Both Elon Musk And His Italian Critics Miss The Real Demographic Crisis

-Analysis-

TURIN — The response that many progressive Italians have offered to Elon Musk’s attack last week against Italy over the demographic winter has a paradoxical effect: they end up agreeing with him.

It is striking how people fail to notice the vicious cycle these arguments create. Their first premise is usually that having fewer children is above all an Italian problem. Their second premise is that young Italians see no future and are giving up on having children because wages are low, jobs are insecure, and childcare is inadequate.

With such premises, however, it becomes hard not to land on Musk’s conclusion: Italy is gradually vanishing, and the welfare state is at risk because we will soon have too few young people to fund our pensions. To genuinely counter the billionaire’s attack, we would need to examine these two premises more closely.

Ultra-low fertility

There is no doubt that Italy has long been among the countries with the lowest fertility rates. Demographers have even coined a term for this, ultra-low fertility, used for countries with rates below 1.3 children per woman, from South Korea to Canada, from China to Ukraine, from Spain to Italy. But a look at global trends shows that these countries are not so much exceptions as forerunners.

Already today, roughly two-thirds of humanity lives in countries below the replacement threshold of 2.1 children per woman, considered the level required to keep the population stable. Only Africa still has higher rates, though they too are falling fast compared to the past.

Anyone under 50 must accept that they will soon witness something not seen since the 14th century: a shrinking world population.

From a macroeconomic point of view, a smaller global population means less pressure on natural resources, which brings both environmental and energy benefits.

But is this truly a problem? Are we really facing some kind of apocalypse? From a macroeconomic point of view, a smaller global population means less pressure on natural resources, which brings both environmental and energy benefits.

Of course, we will have to get used to lower economic growth rates or offset population decline with sharp increases in productivity. And it will become more difficult to repay public debt, which depends on aggregate rather than per capita growth, and harder to sustain welfare systems unless they are reformed.

Some economists say an aging population reduces the flow of ideas, which come mainly from the young, and that productivity growth will suffer as a result. But technological progress can help compensate. In any case, addressing these issues requires us to focus on empowering young people.

Building nurseries

In short, the real issue is the transition from one equilibrium to another. But the more we cling to the belief that building nurseries will persuade people to have more children, the more we give politicians an excuse to avoid tackling this transition, pushing off the decisions needed to adapt to reality. Nurseries do need to be built, but to invest in the brilliant minds of children, not to coax parents into having babies for the sake of the pension system.

This takes us to the second premise, that Italians are choosing not to have children for economic reasons, from low wages to a lack of services. Here too, it is clear that uncertainty can lead those who want children to postpone the choice, or to abandon it entirely, just as it is clear that anti-poverty measures and income support policies are essential.

But no one should expect public policy to restore fertility rates to mid 20th century levels, in Italy or anywhere else.

Are policies enough to make people have more children again?

It is curious that we so often cite Spain, from its minimum wage to its equal parental leave, as a model of a country growing faster than ours without neglecting social inclusion. Yet we overlook the fact that even there the fertility rate has fallen to 1.16, virtually identical to our 1.18.

Empty cribs, crowded planes

And the Nordic countries, often seen as a paradise of pro-birth policies, from generous transfers to services that arrive at your doorstep, show similar numbers: Sweden is at 1.43 children per woman, Finland at 1.32. Are policies enough to make people have more children again? The answer is no, apparently.

It is just as striking that Italy is so alarmed by depopulation caused by a falling birth rate, when in the past decade more than one and a half million adults have left the country, 48% of them between the ages of 18 and 34. The problem is not only empty cribs but crowded planes. Planes full of young people heading abroad. Italy is not vanishing because young women are having fewer children, but because older men won’t share power and privilege.

This also calls for a different strategy: why not consider, for example, a Start Tax that would reduce income taxes for those under 40, to reverse these trends and attract young talent? It would be a way to answer Musk without embracing his model: not a call for young people to make more children, but a call for society to invest in young people.