The "real" fiscal cliff

From Tyler Cowen at the Marginal Revolution blog, what he terms "the truly important news". I'll agree with his assessment.

Forget post-election dissection and the fiscal cliff, here is the stunner: 

The U.S. birthrate plunged last year to a record low, with the decline being led by immigrant women hit hard by the recession, according to a study released Thursday by the Pew Research Center. 

The overall birthrate decreased by 8 percent between 2007 and 2010, with a much bigger drop of 14 percent among foreign-born women. The overall birthrate is at its lowest since 1920, the earliest year with reliable records. The 2011 figures don’t have breakdowns for immigrants yet, but the preliminary findings indicate that they will follow the same trend. 

That’s the real fiscal cliff.  Yet The Washington Post reports that its most popular article today is “Starbucks’ new $7 coffee is its priciest ever."

Yeah, that's not good. As I mentioned on Twitter this morning, over the long run, without population growth there can be no economic growth. Worse yet, a steady decline in the ratio of non-working (retired) citizens to working age citizens means that there's virtually no way to keep Social Security solvent, or to have any hope of paying down our national debt.

Want to know why Japan's economy can't seem to get out of its own way? This is why:

Too few working people (we could also call them "taxpayers"), too many unproductive people to support, and not enough aggregate savings among the latter to support themselves without help from the former. That's a problem, and it's one that's difficult if not impossible to reverse.

When a population ages dramatically, in relative or absolute terms, that always creates issues from an economic standpoint. It's a simple problem, and yet it's one that no amount of modern economic complexity (or monetary policy) can overcome. As Tyler wrote, this is the real fiscal cliff.

[Marginal Revolution]