What “Birthrate Crisis”?

I was prepared to detest Megan McArdle’s most recent Washington Post column, “Can immigration save the U.S. from its birthrate crisis?”:

The primary asset of any society is its people. That’s true in the lofty spiritual sense and in the crass financial one: Other people produce both the economic goods and the tax revenue that sustain the nation.

Like any other asset, this one needs to be replenished by continual reinvestment. A society that stops replacing itself is like a trust-fund kid dipping into the capital. The accounts empty at an accelerating pace, and a bill eventually comes due that cannot be paid.

Virtually the entire rich world is now in varying stages of that cycle.

but, as she acknowledges in the next sentence, the U. S. does not have a birthrate crisis. After considering U. S. policy she lands in the right place:

An immigration solution to the United States’ demographic challenge would probably mean a very different immigration policy, something like the points system used by countries such as Canada and Australia, which selects for migrants reasonably fluent in English and likely to be net tax contributors. Family reunification, which reinforces the United States’ historical bias in favor of low-skill migration, might well have to be curtailed.

While we do not have a birthrate crisis, we do have a pair of other crises, both of which are exacerbated by uncontrolled immigration. The first of these crises is a productivity crisis. Consider these two graphs. The first depicts labor productivity:

while the second depicts marginal labor productivity:

Take particular note of the circled sections on the righthand side of each chart. What they tell us is that there has been a change. The return on investment in labor is not growing as it once was. Indeed, if you could extend that chart all the way back to 1790 you would see how much has changed over the years. We don’t need more workers. We need fewer workers with low skills and more with higher skills. At its best higher education only addresses the second part of that equation and at that only if higher education actually brings more productivity which would require us to be more restrictive in the sort of higher education we’re subsidizing.

The other crisis is a crisis of social inequality which is being made worse by income inequality. But that’s a topic for another post.

One last thing that should not be neglected in this discussion. Japan has actual population decline, very low immigration, and no crisis. They have no crisis because labor productivity continues to rise and income equality is much greater there than here. In other words even with a birthrate below the replacement rate the welfare of the population can grow as long as productivity continues to rise and the benefits of that increase are spread across the population.

The basic question is what sort of society do you want? If you want a stratified society with a permanent underclass, just keep doing what we’re doing.