gerard Depardieu and look for somewhere where there isn't such a high fiscal burden, preferably where the elderly dependency ratio isn't shooting up so fast.

I am sufficiently concerned about this issue, which I think ultimately endangers possibilities of economic recovery all along the periphery, to have created a dedicated facebook page, campaigning for one single issue - that the EU Commission and the IMF give a greater priority to trying to measure these flows, and understand their consequences. I am simply asking that they pressure EU member states to improve their statistics gathering, treat the issue as a priority, and identify an indicator to incorporate in the Macroeconomic Imbalance Procedure (MIP) Scoreboard. Really it doesn't matter whether you are in favour of austerity, or against it, feel more Keynesian than Austrian, or vice verse, all I am asking for is that this problem be taken more seriously, measured and studied.

Bulgaria The Classic Case?

Really there has been a before and after to the financial crisis, at least insofar as awareness of the demographic dimension is concerned. Really, before the onset of the crisis very few people really attached much importance to the question. Since the arrival of the European sovereign debt crisis, and the fiscal cliff debate in the United States, awareness has grown that population ageing probably will slow economic growth, and that previous expectations about levels of pension and health care provision may have been way too optimistic. The latest example of this has been Nobel Laureate Paul's Krugman's comments on how Japan's demographics may be influencing its growth rate. In a tellingly graphic expression he explains that the root of Japan's ailment might be that the country is suffering from a growing "shortage of Japanese".

Once you realise that population shortage may be a problem in Japan, you start  wondering where else it might be one. And then, once you begin to look you start seeing the issue springing up like mushrooms all over the place. In Bulgaria for example.

According to the 2011 census, Bulgaria has lost no less than 582,000 people over the last ten years. In a country of 7.3 million inhabitants this is a big deal. Further, it has lost a total of 1.5 million of its population since 1985, a record in depopulation not just for the EU, but also by global standards. The country, which had a population of almost nine million in 1985, now has almost the same number of inhabitants as in 1945 after World war II. And, of course, the decline continues.

As well as shrinking the population is ageing. In 2001 16.8% of the population were over 65. Just 10 years later the equivalent figure had risen  to 18.9%. Naturally this means the median population age is rising steadily. It is precisely part of my argument that this surge in median age over 40 has important consequences for saving and borrowing patterns at the aggregate level, patterns which have not yet been adequately measured and identified. Thus the macroeconomic dynamics of a country change. The impact of these changes has not yet been incorporated into the traditional models most analysts use in forecasting.

 Naturally the workforce itself is in rapid decline.

The causes of Bulgaria's rapid ageing and shrinking population problem are twofold, low fertility and emigration. This is what makes the country look more like the old DDR and less like Japan. In fact Bulgaria's situation is an extreme case of what is happening in many East European countries, especially Romania and the Baltics. If you want another reference point, Ukraine would be in this group, but even worse, since it is even outside the EU. 

Details of migrant numbers are scarce, and at best hedgy. The data we have is surely a significant underestimate, as the OECD pointed out in its latest country migration report:
Figures on declared emigration show an increase from 19 000 in 2009 to 27 700 in 2010. However, actual outflows are considered to be much greater, based on immigration statistics of th e main destination countries. Spain, the most important destination country in recent years, recorded 10 400 Bulgarians entering in 2010, 7% more than in 2009. Outflows of Bulgarian citizens from Spain also increased in 2010, to 7 600 from almost 5 000 in the previous year (+52%). The number of Bulgarians in Spain increased by 14 500 in 2010, and a further 13 000 in 2011. There are no consistent data for Greece, the second main destination of Bulgarian immigrants in recent years, but it seems that the stock increased less in 2010 than in previous years. 

Remittances data gathered by the World Bank give the general picture. Basically there was a large surge following the severe crisis of the late 1990s, and since that time the level of payments has only weakened slightly, on the back of the severity of the crisis in the main destination countries.

Bulgaria is also pretty much what the old DDR would look like if it hadn't fused with Western Germany, namely it much more similar to Hungary than it is to Japan (in the sense I discussed in this post) as it has a significant negative balance on the net international investment position (though not as large as Hungary's), which means as well as being quite poor it is totally unprepared for rapid population ageing (since the text book way to sustain pension and health benefits in a context of increasingly weaker headling GDP growth is normally thought to be to draw down on overseas assets).

Bulgaria  also bears comparison with Hungary for the way it has carried out a rapid correction on its external position. This is due largely to remittances and services exports, since the goods balance is still in deficit. But still, the turnround is impressive.

As elsewhere exports have performed very strongly.

But again to no real avail, since domestic demand is deflating so strongly that the economy struggles to find air...... and growth. In this sense it is hard to agree with the IMF Executive Directors when they state in their latest Public Information Notice, following conclusion of the Fund's 2012 Article IV consultation,  they "broadly agreed that the currency board arrangement has served Bulgaria well". If allowing a country to drift towards long term melt-down is doing well, I would hate to see what something which they thought was an impediment would do! Some thing is rotten in the state of Denmark, and that something isn't being identified or dealt with.

Naturally part of the problem is that the flow of credit has dried up.

But the other part is surely the one Krugman identified in Japan, the growing shortage of Japanese (sorry, Bulgarians). It is hard to see how you can get serious retail sales growth in a population that is shrinking so rapidly. The end result is that the economy grew steadily into the global crisis, and subsequently has stagnated. This stagnation isn't simply conjunctural anymore, it has become structural, as the decline in domestic demand associated with ongoing deleveraging and population ageing and shrinkage precisely offsets the positive impact of all that export growth.

Not everyone is convinced, of course. The IMF expect the Bulgarian economy to return to a rate of growth of between 3% and 4% after 2014, but looking at the demographics and comparing it with what we are seeing elsewhere that seems pretty unrealistic. What is the expression Christine Lagarde would use? "Wishful thinking" perhaps?

In any event, in the short term the country looks set to significantly underperform any such rosy expectations. FocusEconomics Consensus Forecast panellists expect the economy to expand 1.4% this year. In 2014, the panel expects economic growth to reach the impressive rate of 2.4%.

Growing Political Discontent

 Since Bulgaria is a small country, and a poor one to boot, most of the above had been going on virtually unnoticed by the rest of the world. Then last week the Bulgarian government suddenly resigned en bloc. The immediate cause of the crisis which lead to the resignation was  the continuing rise in energy costs, a rise which was largely blamed on the Czech provider CEZ. To appease the street protestors the government has now initiated a procedure to revoke the company's licence, a move which has started to raise concerns about institutional protection in the country.

According to the report in Bloomberg:
Bulgaria’s State Financial Inspection Agency started a probe into CEZ’s Bulgarian units last year and submitted a report on Feb. 8, saying that CEZ ‘‘evaded requirements of the Law for Public Tenders,” the Energy and Economy Ministry in Sofia said on Feb. 18. The ministry asked the authority to conduct a similar investigation into the local units of Austria’s EVN AG and Prague-based Energo-Pro, it said. Bulgaria sold seven power distributors in 2005 to EON SE, CEZ and EVN before joining the European Union. EON sold its Bulgarian companies to Energo-Pro in 2011.
Czech Prime Minister Petr Necas was not slow to respond:
“I regard the statements by Bulgarian officials about CEZ and other foreign companies as very non-standard and see the whole issue as highly politicized because of the approaching parliamentary elections,” Necas said. “I expect Bulgaria, as a member of the European Union, to stick to its international obligations, European law and its own laws on protection of foreign investments.”
Naturally energy prices are not the only issue. The population is tiring of austerity, and living standards that don't rise even as unemployment does.

One symptom of this is that Bulgaria's government sacked Finance Minister Simeon Djankov at the start of last week. Djankov was closely identified with austerity policies, and it isn't hard to read his departure as an attempt to curry favour with voters in elections which are due this summer.

Having said that, the country's government debt at under 14% of GDP is incredibly low, so there is room for flexibility, if it wasn't populist flexibility. The real issue is that simply spending more this year, or next, won't fix the underlying problem, and that problem is unlikely to be addressed until it is recognized as a problem by the institutions responsible for economic policy formulation. As someone once said, de-nile is not only a river in Egypt.

This post first appeared on my Roubini Global Economonitor Blog "Don't Shoot The Messenger".


 According to wikipedia: "There's a Hole in My Bucket" (or " the Bucket") is a children's song, along the same lines as "Found a Peanut". The song is based on a dialogue about a leaky bucket between two characters, called Henry and Liza. The song describes a deadlock situation: Henry has got a leaky bucket, and Liza tells him to repair it. But to fix the leaky bucket, he needs straw. To cut the straw, he needs a knife. To sharpen the knife, he needs to wet the sharpening stone. To wet the stone, he needs water. However, when Henry asks how to get the water, Liza's answer is "in a bucket". It is implied that only one bucket is available — the leaky one, which, if it could carry water, would not need repairing in the first place.

The origin of this song seems to go back, oddly enough, to the German collection of songs known as the Bergliederbüchlein. Ironically Henry's Q&A with Liza fits the quandry facing the countries on Europe's periphery and their lack of constructive dialogue with their core peers about the roots of their problems to a tee.

Monday, February 25, 2013

On the outports of Newfoundland as a globally-relevant paradigm

A couple of weeks ago, a friend of mine wrote an essay about the outport communities of Newfoundland, an essay titled "On Futility". The outport is a form of community unique to Newfoundland, a densely-populated coastal village with a population in the dozens or hundreds dependent on the once-abundant cod fisheries. A 2008 article by Jenny Higgins for the Newfoundland Heritage site points out how low living standards and the attractiveness of other areas--urban Newfoundland, mainland Canada, maybe even points further--created a tradition of emigration that only intensified after the collapse of the same fisheries in the late 1980s and early 1990s.

[The Newfoundland fisheries] existed for centuries and employed thousands of people, with many more engaged in processing, exporting and transporting the catch.

Then it got overfished. It collapsed in the early 90s, and it crashed hard: in some areas, stocks declined 99% over 50 years.

The fisheries have been under a moratorium for exactly 20 years now. There has been no improvement. Instead, the ecosystem is changing: invasive species are moving in, predators are devastating the remaining populations, and there is little to no evidence of a recovery. The Newfoundland fisheries are, for all intents and purposes, dead.

Large numbers of Newfoundlanders refuse to accept this. They demand that the fisheries be re-opened, as if the fish are merely hiding: the second a boat hits the water, the cod will come leaping out of the surf by the thousands, eager to be caught.

Others have accepted that the fisheries are dead, but insist that the jobs need to find them: they’re going to sit tight and wait for the government to find an industry for each and every teeny, tiny dot on the map. Even the towns with only a dozen residents. Even the towns accessible only by sea. Even the towns without reliable electricity or running water.

The hinky thing is that the young people seem to get it.

The exodus from the outports, and rural Newfoundland, is continuing to this day. There have been news reports of a very partial recovery of cod stocks last year, not nearly enough to justify the revival of the fisheries outports. A 2011 essay by sociologist Deatra Walsh--in Walsh's case, the town of Lewisporte--points out that many rural communities of Newfoundland may survive, service towns and the like, but that the outport is doomed. A 2001 paper (PDF) by Hamilton and Butler, "Outport Adaptations: Social Indicators through Newfoundland’s Cod Crisis", emphasizes that rural Newfoundland managed to retain a fair amount of social cohesion in the decade after the mortatorium in 1992, thanks to off-the-book employment and federal subsidies. In a 2012 opinion piece in the National Post, Newfoundland-born columnist Rex Murphy points out that the collapse of the outport has significant cultural repercussions for Newfoundlanders.

The end of the cod fishery stirred the greatest in-country migration of Newfoundlanders of modern times. Thousands of fishermen and plant workers and their families, scattered through all the towns and villages of Newfoundland’s meandering coastlines, were forced to look elsewhere for sustenance and employment. They were forced to abandon what they knew best, the environment of their families for generations, the peculiar set of skills that goes with fishing, and go out of province to an abruptly new life.

The moratorium brought on a seismic alteration in Newfoundland. The outports have been drained of their most active people; the long chain of continuous living from the sea and living on its very borders has been broken beyond repair. Many of the famous towns and outports — names that have been in songs and stories almost forever — are now whittled to half their size and less. Some old people remain. The younger come back every little while to visit, see parents, or just to savor time close to the water. But the dynamic life of the majority of outports is over with the fishery that gave birth to it.

It’s a striking, very melancholy change. While the outports dwindle into mere picturesqueness, the capital city of St. John’s explodes with activity and commerce from the offshore. There’s a Calgary feel to how fast things are moving in St. John’s. The offshore oil developments came at a very providential time. They also, I think, take the mind away from the stark prospects of Newfoundland outside the city.

[. . .]

Those who have left for good know how deep the change was. Those who remain carry the largely unspoken insight that outport Newfoundland, which gave birth to such a singular culture, rich in humour and pathos, indented with hardship and tragedy, and irresistible to those who felt its appeal, is on the point of vanishing.

All this is true. And yet, I'd suggest that the movement away from the outports towards urban areas--places like the capital city of St. John's, or like any number of destinations in Canada like the big cities of Ontario or Alberta--is a good thing for the people who lived there, or who would have lived there. Isolated one-industry villages capable of providing only marginal standards of living aren't good places to live. I'd question, like Wonkman, if it's a good idea to spend resources keeping non-viable communities alive at an artificial level of activity, as opposed to allowing for a certain amount of planned decline. Certainly the young people of the outports don't seem interested in staying in communities which have outlasted their economic base.

Saturday, February 23, 2013

On North Korea becoming a place where people are from

Writing at Lawyers, Guns, and Money, Robert Farley linked to some interesting efforts being made to plan for Korean reunification. Reacting to this conference report, one Robert Kelly took issue with the idea that reunification could be managed as anything but a wholesale and terrible expensive takeover of the North by the South, on account of the North Korean state's lack of legitimacy compared to South Korea.

This will bring about numerous issues, especially he notes in regards to migration issues.

Getting NK up to speed ASAP is also necessary to forestall a massive migration southward with consequent North Korean ghettoes emerging around Southern cities and all the crime, resentment, and pseudo-identity politics that would create. The likely food shortages alone will probably drive Northerners southward. USFK/ROKA ideas of air-dropping food into North Korea are band-aids, and notions of a green revolution to improve NK agricultural production will take several years to fall into place. But the obvious attraction of Southern lifestyles will be the true driver as it was in Germany, a point I am surprised was not made in the report.

It is worth noting how much internal migration there was in unified Germany. Pusan National University had a German speaker on this issue of post-unification migration. He noted that it was 20% of the entire ex-GDR population, slowed only by moving the capital to the east, an option a unified Korea would not likely entertain. I have written this up on my blog (October 22, 2010), and the Project might like to contact the speaker.

Migration-deterring notions like an internal passport or temporary work permits for Northerners in the South would appear terribly immoral, suggest North Koreans are second-class citizens, embarrass Korea before global opinion, and fire revanchist Northern political entrepreneurs. Once the DMZ is open, it will be politically near-impossible to reclose it without North Korea turning into something like the West Bank, a semi-occupied wild west zone in legal limbo, or a gigantic SEZ for the chaebol. Either way, it would appear so immoral before global opinion, and ‘illegal internal immigration’ would be so persistent, that I cannot imagine it will work.

I've blogged here about South Korea's emergent status as a country of immigration, at least as early as September 2009 and most recently earlier this month. The idea that North Korea may become a major source of immigrants is something that makes perfect sense to me, given the dysfunction in the North as contrasted to the prosperity in the South and assuming the reunification of the Korean peninsula--as I wrote in March 2010, very many North Koreans will want to head south. I've also written in November 2010 about how the contrast between a relatively multicultural South and a North that prides itself on ethnic purity may already be complicating intra-Korean relations, and may complicate relations significantly if Korea is reunified.

South Korea, as I noted, is becoming a place that people are moving to. North Korea, in the 21st century, is going to be a place that people are from. I don't think economic convergence with the south if reunification occurs is going to proceed at anything like the speed necessary for anything but the maintenance of the inter-Korean border to prevent large-scale migration south. As I noted in March 2010, North Koreans can go elsewhere, too, whether to adjacent China, Russia, Japan or points beyond. Last September here in Toronto, local news media covered the mass wedding of 15 refugee couples from North Korea at Toronto City Hall--see the tabloid Toronto Sun and the broadsheet Toronto Star for examples.

Friday, February 22, 2013

On how a lack of fluency in German is hurting Europe's single market

The Economist recently observed that, for all that the European Union is supposed to function as (among other things) a single market for labour, Europeans from countries hit hard by the Eurozone crisis aren't moving in the numbers that one would expect. A lack of fluency in the German language is identified--fairly, I think--as a major concern.
Spain has a youth unemployment rate of 56%. In Greece it is 58%. By contrast, Germany has negligible youth unemployment (8%) and a shortage of qualified workers. Theoretically, people should be willing to move from the “crisis countries” to the boom towns, just as the Okies once flocked to California.

To some extent this migration is indeed happening. New arrivals in Germany in the first half of 2012 grew by 15% over the same period in 2011, and by 35% net of departures. And the numbers of newcomers from the euro crisis countries increased the most—Greek arrivals were up by 78%, Spanish by 53%, for example. But the absolute numbers (6,900 Greeks and 3,900 Spaniards during those six months) are still modest.

It is “astonishing how astonishing it still is that they are coming”, says Holger Kolb, at the Expert Council of German Foundations on Integration and Migration. Some things are beginning to work as intended, such as the elimination of bureaucratic hassles for moving within the EU. Yet it seems that the EU can never become a truly integrated market. That is mainly because of language. Mr Gómez finds Germans challenging—“always nagging you about recycling or noise or whatever”—but the language is “the hardest part”.

Thus language has replaced work visas as the main barrier to mobility. When the euro crisis began, the branches in southern Europe of the Goethe Institute, the German equivalent of the British Council, were overwhelmed by demand for German courses, says Heike Uhlig, the institute’s director of language programmes. That demand was also different, she adds: less about yearning to read Goethe’s “Faust” than about finding work. So the institute retooled, offering courses geared to the technical German used by engineers, nurses or doctors.

The problem with this is that the German language isn't nearly as widely spoken a second language as English, or (relative to the number of first-language speakers) French. I pulled these maps from Wikipedia's article on languages in the European Union. Due credit to the creators can be found at the Wikipedia site, and on my Flickr pages hosting the images.

First comes German.

Knowledge of German in Europe (2005)

German as a foreign language in Europe (2005)

Next, English.

Knowledge of English in Europe (2005)

English as a foreign language in Europe (2005)

This data is taken from a 2005 survey. Looking at a 2012 followup, it seems like fluency in German may have fallen off further.

It's worth noting two things.

1. German is much less wide-spread than English. The two maps might actually be slightly misleading, in that they have different scales. I'd assign responsibility for this to the catastrophic outcome of the Second World War, which led to the liquidation via migration of the German communities in the east and the collapse of German as a language of wider communication. Regardless, German has a long way to go to catch up.

2. By and large, fluency in German is least common in the Eurozone countries hardest hit by the crisis: Spain, Italy, Portugal stand out for their lack of speakers. Again, German has a long way to go to watch up.

Thursday, February 21, 2013

"Why Permanent Residents Should Be Allowed to Vote in Toronto"

Writing for the Toronto blog Torontoist, Desmond Cole recently suggested that permanent residents in the city of Toronto should be able to vote in municipal elections.

In 2006, Ryerson municipal affairs expert Myer Siemiatycki estimated that at least 250,000 Toronto residents, or 16 per cent of the city’s population, could not vote in municipal elections because they were not citizens. He describes this as a “lost city” of residents—who pay municipal taxes through their mortgages or rent, and contribute to services and programs through various user fees—but have no say in electing the mayor, city council, and school board trustees.

We have much to gain from giving permanent residents a direct say in Toronto’s election. Those who use and pay for services have a right to hold their relevant elected officials to account.

It is important for these residents to feel as welcome to shape programs and services as any citizen. Non-citizen residents can do this through advocacy, public consultations, and many other general forms of engagement, but with voting comes a more powerful kind of inclusion, symbolic and otherwise. Extending the vote empowers those who qualify to proudly identify themselves as fully engaged participants in civic life, not merely ratepayers or service users. Having more Torontonians taking up this responsibility is a good thing for our politics.

In Thorncliffe Park, a central east Toronto neighbourhood, one in three people is a child between five and 13 years of age. Thorncliffe is also home to immigrants from South America, South Asia, and the Middle East. But parents of children in Thorncliffe can’t choose their school board trustee simply because they are not citizens. Yes, politicians in these neighbourhoods are charged with representing everyone, non-voting residents included. But at election time, their decisions not to canvas houses, apartment buildings, and areas with high non-citizen populations tells those residents that their opinions matter less because they are not the ones going to the polling stations.

Canada has one of the highest rates of naturalization, or turning immigrants into citizens, in the world. Statistics Canada found in 2006 that four in five Canadian immigrants had become citizens, and that figure was on the rise. Some see this as an argument against extending the franchise to non-citizens: if most immigrants will become citizens anyway, why not wait until they have to give them the vote? But this is backwards. Since we know the vast majority of immigrants will pursue and obtain citizenship, delaying what in most cases will happen anyway is an artificial barrier to more robust participation in civic life.

The post was controversial, accumulating (at present) 58 comments. Many were opposed to the idea on principle, while others saw it as less necessary than boosting political participation including voting among people who are citizens already. Cole's rationale, though, does appeal to me, all the more so since--as he points out--any number of countries already do allow foreigners resident the vote in local elections. Most germanely, European Union citizens can vote in municipal and European Parliament elections across the Union, while Commonwealth citizens has access to the electoral roll in a diminishing number of countries. (Perhaps surprisingly, given the trend in the United Kingdom to limit Commonwealth citizens' access to the country, Commonwealth citizens still have the vote. In Canada, in marked contrast, the tendency has been to move away from this principle.)

Wednesday, February 20, 2013

"Singapore is not serious ..."

The above is the title of a post by The Power and the Money's Noel Maurer that took a look at the actual subsidies, mentioned in passing in the recent post on Singaporean population policy. Briefly, even the various financial incentives offered by the Singaporean government--heavily subsidized fertility treatments, baby bonuses and tax incentives, child care subsidies--aren't that significant relative to the costs of parenthood.

[T]he median income in Singapore is $28,800 per year. For a couple with two children, you get a one-time gift of $9,600. Then you get $5,760 for day care ... which drops in half when the child is no longer an infant. (And does not get you much unless day care is much cheaper than in the United States. Unlicensed housefront operations in Queens Licensed home operations in Upper Manhattan cost more than about $480 a month.) Our hypothetical two-income couple has an income tax liability of $2,232 (calculated using this chart from the Singaporean tax authorities) which unless I am greatly misunderstanding means that the value of the subsidy is effectively capped.

Total annual payments: a one-time first-year gift of $12,792, followed by $5,112 per year until the child enters school. Life-changing, this is not. And worse yet, if you needed fertility treatments, which most older couples do, you needed to think about the cost. (Israel does it differently.)

This is not serious.

Tuesday, February 19, 2013

Taking a look at Jonathan Last's arguments on migration

Demographics writer Jonathan Last (Wikipedia article, official site) has gotten a fair bit of attention for his Wall Street Journal essay "America's Baby Bust", wherein he argues that the United States' slowing economy is directly connected to low fertility. Much of the reaction to his analysis has been critical. Writing in The New Republic, Rui Texeira questions Last's dismissal of immigration and his piecemeal remedies for low fertility (tax breaks as opposed to government programs). It's taken apart scathingly by Love, Joy, Feminism!'s Libby Anne, who rightly finds Last's equation of Chinese forcible one-child policy with small American families ridiculous, Last's dismissal of the idea that things could be done to make family life easier on the grounds that people shouldn't necessarily expect happiness ill-guided, and makes an argument that Last's focus on fertility of well-off white American women reflects the "race suicide" rhetoric of early 20th century American eugenicists.

Me, I'd like to take a look at a Los Angeles Times op-ed that got published on the 8th of February, simply titled "Fertility and Immigration". I think this to be one of those articles that could benefit from a fisking.

In Washington, politicians are trying to reform America's immigration system, again. Both President Obama and Republican Sen. Marco Rubio (R-Fla.) are proposing "paths to citizenship" for an estimated 11 million illegal immigrants. Other proposals abound, including finishing the border fence, creating a better E-Verify system for employers and passing the last Congress' Dream Act.

All of these ideas, however, fundamentally misunderstand immigration in America: Future immigration is probably going to be governed not by U.S. domestic policy choices but by global demographics.

1. In Last's defense, he does say "probably".

2. Against Last, he really does overlook the importance of policy in determining major migration flows. Consider the movement of Poles to Germany. Large-scale Polish migration west dates back to the beginning of the Ostflucht, the migration of Germans and Poles from what was once eastern Germany to points west, in around 1850. By the time Poland regained its independence in 1919, hundreds of thousands of Poles lived in Germany, mainly in the Ruhr area and Berlin. Leaving aside the exceptional circumstances of the post-Second World War deportations of Germans from east of the Oder-Neisse line, Polish migration to (West) Germany continued under Communism, as hundreds of thousands of people with German connections--ethnic Germans, members of Germanized Slavic populations, and Polish family members--emigrated for ethnic and economic reasons. In the decade of the 1980s, up to 1.3 million Poles left the country, the largest share heading for Germany. Large-scale Polish migration to Germany has a long history.

And yet, in the past decade, by far the biggest migration of Poles within the European Union was directed not to neighbouring Germany but to a United Kingdom that traditionally hasn't been a destination. Most Polish migration to Germany, it seems, is likely to be circular migration; Germany missed out on a wave of immigrants who would have helped the country's demographics significantly. Why? Germany chose to keep its labour markets closed for seven years after Poland's European Union admission in 2004, while the United Kingdom did not, the results being (among other things) that Polish is the second language of England.

Regulations matter. I've already noted that in Mediterranean Europe, the large majority of immigrants don't come from North Africa, notwithstanding reasonably strong trans-Mediterranean ties. Why? Restrictive migration policies. Other examples can be easily found. Migration to different countries occurs largely at the will of different countries. There are no hordes battering down the doors.

For the last 30 years, a massive number of immigrants has poured into the U.S. from south of the border. Today there are 38 million people living in the United States who were born somewhere else. That's an average of more than 1 million immigrants a year for three decades, a sustained influx unlike any we've seen before in U.S. history. And regardless of what policies Washington decides on, that supply is likely to dry up soon.

[. . .]

When it comes to immigration, demographers have a general rule of thumb: Countries with fertility rates below the replacement level tend to attract immigrants, not send them. And so, when a country's fertility rate collapses, it often ceases to be a source of immigration.

1. That's not a hard-and-fast rule. Looking to the post-Second World War era, for instance, even though fertility rates in North America and western Europe were substantially above replacement levels, these regions still attracted large numbers of immigrants. Why? Simply put, economic (and political) conditions in these countries were sufficiently attractive to migrants, who could easily find work.

2. A collapsing fertility rate does not mean a country stops being a source of immigration. Look at post-Communist Europe, if you don't believe me. Now, it is true that if fertility falls to low levels and stays at low levels, the size of the cohorts of potential emigrants will eventually shrink. I don't think it a coincidence that Romania has emerged as a source of immigrants as the cohort of children born under Ceaucescu's pro-natalist policies comes of age. That shrinkage by itself does not mean a diminished propensity to migrate, however. Look, again, at Romania. The ability to migrate, whether we're talking about being able to afford the various costs and benefits of the movement or the non-existence of barriers to migrate (or even the existence of incentives to migrate is more substantial a factor than the mere presence of a cohort of people of which some may become potential migrants.

Consider Puerto Rico. In the 1920s, Puerto Ricans began to trickle into the United States. Their numbers accumulated slowly, and by 1930, there were 50,000 Puerto Ricans living in the U.S. (nearly all in New York City). Over time, however, the community reached a critical mass, and by the mid-1940s, 30,000 Puerto Ricans were arriving every year. The Puerto Rican wave continued, and grew. In 1955, 80,000 Puerto Ricans came to the United States.

But from 1955 to 2010, the number plummeted. Even though the population of Puerto Rico had nearly doubled in that time, the total number of Puerto Ricans moving to the United States in 2010 was only 4,283.

Why? After all, migrating to the United States from Puerto Rico had become easier, not harder. And while economic conditions in Puerto Rico brightened somewhat, the opportunities and standard of living in the U.S. are still superior.

What happened is that Puerto Rico's fertility rate imploded. In 1955, Puerto Rico's total fertility rate was 4.97, well above replacement. By 2012, it had fallen to 1.64 — even further below the replacement line than the United States'.

I went to the Penn World Tables and pulled data on Puerto Rico for the 1950-2011 period.

"Brightened somewhat" is faint praise indeed for the Puerto Rican economic miracle. PPP-adjusted GDP per capita in Puerto Rico rose from a shade over 18% of the United States average in 1950 to 58-59% in 2010, depending on the exact method used. It grew by 250% in the two decades after 1950, experienced a brief regression and slow recovery in the 15 years subsequent, and since 1985 has continued to converge notably. All this economic growth has come has the population of Puerto Rico has almost doubled, and as the American economy has of course continued its own growth.

Living standards in Puerto Rico have risen hugely. If they hadn't, and all things remained the same, Puerto Ricans would still be leaving their island for the United States in very large numbers. Total numbers might be smaller, but the propensity to leave would not have diminished palpably.

Many Latin American countries have already fallen below the replacement level. It's not a coincidence that sub-replacement countries — such as Uruguay, Chile, Brazil and Costa Rica — send the U.S. barely any immigrants at all. The vast majority of our immigrants come from above-replacement countries, such as Honduras, El Salvador, Colombia, Guatemala and Mexico.

One thing that Last seems to have overlooked completely is that the countries with sub-replacement fertility in Latin America that he named are (by and large) not only the more economically developed countries in Latin America and therefore would be less likely to send migrants than less developed ones, but that these countries have ties outside of Latin America to countries other than the United States. (The small republics of Central America and the Caribbean are quite poor, and are almost as dependent on the United States in many ways as, oh, Puerto Rico. Mexico is the exception, mainly because Mexico borders directly on the United States. If it didn't, there would not be somewhere in the area of forty million people of Mexican background in that country.)

For instance, Last says that there aren't many Brazilians in the United States. That's true; as the Burgh Diaspora's Jim Russell recently noted, many Brazilian migrants are returning to their country. That said, Brazilian emigration is overwhelmingly not concentrated on the United States. There are at least as many Brazilians living in Japan as in the United States, and more Brazilians living in western Europe. The United States is not the world.

Consider Mexico, which over the last 30 years has sent roughly two-thirds of all the immigrants — legal and illegal — who came to the United States. In 1970, the Mexican fertility rate was 6.72. Today, it's hovering at the 2.1 mark — a drop of nearly 70% in just two generations. And it's still falling.

The result is that from 2005 to 2010, the U.S. received a net of zero immigrants from Mexico.

Stricter border control has, of course, played no role in this.

Last is right to note that the global demographic transition will diminish numbers of potential migrants. He is wrong to conclude that it will diminish the propensity of people to migrate, and doesn't take into consideration the critical role of public policy in either enabling or disabling flows of migrants. Give it a C minus.

Sunday, February 17, 2013

On potentially unsustainable immigration in Singapore

The demographic structure of Singapore, is characterized equally by a very low fertility rate among the population of Singaporean citizens and a very high rate of immigration, has become a major political issue in Singapore. An very open immigration policy that implements the principles of replacement migration in their purest form is politically unpopular.
Singapore, which is boosting infrastructure to accommodate a population of 6.9 million by 2030, said the number of people in the city state will be “significantly” lower than what it is planning for.

The government won’t decide on a population trajectory beyond 2020, Prime Minister Lee Hsien Loong said in Parliament yesterday as lawmakers from his ruling party endorsed a white paper that outlined proposals including allowing more foreigners into the country to boost the workforce. Opposition members rejected the motion, saying immigration as a policy to spur economic growth is not sustainable.

Record-high housing and transport costs, public discontent over an influx of foreigners and infrastructure strains in the country of 5.3 million people are weakening approval for Lee’s party. Singaporeans are planning a protest next week against the government’s population projections for 2030, which could see citizens, including new ones, making up only one of every two people on the island smaller in size than New York City.

“We will track and control the number of non-Singaporeans and the inflow of immigrants so that we are not overhauled just by the sheer flood of people coming in,” Lee said. “We are not deciding on a population of 6.9 million for 2030 now.”

Lee’s administration is under pressure to placate voters without disrupting the entry of talent and labor that helped forge the only advanced economy in Southeast Asia. His party lost two by-elections after returning to power in May 2011 with the lowest share of the popular vote since independence in 1965.

Much of the public opinion I've come across is hostile. This expatriate blogger and this Singaporean blogger, for instance, each favour letting the Singaporean population age and eventually decline, if it helps prevent a deteriorating quality of life for Singaporeans. The dramatic consequences of very low fertility in Singapore don't seem to matter. (An April 2012 government presentation suggests that, at current birth rates and without increasing citizen numbers through naturalization, the Singaporean citizen population will start experiencing negative decrease around 2025. This seems about right.)

What are the reasons for low fertility in Singapore? Numerous papers--"Below-Replacement Fertility in East and Southeast Asia: Consequences and Policy Responses" by Gubhaju and Moriki-Durand, published in 2003 in the Journal of Population Research; the 2011 paper "The Determinants of Low Fertility in Singapore: Evidence From a Household Survey" by Hashmi and Mok; the East-West Centre's May 2010 paper "Very Low Fertility in Asia: Is There a Problem? Can It Be Solved?" by Westley, Choe, and Retherford--trace the causes for very low fertility in Singapore, as elsewhere in high-income East Asia, to contradictions between the policies which promote high economic growth and policies which promote marriage and family formation, and conservative norms for women in families and as mothers which encourage many women to postpone marriage. As a consequence, marriage rates have dropped while non-marital fertility remains low. (The two factors seem of comparable importance.) In the context of a very competitive economic environment made increasingly more so by deregulated labour market and immigration, it makes sense for individuals to postpone family formation and instead work on accumulatng the capital necessary to live. These are compounded by the very high cost of living in an increasingly densely-populated Singapore, and the economic cost associated with parenthood.

Gavin Jones' paper "Late marriage and low fertility in Singapore: the limits of policy", published in May 2012 in The Japanese Journal of Population, makes the point that--to a certain extent--Singapore's three decades of heavy government involvement in fertility, starting in the 1980s with relatively crude baby bonuses but proceeding to increasingly sophisticated schemes for government childcare and paid parental leave, may have helped keep fertility high. Recorded fertility in mostly-Chinese Singapore may be lower than that of the Chinese living in the Malaysia that Singapore was once part of--the Malaysian situation was profiled here at Demography Matters in 2009 (1, 2)--but it's higher than that of other East Asian cities.

Comparison[s] with low-fertility East Asian countries [raise] some interesting observations. First, Singapore’s fertility is in the same league as these countries, though it has never gone as low as recent figures for Taiwan, Hong Kong and South Korea. Bearing in mind, however, that Singapore is a city-state, comparisons with other cities in the region are appropriate. When this is done, we find that Singapore’s fertility rate is approximately 15% to 50% higher than in cities including Tokyo, Seoul, Busan, Shanghai, Beijing, Taipei, and Hong Kong [. . .] There may be some elements of policy in Singapore that are partly responsible for these differences. Second, fertility differs substantially among the different ethnic groups in Singapore. Malay fertility is substantially higher, and Chinese fertility lower, than the average. However, given the three fourths weighting of Chinese in the resident population, the overall fertility level is heavily influenced by the fertility of Chinese Singaporeans (whose TFR fell to a historic low of 1.08 in 2009). Malay fertility rose substantially for some time after being the first Muslim population in the world to reach replacement level fertility in 1976, but it has recently fallen sharply to reach its 2009 TFR level of 1.8.

[. . .]

Fertility has not responded as hoped, and this may well reflect the fact that the baby bonuses and tax concessions for children are not substantial enough to make much of a dent in the high monetary costs of raising children. Moreover, the culture in many Singapore workplaces remains unfriendly to those who prioritise family over responsibilities to the firm, and this discourages women from having a child that may hurt their career prospects and relationships with workmates. Nevertheless, it could well be that Singapore’s more comprehensive policies to support marriage and childbearing go a long way towards explaining why fertility rates in Singapore, though disappointingly low from the perspective of the Singapore government, are higher than in other major cities in the region, as noted earlier.

Granted that it's unlikely that the Singaporean government can do anything about the high cost of living in Singapore, or that it will be able to enact anything more than slow change in the cultural norms which keep fertility rates low, skepticism about the results of the latest government push seems justified.

"My mother-in-law hates me and she says I'm selfish, but I don't really care," says [Penelope] Sim, a human resources consultant who's been married for six years. "Everything's crazy expensive and life's already stressful enough here without children. If there's no one to carry on the family name, then so be it."

Sim, 33, embodies Lee's challenge to persuade Singaporeans to wed younger. While the birth rate was about 1.3 children per woman in 2012 - barely enough to replace one parent - a backlash against soaring immigration forced the government to curb the influx of foreigners, leading to labour shortages and slower economic growth.

Measures since 1987 to reverse declining fertility, including handouts of as much as S$18,000 (HK$113,600) and extended maternity leave, haven't worked. The nation's birthrate in 2010 and 2011 were the lowest in 47 years of independence. About 36,000 babies were born to residents in 2011, compared to nearly 50,000 in 1990.

The failure to encourage more births means the country will face a shrinking pool of workers and consumers - a deterrent to investment. It will also increase the burden on younger employees to pay for an ageing population. Lee says higher taxes will be needed in the next two decades as the government boosts social spending to support the elderly.

Measures released on January 21 on a government website called "Hey Baby", include boosting Singapore's annual budget on marriage and parenthood to S$2 billion from S$1.6 billion, including spending on matchmaking, housing grants, childcare and fertility treatments and cash gifts for babies. In 2001, the budget was S$500 million.

The prime minister, who has four children, is encouraging couples to start a family earlier by giving priority public housing to those with children below 16 years of age. With some of the most expensive real estate in Asia, government-subsidised homes are the only affordable option for most young couples, and waiting lists for new apartments can extend years. The government will make a S$3,000 contribution to childhood medical expenses and last week announced measures to make childcare more affordable.

Is immigration the answer? In the short term, it may be, but as Mukul G. Asher noted in 2008--see this short presentation that was expanded in this paper--Singapore will be competing for immigrants with other destinations, many of which may do a better job of reconciling economic and family needs. The fertility of new Singaporeans is likely to converge with the old. In the medium term, unless unrealistically large numbers of immigrants come to Singapore, the population is still going to age spectacularly. In the long term, a bigger problem may be created. (The conclusion of the South Korean segment of the United Nations' report on replacement migration that, in order to keep potential support ratios at the level of 1995 given prevailing fertility, 5.1 billion people would need to immigrate by 2050 comes to mind.) William Pesek, below, may be right to call this "the human equivalent of what Bernard Madoff did with money", “Ponzi demography.”

All this leaves aside the issue of whether or not immigration on the scale envisaged by the Singaporean government is going to be popular, or even politically possible; authoritarian though Singapore might be, it's still a parliamentary state with elections. Clinging to an economic model requiring politically unsustainable--perhaps physically unsustainable, given Singapore's small size--level of immigration brings to mind Paul Krugman's argument that high economic growth in East Asia, especially Singapore, was the consequence less of productivity growth and more by inputs of labour and capital. At some point, something will have to give. William Pesek's Bloomberg News opinion piece, "Singapore's Population Bubble", highlights the potential fragility of the current political consensus.

The signs of overcrowding and urban stress are palpable to any visitor. Prices are surging, public services in a nation famed for nanny-state tendencies are slipping and some of the finest infrastructure anywhere is bucking under the strain. Locals blame the influx of immigrants, which Prime Minister Lee Hsien Loong’s ruling party touts as one key to Singapore’s success in the years to come.

The city-state, with about half the area of New York City, has 3.3 million citizens and 2 million foreign residents, many of whom have contributed greatly to Singapore’s growth in finance and construction. Yet complaints that overseas workers deprive locals of jobs and drive up housing prices fill the air. Singapore is the third-most-expensive Asian city and ranks as the sixth most costly in the world, according to an Economist Intelligence Unit ranking of 131 cities.

[. . .]

Sadly, some of the rants one reads in the media and online veer toward xenophobia. If Singaporeans are so livid, they should stop supporting Lee’s party. After all, isn’t the government, by seeking to import more human capital, telling its own people that they lack the skills to compete? Anyone who doubts Singapore is serious only has to look at accelerating efforts to reclaim land from the sea for development, giving the city the room for population growth.
[. . .]
Singapore needs to find another way. The era of easy growth is over. Just as economies such as Japan and South Korea are seeing the limits of their export-led models, Singapore’s formula has run its course. Raising the productivity of its current workforce would be more potent for a developed, open economy looking to compete in a region dominated by the cheap labor and manufacturing of China and India. Singapore should focus as much energy on incentives for its existing residents to innovate and start new businesses as on adding more bodies.

Friday, February 15, 2013

"South Korea Scours Himalayas for Staff as Population Ages"

Perhaps informed by Hugh and Vistesen's post on Japan's particular path, I wanted to post a link to a Bloomberg BusinessWeek article, Eunkyung Seo's "South Korea Scours Himalayas for Staff as Population Ages". In brief, the article describes how South Korea is starting to become a country of immigrants.

Sharma Sagar is the new face of Korean manufacturing. He’s from Nepal.

Sagar studied Korean for years, competing with other candidates in his native Himalayan homeland to be chosen by a joint-government program that was set up to help South Korea supplement its dwindling labor pool.

“Everyone wanted to come,” said Sagar, who has been mixing materials to produce vinyl at Homyeong Chemical Industrial Co. north of Seoul since he arrived in May. “I’m earning a lot here, about 20 to 25 times more than my friends back home. I want to stay here as long as possible.”

With one of the world’s fastest-aging populations, South Korea has gone from a country where labor was the only abundant resource to one seeking staff to help run the plants and farms of Asia’s fourth-largest economy. While neighboring Japan has largely rejected imported labor as a solution to its aging workforce, South Korea is beginning to accept it. Immigrants have risen sevenfold since 2000, to 2.8 percent of the population, and could make up more than 6 percent by 2030, the government said.

“We should take preemptive structural action to tackle the aging population in order to avert Japan’s path of the so-called lost decades,” said Choi Kwang Hae, a director-general at the Finance Ministry. “It’s inevitable that we will have to absorb foreign labor to boost our economy.”

As the won strengthens and the yen weakens, some of South Korea’s exporters are increasingly looking to hire abroad to cut costs and remain competitive. In the past six months, the won has gained 4.3 percent against the U.S. dollar, while the yen has fallen 16 percent.

“Our factory can’t operate without foreign workers,” said Park Kwang Seo, director at Homyeong Chemical, which supplies packaging to Coca-Cola Co. and coating films to Samsung Electronics Co. “Our business is growing fast and we need to hire more to meet the demand.”

The government announced steps on Nov. 28 to attract more immigrants, including easing visa and citizenship requirements and giving more social support for settlement.

“Demand will increase sharply for foreign labor in each part of our society,” Prime Minister Kim Hwang Sik said in a statement at the time. “We should take pre-emptive action with a comprehensive and long-term perspective to maximize benefits from inflows of foreigners.”

There were 1.45 million foreign residents in South Korea in December, up from 210,249 in 2000, according to the Ministry of Justice. The number will rise to 3.2 million in 2030, according to the ministry.

With a birth rate of 1.24 children per woman in 2011, South Korea will be short 2.8 million workers by 2030, according to a Finance Ministry report released on Dec. 26. The nation’s potential gross domestic product growth would drop to 1.9 percent by 2031 from a 3.8 percent average pace during 2011-2020, the report said.

Readers might be interested to go through the archives, checking other posts tagged with Korea and South Korea. The article explores some of the major themes we've examined here: the rapid aging of the South Korean population, labour migration from China mainly by ethnic Koreans, marriage migration from Southeast Asia, problems associated with recruiting migrants into higher-paying positions and rigid barriers, and so on. The looming potential of North Korea, as a source of migrants or a cause for migration, isn't mentioned.

One thing, however, seems clear: South Korea is a country that people are moving to.

Wednesday, February 13, 2013

Hugh and Vistesen on "Japan's Looming Singularity"

Co-bloggers Edward Hugh and Claus Vistesen have co-authored an essay, "Japan's Looming Singularity", on the particular consequences of Japan's rapiding aging population--most notably, its shrinking work force--on the economy. Available at A Fistful of Euros as well as at Japan Economy Watch, Hugh and Vistesen make the point that Japan's particular demographic profile, characterized by sustained very low fertility, longevity, and negligible immigreation, has made Japan the first developed country to reach a particular economic state we know nothing about. How can steadily growing public debt be made to work with a shrinking work force without immiseration and worse?

The assumption that things can more or less go on and on is widespread both in and outside Japan. Despite the frequent references to “Japan’s lost decade”, the country has now lost not one, but two – what was it Oscar Wilde said, losing one child could be an accident, but losing two surely has to constitute negligence – and as things are shaping up we seem to be all set to have a third one in front of us, markets and weather permitting, always assuming the Japanese government remains able to finance its debt.

[. . .] Japan is not only an ageing society: It’s THE ageing society. Following decades of an ultra low birth rate and negligible immigration, it faces a steady decline in its working-age population and a rising dependency ratio for decades to come. There is no changing this now. Even some “miracle” reversal of the fertility problem would take decades to work through, so whatever happens next, things will get worse before they get better.

Japan’s population – in median age terms – is the oldest on the planet. Median age is around 45, and it will continue to rise. There is no real prospect of it coming back down again, since the process it is experiencing appears to be totally irreversible. Forecasts see the median age in Japan rising to more than 50 within the next two decades, and really here we are breaking totally unknown territory – no society in the whole of human history has ever been this old.

[. . . If Japan is going to see a decline in working population over the next several decades (and possibly much longer, since so long as fertility remains below replacement rate each generation will be smaller than the previous one) and if this lies at the heart of the deficient domestic demand deflation problem, then it means the issue is a deep structural one which won’t be resolved by any kind of “kick start”, however large. The only consequence of having permanent fiscal injections will be not to give stimulus, but rather an accumulation of debt that will be increasingly harder for those smaller and poorer workforces to pay down in the future – especially if the process is associated with ongoing deflation.

To use an analogy – it isn’t simply a question of a planet which has slipped off or strayed from its orbit (or “good equilibrium”), and just needs a nudge to get it back on, what we have is a planet which has veered off onto a whole new trajectory, one which leads to who knows where. This situation was never contemplated by the founders of neoclassical theory, and yet, having started in Japan, the phenomenon is now extending itself steadily across all developed economies in one measure or another.

[. . . T]hose who urge a solution to Europe’s imbalances via an increase in German fiscal deficits to stimulate consumption miss the point: arguably what people in these societies need to do is save more, not less, and certainly when it comes to the public sector.

Go, read.

Thursday, February 07, 2013

More on the non-occurrence of a Chinese Russian Far East

The fate of the Russian Far East, the easternmost region and federal district of Russia with a land area of 6.2 million square kilometres and a fast-dropping population of 6.3 million as of the 2010 census, is something people have speculated about for some time. We've talked about it, too. Co-blogger Claus Vistesen noted in 2006 the scale of the population shrinkage in the region, product of natural decrease and of mass migration to points elsehwere in Russia. Geocurrents' Asya Pereltsvaig noted in an April 2012 post the extreme case of Magadan Oblast, where the population has fallen by two-thirds since 1989, but by and large significant population shrinkage and aging is a fact.

The supposed threat of a Chinese takeover of the region has been in the air for a century. I don't think it's going to happen. I wrote in September 2009 and again in January 2010 that the evidence just didn't suggest that there was any substantial Chinese migration to the Russian Far East, the most economically marginal area of a Russia that doesn't rank highly for Chinese migrants who want to take the expense to leave their country. I mentioned in August 2010 that there was in fact a long history of Russian immigration to northeastern China continuing even into the present day, and that a northeastern China that was fast surpassing the Russian Far East might become an important destination for people seeking to leave a declining periphery of Russia. Even the relative excess of marriage-age women in Russia contrasted to a surplus of marriage-age men in China isn't likely to propel cross-borer migration: in April of last year I linked to anotherpost by Geocurrents' Asya Pereltsvaig that made the point that, in fact sex ratios in Asian Russia generally are relatively balanced and any Chinese migration to relatively attractive areas in Russia would be directed towards European Russia.

Just last month, writing for Open Democracy Ben Judah produced an article, "Why Russia is not losing Siberia", that reinforces this. He travelled to Birobidzhan, capital of the fabled Jewish Autonomous Oblast hard by the Chinese border, to see how many Chinese were around. For a population supposedly on the verge of taking over a vast territory, the Chinese of the Russian Far East are astonishingly scarce.

Birobidzhan was supposed to be Soviet homeland for the Jews. That obviously failed. But as I researched where to focus my trip, the legendary Chinese settlement of Siberian Birobidzhan kept coming up. It was the Russian province with the highest percentage of Chinese settlement, having leased out 14 per cent of its arable land to Asian farmers. It was together with Khabarovsk region the province that has leased over 7,500 square kilometres for Chinese agriculture. I decided to go – and find out if this area the size of New Jersey was the beginning of the ‘loss of Siberia’ or in the grand scheme of things not very much of Siberia at all.

Experts in both Moscow and Beijing agree there are around 500,000 Chinese in Russia and that most of them live in the capital and St. Petersburg. What is so surprising travelling in the Russian Far East, is that this actually appears to be the case. There are quite simply very few Chinese in the cities of Birobidzhan, Khabarovsk and Vladivostok. There are no large ‘China-towns’ and local officials and locals say the numbers have been falling for years.

At first glance in Birobidzhan there appear to be more Jews than Chinese i.e. virtually none in the poor and sinister city where the streets are named after Yiddish poets and official buildings are capped with rusting Hebrew lettering. Locals mock the fears of those in Moscow. The number of Chinese peddlers has been falling for years, as Chinese wholesalers put them out of business. Even in the market the Chinese were absent. ‘Why would rich people like the Chinese work in a market?’ asked one confused Kyrgyz crockery vendor when I asked where they were hiding, ‘The Chinese are the big bosses that do the wholesaling or own the stalls. They don’t get their hands dirty.’

The real striking migration flow was like elsewhere in Russia – Muslims from the Caucasus and Central Asia. In Birobidzhan, as in Khabarovsk and Vladivostok, there are large numbers of Azeri immigrants, followed by huge amounts of dirt poor Tajiks, Uzbeks and Kyrgyz. They far outnumber any Chinese in these cities. The most powerful families in Birobidzhan were Azeri immigrants that seemed to have sewn up local politics, food processing, the taxi business and even the local prosecutor’s office.

[. . .]

Locals claimed no Slavs tilled the land any more. Yet independent Chinese settler-farmers had since the mid-2000s also practically gone extinct. The only one who I found (‘Andrei’) in this unhappy outback told me had reached the end of the line. ‘It’s simply too hard here,’ he said in his hut. ‘Life has improved in China and there are now better opportunities there. I’m going back. China got richer, but Russia got nowhere.’ The only people he employed were half-illiterate Russian girls from the village. ‘Chinese workers are too expensive. There are better jobs in China,’ he moaned.

In the far south of Birobidzhan there is some evidence of Chinese land leasing as almost all the fields are electric green from soya and tilled by Chinese migrants. Yet these are not settlers but contract workers living in barracks with no desire to remain in Russia. Instead of working long-term for remittances, they usually do two-three stints in a barracks to save up to start their own business in China and then never come back. They are forbidden to move freely by the companies and frightened of stabbings, hostile drunks and pretty much all Russians.

The director of one of these Chinese agricultural companies operating in southern Birobidzhan explained to me that he was finding it increasingly difficult to recruit enough workers to come to Russia. He estimated there were barely 6,000 in the region and the numbers were falling. ‘To be honest life in China is better than it is in Russia these days,’ he explained. ‘As Chinese wages rise, I am going to start having a serious problem getting these people to come to Russia.’

Judah, I think, is right in tracing the fears of a Chinese takeover of large parts of Russia to fears of a fatal weakness in Russia, to concerns that are fundamentally irrational and/or don't speak to what's actually going on.

Wednesday, February 06, 2013

A few Tuesday demographics-related news links

Here's a few links to demographics-related news stories I thought readers might be interested in.
* Eurasianet, via Inter Press Service, features an article describing how many children in Kyrgyzstan have been left effective orphans by the migration of their parents, for work purposes, to Russia and Kazakhstan. I've read of similar phenomena elsewhere in the world, for instance in other post-Soviet republics like Armenia and Moldova.

* The Guardian carried the news that Polish, on account of the past decade of immigration, is the second most common language by number of speakers in England, with the half-million Polish ranking just behind Welsh-speakers in total numbers.

* On a related note, The Telegraph reports that not only have 3.6 million Britons emigrated in the decade 2001-2011, just under two million were people in the 25-44 age group, i.e. not retirees looking for the good life in France or Spain.

* The Washington Post takes note of the fact that in Ireland, the ongoing post-boom recession is made relatively tolerable only by the resumption of large-scale emigration.

* A recent OECD report points out that the German labour market hasn't been taking up large numbers of immigrant recently, tracing the problems to a regulatory system that's seen more as administering a ban on migrant workers with exceptions than one that enables migration, particularly for non-highly skilled workers, as well as the relatively small number of potential migrants fluent in Germany.

* The Vancouver Oberver notes that while Iran has a substantial population of talented computer engineers and software designers, by and large they can only exercise their talents outside of their country.

* The South China Morning Post's Tom Holland writes, from a Hong Kong perspective, about how Singapore's total population and GDP may have surpassed Hong Kong's thanks to the former's liberal immigration policies, but notes that Hong Kong still has an advantage in GDP per capita. A Straits Times article, meanwhile, notes that the Singaporean government hopes to boost TFRs up to the 1.4-1.5 child per woman level, by a quarter.

* The Hankoryeh notes that fertility in South Korea has risen somewhat in recent years, the TFR rising from an all-tie low of 1.08 in 2005 to 1.3 last year.

* The Global Post has a photo essay depicting Chinese workers making their annual migration back to their home communities for the Lunar New Year festival.

* On the subject of islands, growing migration from New Zealand (mainly to Australia, Bermuda (to the United States and Australia) and Puerto Rico (to the United States, increasingly to Florida) has been note in the press.

Al Monitor and Reuters both note the pronatalism of Erdogan in Turkey, who is trying to prevent Turkey's fertility rate from falling below the replacement level through a combination of financial incentives and public lectures.