Originally published November 3, 2016
However, if one simply subtracts the continent of Africa from those numbers, global population growth looks a whole lot different. The chart below shows the global population (columns) plus global population minus Africa (blue line). Going forward, the UN's medium (red line) and low (green line) variants for future population estimates (again, x-Africa).
Why x-Africa? Simply put, Africa is economically a non-entity, and I'll show why. Crudely put, people are units of consumption and from a growth standpoint, it doesn't matter if you have 7 million or 7 billion people on earth. In terms of growth, all that matters is the year over year change in the number of people (new consumers) multiplied by their ability to consume or GDP per capita (synonymous with purchasing power parity or PPP). Below, countries with low PPP in red (Central Africa), moderate in green, high in blue, and very high in magenta.
No surprise, Africa is poor beyond belief and most global commodities and exports cost the same worldwide so nations with high PPPs (and particularly those with relatively easy access to credit) can consume far more than those with low PPPs. The bulk of nations highlighted in red (particularly in Africa) have PPPs below $2000 a year (and as low as $400/yr). Nations with PPPs of $2000 year are generally in-line with the GDP per capita of Haiti and a third the PPP of Cuba and about 4% of US GDP per capita. Sadly, the lack of growth in the rest of the world coupled with the ZIRP/NIRP driven overcapacity of nearly everything means there is no pathway for Africa to export themselves to prosperity.
- In 1980 China consumed 2.8% of the worlds oil. China now consumes 11.5% of global oil.
- The 35 OECD nations represent about 18% of the worlds population but consume 50% of the worlds oil.
- S. Korea & Taiwan combined, with a combined 75 million inhabitants, consumes about 3.6% of the worlds oil nearly on par with Africa.
So, what does the world population look like with Africa removed (or x-Africa)? Below, global x-Africa population with split out showing under 45yr/olds and 45+yr/olds.
Those under 45 represent the population capable of having children and forming households. The global under 45yr/old population have essentially peaked, will flat-line for a decade, and then begin what appears to be a very long decline. THAT IS A BIG DEAL. With interest rates already at zero, debt and overcapacity rampant, and no population growth anywhere that matters (economically) - that means the current game premised on growth is over.
The only question is what will the new game look like? Clearly the issues we face mean free-markets will not be allowed nor is a democracy seemingly capable of voting for long term solutions that mean significant short term pain. In truth, neither functioning markets nor functioning democracies appear to exist any longer.
And the rise of the elderly 45+yr/old population. THAT IS A BIG WEIGHT (too big) THE UNDER 45yr/olds MUST BEAR.
And below, what the change per 5 year period looks like for the two groups. Under 45yr/olds will begin outright shrinking within a decade (of course this means the under 35yr/old population has already begun contracting...also known as depopulation from the bottom up).
Just in case you wondered how population growth related to GDP was impacted by interest rate policy & debt? The chart below really couldn't make it simpler. OECD, China, Russia, & Brazil combined 15-64yr/old annual population growth (blue columns), Federal Funds Rate (black line), global debt (red line), and global GDP (green line). Since 1981, population growth moves from upper left to lower right (mirrored by interest rate policy...the start of the bond "bull") and the attempt to paper over the declining growth with surging debt...but GDP (flawed as it is) makes it plain there is no real substitute for population growth.
The companion articles that dovetail with this article:
If you wonder why interest rates have collapsed, it's to incent fewer to spend more. If you wonder why central bankers have seemingly gone mad, it's simply a doomed rear guard action in the face of decelerating to outright shrinking numbers of people with the capability to consume. If you wonder why your Social Security or your pension or IRA won't be there when you need them, you may want to scan the charts above again. A system insanely based on perpetual growth has ceased growing and is beginning to contract. It really is that simple.
Below, total global births (x-Africa) peaked in the 1985-90 timeframe & have fallen 13% and how far down from here really depends on which outcome you think most likely. The red lines represent the UN medium variant estimates and green lines the low estimate. The reality will be somewhere between the two but decidedly upper left to lower right.
Births among developed nations have collapsed nearly 30% since peaking about 60 years ago.
But if the developed and developing worlds are seeing collapsing births, how is the total number of births flat-lining? Africa!