Plain English with Derek Thompson - The Global Fertility Crisis Is Worse Than You Think

Episode Date: May 15, 2026

Fertility rates are collapsing around the world. In rich countries and poor ones, in secular societies and religious ones, people are having fewer children than ever before. Some explanations focus on economic factors like housing costs, childcare costs, and student debt. Others point to a harder-to-measure, broader sense of uncertainty about the future. At the same time, economist Jesús Fernández-Villaverde thinks we are underestimating how big a deal this really is. In his view, only two forces will truly shape the future of human history in this century: artificial intelligence and fertility, and changes are already underway. Today, Fernández-Villaverde joins Derek to talk about the global fertility decline, why it is happening across so many different societies, and why he believes this shift could reshape economics, culture, and the future of civilization. Subscribe to our YouTube channel here: https://www.youtube.com/@PlainEnglishwithDerekThompson If you have questions, observations, or ideas for future episodes, email us at [e-mail]. Host: Derek Thompson Guest: Jesús Fernández-Villaverde Producer: Devon Baroldi Additional Production Support: Ben Glicksman Learn more about your ad choices. Visit podcastchoices.com/adchoices

Today, the future of fertility. In the last few weeks, I've been struck by two pieces of media, a long article and a long speech, both about the future of babies. The first was a blockbuster essay in the New York Times by Anna Louis Sussman, entitled, Why So Few Babies? We Might Have Overlooked the Biggest Reason of All, an excerpt from her forthcoming book, inconceivable. That essay's central argument is that declining fertility is not primacy. about money or daycare or gender roles, rather the overlooked reason is a pervasive sense

of existential uncertainty. Young adults today feel a crushing uncertainty about the future to justify the irreversible commitment of having a child. It's not just climate change or housing costs or political instability, it's climate change and housing costs and political instability, and AI and inflation chaos and doom scrolling and declining social trust. all coming together to cast a shadow on the future. Now, there is something here. There's something to all of this. But I'm always wary of analyzing fertility

through the lens of contemporary American culture because the decline of fertility is not entirely new and it's not entirely American. Fertility was declining in the West before the modern concept of climate change even existed. It was declining before the inflation spike and the invention of the smartphone. And it has truly declined everywhere,

not just in the U.S., and Canada, Europe, but in Sri Lanka and Iran and Thailand. It has declined across decades with different levels of growth, inflation, unemployment, and it's declined across countries with different levels of religiosity,

liberalism, individualism, and cultural expectations. Something big is happening here and it's happening everywhere. The second piece of media that I saw was a speech by the University of Pennsylvania economist Jesus Fernandez Via Verde on the state of and future of fertility. At the end of his one-hour lecture, he said that he was now convinced that only two things

were important right now in world history, deep learning, AI, and fertility. Like two massive tectonic plates that move the entire planet, he said, nothing will shift the future of human history more than AI and babies. Well, I think we've covered AI quite a bit on this show from some of you. I'm hearing we cover it maybe a bit too much. But it has been quite a while since we took on the issue of fertility, and I don't think we've ever covered it in the way that Villavere himself thinks about it as a primary tectonic plate that moves the whole of history. Today's guest is Jesus Fernandez Villavere. we talk about the global fertility crisis

and why he thinks it's worse and more important than just about anybody else is saying. I'm Derek Thompson. This is plain English. Jesus Fernandez Via Verde, welcome to the show. Thank you for having me here. At the conclusion of a recent lecture that you gave

at the University of Miami, you said this, only two things are important right now in life, fertility and deep learning. everything else is noise. Once you start thinking about these, it's hard to start thinking about anything else. End quote.

I want to hold off on deep learning and AI for the time being and focus on fertility for the first 90, 95% of this show. Tell me at the grandest historical scale. Why is fertility important? Because demographics is destiny. And the number of children that are born today will determine how our society will look like in 30, 40 years. And we have evidence from the last 10,000 years, 20,000 years in economic history,

that at the end of the day, this is really the only thing that matters. And what I emphasize in Miami was that 2003 was a unique year in the history of humanity, because it's the first time in our history where our total fertility rate as a planet. I'm not talking about the US. I'm not talking about economists. I'm talking about all human beings on the planet fell below replacement rate. We can talk a little bit about what that means exactly, but that has never happened before in 50,000 years, in 200,000 years.

And that basically means that the world population will pick in another 30 years or so, if the trend continues. And we are going to enter into a whole new world that is going to lead to a tremendous amount of social reorganization. Some things can be good. Some things will not be so good. And a lot of the things that we discuss

in the day-to-day in politics, in politics look like they are not about fertility, but they are actually about fertility. To think about them a little bit more carefully. All right, well, I definitely want you to give me some examples of that as we get to the implications part of the show. But before we do, I want to make sure we ground this discussion

of what exactly is happening. Tell me a little bit about what replacement level means and what total fertility rate means. Okay. So let's start with replacement, which is the easiest one. Imagine that you have a population. Let's say we have one million people in that population. How many children need to be born for that population

to be constant at one million in the long run. Well, it turns out to be the case that for every woman in that population, you need 2.1 kids. And why is 2.1 and not two? Well, because of two reasons. And the first one is that there are a little bit more boys born that girls around 105, if you don't do anything like selective abortions. And second, because not all the girls that are born,

will move on to become mothers themselves. They will die of accidents or some other reasons before they enter into their fertile ages. So basically, you need that every woman will have 2.1 kids on average to keep population constant overtime. That's the replacement rate. The total fertility rate is an estimate

of how many children will women have in a given population. So when we look at it, the US, right now the fertility rate in the US is around 1.57. That means that the average American woman right now is having 1.57 kids. Because replacement rate is 2.1, a way to think about it is that we have a shortfall of a slightly over 0.5 kids. Now, there is a subtlety over here, which is important, and I want the audience to understand. Total fertility rate is an estimate. It's a slightly different from what we call completed fertility.

So completed fertility is I actually go back to women that are already 50 years old, and I see how many kids they actually had. The problem with completed fertility, which is what we really care about in the very long run, is that by definition, it takes decades before we can compute it. So if we are going to make any type of forecast about the future, we cannot rely on completed fertility, although hopefully today I will try to warn the audience where completed fertility may be pointing out to slightly different conclusions that total fertility rate. Two real extraordinary factoids from your speech in Miami. Number one, the 2023 was the first

year where total fertility rate fell below the replacement rate for the first time in 50,000 years, 100,000 years of human history. 2023 is remarkable. Number two is that you argued that, quote, peak child might already be behind us. I want you to explain what that means and why if peak child is already behind us, the global population isn't already falling right now. Okay. So let me start with the second

and then I come back to the first. There is something that in demography is called momentum. So momentum means that, that the population will keep growing from around 15 to 30 years, depends on the details of the situation, after you fall below replacement rate. So let me give you a very simple example. Imagine that you have a spouse and you only have one kid.

So you are below replacement rate. But you are two. You have two parents. Your spouse has two parents. so you are not replacing yourselves, but your parents have not died yet. So the fact that you have one kid still increases the population,

but the problem is when your parents died, then we have not replaced them. Okay? So basically what happens was during the 1980s, 1990s, a lot of women were born in the planet. They had their kids in the 2010s, and that's why, the population is still growing.

The grandparents of these girls have not died yet. What will happen is that when these grandparents, when the generation of people born in the 1950s, 1960s start dying, then is when the population goes down. So the analog I love to use is think about a gigantic oil tanker. When you start changing the direction of the oil tanker, it actually has so much momentum that it takes. a little bit of time before it turns.

But it is already cook in. It is already the case that the number of children in the planet has been going down since around the year 2012. It's just that their grandparents have not died yet. Nothing else than that. And then

the first point about we are below replacement rate. Yes. So as a planet, we are not producing enough kids to keep the population constant. Now, of course, there are countries like the US and Western Europe for which we have very, very good data. There are countries in sub-Saharan Africa where the data is not so good.

So all of this is done with some degree of uncertainty. I'm pretty sure that this is the case that it was 2023, but it may be the case that in 10 years where we have a slightly better data, it may have been 2022 or it may have been 24. But the big picture, it doesn't really change if it is one. year up or another. And everything that we observe is that fertility in the planet is continuing going down very fast. So, 2024, the fertility was below 2023 and 2025, it was below 2024. And my educated forecast is that we are going to continue seeing this dropping fertility for the next

20, 30 years, nearly for sure. So we've laid out all these vocabulary terms, total fertility rate, replacement rate, momentum, the peak child gear being 2012 or 2013, the year where total fertility rate fell below replacement being 2023. I just want to make sure that we're reviewing and keeping straight all these, all of this vocabulary, which is important. It all, I think, accumulates to this. Yes. Given your educated estimate, what is the decade that you think the global population will start its structural decline? I will say at this moment, I will say the year 2050. In the year 255, world population will start going down.

Now, again, it's a forecast, maybe a few years earlier, maybe a few years later. And of course, a lot of things can change over the next 30 years. So, you know, I don't want to claim this has the same certainty that you can forecast a lunar eclipse, but given what we see right now, 2055. I'm glad you said this can change, because something significant has changed in just the last 60 years. If you go back to 1960s, 1970s, it was common, it was wise for public intellectuals to predict that the global population would rise and rise until the environment buckled, and we suffered ecological disaster and widespread famine after widespread famine that wiped out millions, billions of

human souls. Instead, that has not happened. Global fertility has declined significantly. It's falling faster than practically anybody predicted. Certainly, folks like Paul Erlich, author of the infamous population bomb book, why do you think these so-called experts were both so confident and so wrong? Okay. I think that the wording of your question already tells you a lot about the answer. use the word public intellectual. You didn't use the word demographers. Okay? So if you go back, so I'm a professor at Penn and we have, sorry to brag in public, what I think is one of the best demographics groups in the world. Had you gone to our population study center in 1968, 1969, and asked professional demographers, what do you think about

Paul Erlich's book, they will have probably say, eh. Now, Paul Erlich was very good, who was not a demographer, was very good at tapping with a lot of the anxieties that people had at the time. I reread the book recently, two years ago, and what surprised me a lot is that all these vocabulary that we have introduced, is not to be found over there. He never wants to define carefully what replacement rate is. He never wants to define carefully what total fertility rate is. He uses all the time birth rate.

So the birth rate is the number of children born per 1,000 population. Those birth rates are seriously affected by the momentum effects I was mentioning before. I will argue that the book was not very good at the time and that what a lot of the public intellectuals at the time were saying was not really what the demographers, the best demographers at the time were saying. I want to push back a little bit here, not because I want to defend Paul Erlich, but rather because I think a responsible interpretation of your research says that you're not just pushing back against the 1960s, 1970s, public intellectuals.

who predicted a population bomb, your research also pushes back against seemingly expert demographers at the United Nations, who you think overestimate the total fertility rate of many countries throughout the world. So explain to me why it's not just the repeatedly,

repeatedly refuted Paul and Alex to the world who you think are wrong, but also the demographers at the United Nations who think would have some of the best sort of penumbural announcement of global births, why are those experts wrong? So you need to understand that the incentives that you have when you are putting numbers on the table at a university

and at a public policy institution are very different. I'm a professor, you know, short of me saying up something absolutely outrageous and, you know, hateful, my dean is not. not going to complain. My dean is only going to say, you know, if you think this is what the data says, I'm happy with you. When you're a public policy institution, you have to follow an institutional framework. And you need to stick with a quote-unquote party line. The population division of the United Nations was created because there was a serious concern that we were having a population bomb. And it is true, and now I want to go back and maybe

hedge a little bit what I was saying before about Paul Erlich, that fertility was very high in the 1950s and 1960s. Now, what demographers were saying in the 1950s and 1960s, which Paul Erlich did not, is that it was likely to start going down, that it was not such an abysmal thing like Paul Erlich was saying. That's why I was, you know, hegging a little bit. It's very difficult for an institution. that has spent 60 years saying that we had a population bomb waking up and say, no, there is no population bomb anymore.

Okay? It's very costly in terms of institutional prestige. It's very costly in terms of communication. And it's very costly also in terms of even the people who are working over there who were very committed to a narrative. Okay. Now, if you actually look at the United Nations projections, they have been dialing down a lot their statements about population over the last decade. In fact, the United Nations has three scenarios, low fertility or middle fertility and high fertility.

My scenario and their low fertility scenario are on top of each other. So it's not that I'm very, very far away from the United Nations. We are already fighting about the second decimal. Now, the problem is that these things, even if it is just the second decimal, accumulate over half a century and have a consequence. But it's not that I'm saying 10 and they are saying 5. They are saying 9 and I'm saying 9.1. That's the first thing that I want to say.

The second is, yes, I think that the United Nations is not doing. a very good job reporting data across the planet. And I have not been able for them, and I had tried to reach out to tell me why. And I wish I had a better answer. But at this moment, I think they are doing a disservice to the public discussion at the world level, because there is a lot of great research done in the United States about population. But if you are in an emerging economy, chances are that there is none of very little. So people really use the United Nations data a lot and forecast.

And I think some countries may not be preparing themselves for what is coming because the United Nations is not really reporting the data that way. Yes, and this is where I think the rubber hits the road, because it's one thing for Penn's demographic model and the UN's demographic model to differ over a series of decimal points. That might seem like a not particularly important story to a lot of people, but it is an important story for reasons that you've already indicated. Number one, those decimals accumulate over time because those total fertility rates reproduce themselves, generation after generation after generation. And if you're talking about a country the size of, you know, Nigeria, Egypt, you're talking about millions of people being. falsely forecast to be born in the coming decades. That's rather significant.

I also want to keep on this theme because this is really maybe the thing I'm most interested in you responding to. I think a lot of people believe that falling fertility is mostly a rich country problem. It's an American problem, a Japanese problem, a Korean problem, a European problem. And it is an American-Japanese and Korean and European problem. But you point out that that's a misconception. total fertility rate is lower than the U.S., according to your analysis. In Mexico, in Brazil, in Colombia, in Thailand, it's practically half of America's total fertility rate, which was stunning for me to see.

If we want to understand why this is happening at a global level and global synchronized phenomena like this are quite rare, where do we begin? Why is this happening all around the world? Okay, but before I answer that question, let me just point out, it is not my analysis. Okay, the only thing I have done is I have gone to the National Institute of Statistics of each of these countries and look at their tables. Okay, so this is, remember Mission Impossible, Tom Cruise hacking into the CIA mainframe? No, this is not that. Okay, okay? This is me.

That's too bad, because that would have made for a better story if you had. No, no, but this is just purely I go to the National Institute of Statistics of Columbia, which will be the equivalent of the world of census in the US, opening their webpage and reporting the number. Okay, so I'm just doing three, three, nothing else. So I promise I'm not doing anything. I'm not coming out with any crazy estimate. This is just looking at what these countries are reporting.

So what can be happening? I will say that there are three hypotheses on the table. And I'm going to list them in what I think are probably the relative importance. First of all, a huge change in social norms worldwide. This probably has a lot to do with social media. It probably has a lot to do with cell phones. The fact that for the first time in history, a lot of younger people in emerging economies

are really socialized in rich countries, social norms. People watch a TV show about how people live in California, how people live in New York, and they say, well, why not something like that for me? And this is much more important than TV.

Yes, TV transmitted a little bit of social norms, but even in the 1980s, 1990s, there were a few US or European shows in the rest of the planet, internet, TikTok, X, is really a complete different ballgame. In particular,

what I think this has mattered a lot is in countries where there is not a lot of gender balance in terms of social norms. If you're in a country like, South Korea, but also in a lot of Latin American countries where, for instance, household work allocation is very unequal. Suddenly, a lot of younger women are looking at the wall and are saying, why in the wall I'm going to be working for my husband 24 hours a day? And social

media has really changed that perception. And in addition to it, we have moved to an economy that is much more service-based. Okay? So service-based economies, even in India, even in Africa, people don't work in factories that much anymore, or even in agriculture. They work in shops, they work in offices. And those are jobs that are much easier for women to have, because they don't depend on physical strength, etc. And so you are in Mexico, you are in Brazil, you are in Colombia. It turns out to be the case. You are 22, 23 years old. You got yourself a nice job or a decent job in a service sector. And this guy comes to you and basically tells you, well, if we get married, guess what? I'm going to be the macho in the home, ruling everything.

You are going to work for me all the time and we are going to have three kids. And you go and tell him the guy, no, I don't want to do that. I really don't want to do that. And this is the type of social norms changes that I think is going on all over the world. The second thing that is happening all across the wall is what I have called the educational weapons race. So it used to be the case that a high school degree was the pathway to middle class life. Those times are gone. But now, probably not even a college degree is enough for a middle class life. You need a master's degree or some type of postgraduate education.

And this is as true in many emerging economies as it is in the US, even more so, because those are economies that do not offer a lot of alternatives to people with low education. And that means that people are staying much longer in a school. They are marrying or forming partnerships much later in life. And moreover, when they are thinking about their kids, they understand they will need to, you know, maintain their kids and educate their kids for many, many years. And I think that increases in education are very, very clear. And the way why I think this is particularly sharp is because in Asia,

which is the continent that is the most obsessed with education, this is what you see. You basically see that in China, in Korea, in Japan, where you really, really want your kid to excel in high school, where you want your kid to excel in college. Those are the countries that have the lowest fertility rates. And the last is housing. Housing is a little bit more of a complicated story.

But in many countries, not in all, housing is at historical heights in terms of price, relative price. And that also limits a lot the ability of families to create, to have more children. Let me summarize what I'm hearing and then offer my own framework that I think incorporates many of these ideas. but uses a somewhat different vocabulary. You're saying that social media phones, the internet television has globalized Western values and in particular globalized Western feminism that has empowered women to determine their own fertility.

And the ability, the freedom, the power of women to determine their own fertility has naturally, in country after country, pulled fertility from total fertility rate from 7, 6, 5 to around 2 or 1. That's happened around the world. I also like the fact that you brought in economics, you brought in the fact that moving from an agrarian to a manufacturing to a services economy might have its own natural effect on lowering total fertility rate and the cost of housing, right? Affordability might at the margins, I think, also move total fertility rate. To the issues that I want to put on the table, number one, contraception, I think technology has played a huge role here. I don't think you're denying it, but I think it definitely needs to be introduced to the stew that we're cooking up.

And also, I think, you know, I'm very interested in the fact that socialization rates in the West, and I think throughout Eastern Asia as well, have gone down quite a bit. People socialize less. They couple up less. I fail to remind people that you mentioned that education naturally delays child-bearing years for many people. If you're going to school longer, you're probably going to get married later. Then you're probably going to move into a house later. Then you're probably going to have a child later. If it's harder to buy a house, then that further delays the process of having a child. To me, when you put all of this together, it seems to me that in the long, long, long run, like over 200 years, let's say, which really is the period of time that fertility has been declining in countries like, say, the UK or Canada and the U.S. Having three or more kids or having kids at all has gone from being a kind of necessity in an agrarian economy and a predestination in a world where women don't have power to a choice. And once having children feels like a social or cultural choice, then that rules in other

questions, such as, can we afford children? Like, clearly people were having seven, eight kids when it was difficult for them to afford a house, right? That's what the pre-industrial era was. People had no money. Food and clothing and home costs were like the entire budget. There was no money left over for like pet care and spa days. They were still having seven or eight kids. Why? Because of the nature of the economy, the nature of the culture, and the fact that having children wasn't a choice in the first place. Now it is. In America, you can get married and not have children and still basically live a completely normal economic and social and cultural life. Same with I could list a thousand other countries here. And so I wonder how you feel about this cultural argument. that a series of technological and economic and social changes essentially flipped a switch where having children used to be a necessity and a predestination

and now it is a choice and that is sort of like the penumbral explanation that contains a lot of other individual explanations. Exactly, no, no. So at a very basic level, I fully agree that was, if anyone cares about my pitch dissertation in 2001, it was basically kind of an exploration of this of this of this of this mechanism and that's why by the way I already forecasted back in 2001 that fertility was going to drop a lot okay but if you

stop the Jesus of 2001 and you tell him you know back then let's say that Colombia's fertility was 2.8 a little bit more three and you ask me where do you think Colombia's fertility is going to be in 2006, given all these mechanisms that you are saying, I will have probably say 1.8, 1.7. What the Jesus from 2001 will have been enormously surprised is that it's not

1.8, 1.7, is there it 1.1.1. Is this kind of last push from... So, let me put it in this way. A fertility of 1.9 basically means most people are having two kids, which is kind of your idea of the perfect, you know, suburban family, a boy and a girl and, you know, a nice house. And a few people that don't have kids. One is really a total fertility of one. It's really a situation where many, many women only have one kid and a lot of women have zero. And that's what has surprised me, that we have really not. not going from seven to two. Seven to two, I expected, everyone expected, that's what you were saying

is the culture norms. What is really amazing is that we have not stopped at two, we have not stop at 1.8, is that we have gone down much, much, okay? So, for instance, why this is a little bit surprising for me? You were mentioning before contraception. Well, the US was around 1.9 in 2000. There was perfect contraception in the US in 2000. I was in the US in 2000. I know that getting contraception was trivially easy, you know, I said some marginal cases in 2000. It was already a service-based economy. It was already a world where women were empowered, maybe not as much as today, but it was not very different that today.

So why have we gone from the 1.9 of 2000 to the 1.57 of today? That's for me where it's a little bit of the... I like that. I haven't quite thought about it that way, but I like this idea that there's one set of explanations that can explain my total fertility rate in a country might go from five to two. But you might need a separate set of explanations that explain why fertility rate would go from two, roughly replacement rate, to one, a situation where the population is only having itself 50 years after 50 years. Before we move on to implications, which is another part I really want to talk to you about, where is the most surprising fertility collapse? I remember, I think I read from your speech that Mexico now appears to have lower fertility than non-Hispanic whites in the U.S. And that Tokyo might have higher fertility than Mexico City, Bogota, or Santiago.

That shocked me, just as much as the fact that Thailand essentially has half the fertility rate of the U.S. For a relatively naive audience that doesn't study this material, what are the most surprising statistics? statistics to you? Latin America. Latin America. Have you tell me which is the main continent right now that is undergoing an amazing demographic revolution in terms of fertility collapse that is not covered in the mainstream media? It's Latin America. Latin America, let me give you my favorite example, Guatemala.

Okay? Look, I love Guatemala. I have many good friends from Guatemala. but Guatemala was not really a shining example of development in Central America. Around the year 2007, 2006, I'm quoting from memory, so I may be off by one decimal. Guatemala had a fertility rate of 3.9. Basically the fertility rate of a sub-Saharan African country. Last year, it was probably around 1.9, 1.8.

the fact that in 20 years Guatemala has cut in half its total fertility rate is mind-blowing but the amazing thing is that the current speed at which this is going Guatemala will have lower fertility rate than non-Hispanic

whites in five years let me give you another statistic now coming to the US the fertility rate of African-American fell in 2004

below the fertility rate of non-Hispanic whites for the first time since the creation of the republic, since the creation of the Union. We have data. So it was always quite higher, the fertility rate of African Americans,

stay high for quite a long time, and then start going down. The fertility rate of non-Hispanic whites also went down, but the fertility rate of African Americans went down much faster, And in some moment in the first quarter of 2004, it crossed. So at this moment where you're asking me, which are the groups with low fertility rate in the US? My answer will be African Americans, which is completely different from what a lot of the discourse is.

So right now, who is having kids in the US? Rich, white suburban families. Who is not having children in the US? poor African-American urban families. This is the types of fundamental changes that are kind of hard to explain with a naive or we went from an agriculture where in my farm I needed seven kids

to live in a city where I only have to. And that explanation, as you said before, it's perfectly fine. That's what my dissertation was about. Okay? Is why suddenly in Colombia and Guatemala, in Chile, in Bolivia, in Brazil, People have decided to stop having kids so quickly.

Right. And the second area, the second region in the world where fertility is collapsing incredibly fast is North Africa and the Middle East. So Morocco is already below replacement rate. Tunis, Tunisia is very, very low. Egypt is falling incredibly fast. All across the Middle East, fertility is falling. very, very fast. And again, those are the type of countries that will not come to mind. But coming back to the beginning of the answer, Latin America, Latin America is really, really the poster

kit of, oh my God, I don't have a very good explanation for this. I want to move on to implications. Yeah. And before I do, I want to say something really clearly that when we discussed the reasons for declining fertility around the world, we listed a set of reasons that combined negative motivators like affordability and lack of housing. We also mentioned a lot of things that I think are just objectively good. I think more education for women is good. I think more freedom for women is good. I know I know I'm not arguing with you about this. I'm more just reconfigurating. I'm very pro-controception. I'm very pro-access to contraception. And so the reasons for the decline of fertility are a mix of, I think, quite clearly good things and arguably bad things.

And similarly, the implications of the decline of fertility, I think, combine both positive upsides and downsides. Let's talk about the upsides first. What are to you the upsides of population decline? Well, first and foremost, that we can ease the pressure on natural resources. So in a world where population doesn't grow or where population starts going down, we will need to consume less energy, or the growth of energy consumption will be smaller. We don't need to build that many highways. We don't need to build that many new dams.

We don't need to extract that many minerals, et cetera. And that's good for the environment. Okay? second thing that is very good it will help us redesign a lot of cities across the world so cities especially in emerging economies grew very very fast from the 1960s to today

and the area is not very pretty fine you may have you may go to some Latin American city and it has a pretty colonial center city which is where you know tourists go and take some photographs and take a TikTok video but when you go to the places where the average person lives, they are not that great. If suddenly we have much lower population pressure,

we don't need to build as fast as we did in the 1960s and 1970s. Really, they were, okay, let me take an example. I'm originally from Madrid in Spain. A lot of the neighborhoods, residential neighborhoods in Madrid are ugly. Now, people don't see those. People don't go to those when they come to visit Madrid. But they are really ugly because in the 1960s and 1970s, where population was growing very fast,

you had to build this horrible high rises very fast just to put people under a roof. That means we are not going to need those ugly high rises. We can demolish them. We can redesign our cities, have much more livable cities, middle-density, places that are much more present to live. So those are good things that I look forward,

and hopefully we can handle those. And then, as you say, if people are not having kids, because they don't think it's their best interest. Who am I to complain about that? I'm an economist, and perhaps some of your listeners know that economists tend to have, by default,

a little bit of a libertarian view of life, if this is what you want to do, that's what you want to do. So what? So in that sense, I think those are the positive things. And what are the downsides? Well, the downsides is that we need to adapt an adaptation can be costly. The obvious thing that comes to mind, of course, is social security.

And we can talk a little bit more that in detail. But everything related with retirement benefits, both in terms of social security payments, but also in the equivalent of Medicare and similar health programs for the elderly across the world, that's going to impose a tremendous amount of cost in the planet, but also the fact that you are going to start, for instance, being forced to close primary schools. The school district here in Philadelphia, where I live, was just forced to announce a couple of weeks ago. They are closing a lot of primary schools just because they are no kids. Well, that's a serious disruption for a lot of local communities.

The way I like to put it is, unfortunately, many parts of Philadelphia do not have – such a nice environment as they could have. And the local school not only plays the role of an educational institution, it also plays the role of kind of a social club. So, for instance, you use the gym for a lot of social events. Now that the school is closed, you are not going to have the gym to do a lot of social events. That really causes a lot of disruptions. You will be forced to close hospitals.

You will be forced to close a lot of other public services, and that's going to make life difficult for a lot of people, and we need to handle those. And finally, I will say the last point is, if fertility really stays at 1 or 1.1 for a long time, I don't think we appreciate how big of a change this is. So, of course, now I'm going to make kind of a crazy forecast, and I want to understand everyone this is a crazy forecast.

But let's suppose that Thailand keeps its current fertility rate of 0.8 for 200 years. Thailand right now has 63 million people. At the end of 200 years, it will be around 2 million people. Sorry, 2 million? 2 million. So how do you wind down a society of 63 million people into two million people. Now, you can say that, you know,

when population starts falling down a lot, they may, you know, do like crazy subsidies for having kids, things can change. Maybe the people who are still having kids tend to have more kids and they grow as a share of the population. All those things can happen. I'm just kind of highlighting the following point,

which I think a lot of people don't get that, as you were saying before, these things compound over time. You are going from a social society that has 63 million people to a society that has two million people. It means you need to close 98% of the hospitals of the country. It means you need to close 98% of the schools of the country. What's the population of Philadelphia? So Philadelphia, the city is around one and a half million right now. So one and a half million is not so different from two million, right? You're

talking about the nation of Thailand having a population into. 200 years that's a little bit larger than the city of Philadelphia. That's literally, it's, it's not even possible for me to comprehend. Exactly. Exactly. And that's, and that's what I'm trying to say, that this is not, people have the idea that this is going to be about, oh, the other day I was having a discussion with someone. Oh, well, we will close some hospitals. I say, no, no, this is not about closing some hospitals. This is about closing. Or it is about closing hospitals in the next five years. Yes.

You're saying that this is a phenomenon that's like a tectonic plate. It's going to keep moving. And history is going to play out on top of that tectonic plate. And if it doesn't stop moving for 100, 200 years, you have a situation where Thailand becomes Philadelphia. I want to keep pulling on this thread because this conversation now is reminding me of the conversation that I had with my friend Rob Meyer, who's the editor-in-chief of HeatMap. We were talking about climate change. And I was asking him some general question about climate change, which is another trend that has a sort of of compounding interest phenomenon.

And he said, Derek, the problem with climate change, the most interesting problem of climate change, the most significant problem of climate change, is not the fact that temperature goes up. It's the second and third order effect. Temperature is going up increase the likelihood of famines. A famine in Syria creates a population flow into the Mediterranean. That creates a refugee crisis at the borders of European countries.

That creates an immigration, into Germany under Angela Merkel. That creates a populist backlash across Central Europe. And so suddenly after just four easy steps, and this is not a hypothetical, this happened 10, 15 years ago, after about four steps, a phenomenon that sounds like it's about carbon dioxide in the atmosphere is actually about the rise of populism in Europe. And so taking that as inspiration, I would. wonder whether there are other knock-on effects that you and other demographers thinking in the

span of decades and even centuries worry about when it comes to population growth. One just quick example to me would be a lot of modern liberalism is built on the presumption of positive some interactions. Yes. But a positive sum philosophy requires growth. In a world without growth, my earning more income is not positive sum. I'm taking income from somebody else because it's a zero-sum environment. And a world where population is declining and productivity is not increasing is a world where GDP growth on a year-to-year basis is something like zero to negative 0.5%. You're talking about a permanent stagnation and recession. That's a world of zero-sum growth and that's a world where I think that a lot of values that I consider positive liberalism

are no longer feasible because in some cases they might not be true, and that's a little scary to me. So without necessarily endorsing that particular fear, I'm interested what you see is some of the more interesting or scary second-order effects here. So let me give you an example that is very close analog. Let me take a case of Spain, because I know it very well. We have had very, very low fertility now for a long time.

That means that our social security, payments have balloon, which means that basically now the younger population needs to pay a tremendous amount of taxes to sustain that elder population. Well, people are not happy about it. People are basically saying, look, I'm happy to pay 25%, 30% of my income in taxes to pay for social security, right, it is, but I'm not happy to pay 50%. Okay, like everything there is, you know, it's okay, it's not that I want to pay but I don't want to basically work half of my day yes to pay taxes.

That means that at this moment, if you, and so in Spain right now, there are two conservative parties. Europe is slightly different than the US because we have proportional representation while the US has a first pass the vote. In political systems with proportional representation, political change is by the appearance of new parties. So now we have two parties. we have a mainstream

conservative party which will be the Republican Party of let me say the Mitt Romney's George Bush's father your country club Republican

they like to talk about lowering taxes and having a breaking investment and there is a radical right-win party and this radical right-wing party is among other things

about these redistribution issues that you are mentioning Now, let's look at all the electorate in Spain that vote right and divided between those under 50 and those above 50. Those under 50, the radical party is the large party by a very long margin. Those above 50, the conservative mainstream country Gulf Republican is the important party. And it's not just a little bit of a difference. not just around 50, is that if you go for those under 25, no one under 25 is voting for the mainstream Conservative Party.

And no one after 65 is voting for the radical right-wing party. So there you have it. The demographic change and the pressure that this has put on the Spanish government budget basically meant, means, sorry, that the way in which the right-wing votes in Spain have allocated has changed drastically. and that has a complete change in the policy of Spain amount tons of things. It also seems to me that the politics of immigration

become a significant and unavoidable part of sustaining the welfare state because what do you need to sustain a welfare state? You need taxable income. Well, where does the income come from? It comes from people. And if you're running out of people, you need to import people.

And that's called immigration. But in my experience, is sort of someone who lives thousands of miles away from Europe, it sort of follows what's happening in the FT. It seems to me like practically every country that allows immigrants to become a certain share of their population almost always have a populist backlash. I'm not rooting for that outcome. It's just what I often see. And it means that you're stuck in this almost like this Chinese finger trap where you need to increase taxable income on the one hand. But doing so in a low fertility environment can only require either slashing social security

or adding immigrants. But adding immigrants increases populism, slashing social security creates another backlash. So you find yourself in an environment where there is no long-term popular solution to your political problems. That's what I see as an outsider. Exactly. So let me put it in this way.

When a lot of times I talk about these problems, someone always raises the hunt, and I says, you know, we will just bring in a few immigrants and that will fix the problem. Okay, but let's go back to the example of Japan or South Korea that I was mentioning before. So Japan right now is around 98% Japanese, ethnically Japanese. If we wanted to keep the population of Japan constant in 200 years through immigration, in 200 years, Japan will be 5% Japanese, 95% non-Japanese.

This is not about bringing a few immigrants. This is about changing your country. country will not be Japan. Okay, you may like it and you may say, I'm perfectly fine, I'm not attached to the idea of Japan in abstract, but I can see a lot of Japanese saying, look, this is not about being a xenophophob, this is not about being immigrant, this is about not having a country anymore. Let me give you a very concrete example. I'm actually quite sympathetic in Spain.

In Spain, in addition to Spanish, we have regional languages, like Catalan. and the problem is Catalonia is getting a lot of immigrants. The immigrants are not Catalan speakers. And their kids, they may learn Catalan in a school,

but they don't speak Catalan. Okay? Given the current level of immigration, Catalan, I have forecast, is doom as a language. It will not exist. Fine. Some people will always speak it in a small village in the middle of the mountain.

But as a working language of day-to-day life, Catalan is doom. And you see it in all the statistics. You look at people under 25. You look at people under 30. Very clearly the language is dying. Well, if you're a native Catalan speaker, this is existential for you.

Okay? So fine. This is not about being immigrant because I'm a, you know, a nasty guy. This is not about being racist. This is just about saying, don't I have a right to my language to still exist? So that's the type of things.

And, you know, I'm an immigrant myself. So it's not that I'm against immigration. But, you know, it's like everything needs to be within a reasonable degree. You're making what seems to be an almost mathematical point. A population that does not replace itself with fertility will either die or find itself replaced by people who are born in another country and maybe in another culture. There's no other way for the math to work out. This is why over the century's low fertility becomes not just a numbers problem, not just an economic problem, not just a welfare state taxation problem.

It's a political problem and a cultural problem. My last question to you, of course. The first question I had for you was quoting your speech from Miami saying that there's only two things that matter in the world. And we spent 99% of this episode talking about one of them, fertility. The other one is deep learning, aka AI. Let's just bring in deep learning for one question. If Korea's total fertility rate is one in the 2020s and the 2030s and the 2040s, its population is going to be shrinking fast by the 2050s and the 2060s.

But AI also benefits from this principle of scale, right? This technology that in 2022 often fail to do basic arithmetic is now identifying cybersecurity vulnerabilities better than the best coders in the world. How do these trends intersect? Okay. So they intersect to some degree, but not as much as sometimes people think. So let me tell you where you are absolutely right.

If thanks to artificial intelligence, we, and robotics, for instance, we can, you know, a lot of the jobs can be done by computers, by robots. If that generates a lot of economic growth and that helps us to pay for social security, that will make the transition much easier. The adaptation will be much easier.

I'm a little bit of a techno-optimist in that sense, and I'm glad that this is happening, and I think it's going to give us a little bit more degrees of freedom to adapt our society. But coming back to my point before, this is just not about GDP. Okay, and it's kind of funny that as an economist, I say it's not about GDP,

when an economist I'm supposed to be paid every month to say this is about GDP. Because of the type of social phenomena I was emphasizing before. So, for instance, my wife and I love to go to this small village in England to spend some time on vacation. It's a lovely, you know, typical pretty English village. They recently closed the local pub because of population fall. The problem is that the local village, pub in an English village is not just the place where you go for a beer.

It's really the place where you meet your neighbors. It's really the social gathering place of the village. How are you going to substitute that with artificial intelligence? Okay. And that's what worries me, that a lot of the things that make us human is not about being able to produce a lot of widgets with robots. It's about our social interactions.

Again, thinking about, for example, before, of Thailand, if we are going to be two million and a half, we pretty much need to abandon most of the country and make it empty because in a age of it, you need a scale to run things like hospitals. So we are going to abandon 90% of the country and leave it to the wild side. Artificial intelligence is not going to be able to do much about that.

And those are the type of challenges that I don't think people quite happen. yet. So I'm a techno-optimist. I love artificial intelligence. I do a lot of artificial intelligence on my own work, but we need to be careful about what it can and cannot deliver in terms of fertility. Jesus Fernandez Villaverde. Thank you very, very much. Thank you. Thank you for having me here.