Extinction Zone

Chart of the Week #32

While many fret about overpopulation, the reality is that fertility rates have been on a downward spiral since 1963. The current global fertility rate is barely above replacement, at about 2.25 children per woman.

But nowhere has the demographic shift been more dramatic than in the developed world (think North America, Europe, Oceania, and East Asia). Fertility rates have dropped from nearly 3 children per woman in 1950 to 1.45 today—basically halving. You can see this in today’s chart below.

As a result of the declining global fertility rate, the world’s population growth rate has dropped significantly, from a peak of 2.3% per year in 1963 to less than 1% today.

Scholars generally agree that three main factors have driven the rapid decline in global fertility rates: “women’s liberation,” rising costs of raising children, and lower child mortality rates. I’d also add the widespread availability of contraception, urbanization, and the rise of anti-family/anti-natalist ideologies. While there are other factors at play, these seem to be the most significant, and they’re all linked to increased prosperity.

It’s almost as if modernization itself plants the seeds of demographic collapse—a paradox in its own right.

Now, if you look at the chart again, you’ll notice the gray zone at the bottom labeled as the "extinction zone." This isn’t hyperbole. It represents fertility rates below 2.1 children per woman—the minimum needed just to maintain a stable population.

And as you can see, developed regions aren’t just flirting with this threshold—they’ve been deep in the "Extinction Zone" for decades.

This is a massive issue because as each generation gets smaller, it creates a vicious cycle that makes it harder and harder to reverse the demographic collapse.

Elon Musk—a big advocate for procreation (setting him miles apart from billionaires like Bill Gates, who wants to significantly reduce the world’s population)—has pointed out that if this "compounding effect" continues, we could see many countries shrink to just 5% of their current size in just three generations. Here’s a snippet from that interview.

No doubt, Musk is spot on when he argues that the collapsing birth rate should be the top priority for countries to address.

Think about it: how do you maintain your glorified welfare state and pension systems when there are more retirees than workers? How do you drive innovation when your workforce is shrinking? How do you defend your borders when you can't field an army?

Now, Musk also mentioned South Korea as an example of a country where a collapsing birth rate will have devastating effects on its population size. It's a fitting one. With a fertility rate of just 0.68— the world's lowest—the country is experiencing what can only be described as demographic collapse. And the consequences are already showing…

Just earlier this week, on December 3, 2024, President Yoon Suk Yeol declared nationwide martial law (now lifted), imposing strict curfews, widespread security measures, and severe restrictions on movement, throwing the country into a crisis state. While the mainstream media treats this as purely political theater, they're overlooking the demographic dimension. When your population is aging rapidly and your workforce shrinking, maintaining social stability and cohesion becomes increasingly difficult. And that's just one recent example.

Now, South Korea knows its rapidly shrinking population is a huge problem and is investing millions to combat it, with initiatives like the "Seoul Without Loneliness" program (which will inject $322 million over five years to address the growing issue of "social isolation").

And South Korea isn’t alone. Japan, Singapore, and most of Europe are dealing with similar looming crisis-like challenges. Even China, once worried about overpopulation, is now desperately trying to convince its citizens to have more children.

The problem is that none of these government efforts seem to be making a real difference. Not exactly a shocker…

Have a great weekend!

Lau