retail news in context, analysis with attitude

The Wall Street Journal reports on a problem that some say is the most vexing one facing America:

"Forget the debt ceiling. Forget the fiscal cliff, the sequestration cliff and the entitlement cliff. Those are all just symptoms. What America really faces is a demographic cliff: The root cause of most of our problems is our declining fertility rate.

"The fertility rate is the number of children an average woman bears over the course of her life. The replacement rate is 2.1. If the average woman has more children than that, population grows. Fewer, and it contracts. Today, America's total fertility rate is 1.93, according to the latest figures from the Centers for Disease Control and Prevention; it hasn't been above the replacement rate in a sustained way since the early 1970s.

"The nation's falling fertility rate underlies many of our most difficult problems. Once a country's fertility rate falls consistently below replacement, its age profile begins to shift. You get more old people than young people. And eventually, as the bloated cohort of old people dies off, population begins to contract. This dual problem—a population that is disproportionately old and shrinking overall—has enormous economic, political and cultural consequences."

Yikes.

The story goes on:

"Low-fertility societies don't innovate because their incentives for consumption tilt overwhelmingly toward health care. They don't invest aggressively because, with the average age skewing higher, capital shifts to preserving and extending life and then begins drawing down. They cannot sustain social-security programs because they don't have enough workers to pay for the retirees. They cannot project power because they lack the money to pay for defense and the military-age manpower to serve in their armed forces."

Decline, the Journal suggests, "isn't about whether Democrats or Republicans hold power; it isn't about political ideology at all. At its most basic, it's about the sustainability of human capital." And the US may simply be less sustainable when measured by these standards.
KC's View:
Y'know those bumper stickers that almost always crop up after an election, saying things like "Don't blame me, I voted for Bush," or "Don't blame me, I voted for Kerry"...

Well, after reading this story, I feel like buying a bumper sticker that says, "Don't blame me, I have three kids."

It is an interesting piece, and you can read the whole thing here.

If the analysis is correct, it is a trend that has enormous implications for marketers.

(Marketers of a lot of things. For example, in a country with fewer kids, how do colleges compete for a declining number of potential customers? A lot of them seem to think that the best way to do so is by building bigger, fancier campuses and then charging higher tuitions. I'm not sure that is sustainable. It strikes me that they may have to a) rethink their fiscal models, from physical facilities to hiring practices to how much they can charge, and b) rethink who their audience is, and focus more on continuing education of people who are in the workforce. But I digress...)

One thing does occur to me. I think one of the reasons that people have fewer children - and there are lots of them - is that personal happiness is a higher priority than ever, and a lot of people define personal happiness not just in terms of family. hence, smaller families. But that focus on personal fulfillment - some might call it creeping narcissism - sometimes lead people to buy more, not less. It doesn't balance out, but it can lead to advanced consumerism.