Technology And Demographic Changes

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Many countries are facing demographics issues going forward. As mentioned in other articles, Germany, Spain, Russia, Japan, and Italy are all at peak populations. They have abysmally low fertility rates which means their populations are either in or entering decline.

We also see the United States and China facing similar situations. Both of them register under the fertility rate of 2.1, which is accepted as the minimum to maintain a population.

Historically, as we saw with Japan, this situation creates a host of problems. To start, it is impossible to have an expanding economy when the number of people is declining, especially if is based upon consumption. At the same time, this situation creating an aging population which generates an upside down social effect. Basically, we end up with a lot less people working to support more people.

It is no secret that older people are less productive than younger ones while also requiring more social services. Someone has to pay for this and, as Japan found out, it gets very difficult to do without economic growth.

Finally, we see the need for caretakers and individuals in those fields in greater demand. However, when the population gets to a point where the older people far outnumber the working class, we see it is hard to find these people.

This is something that we have yet to find an answer for. Recent reports/estimates have the US fertility rate at 1.6 and China as low as 1.18. If this holds, both countries will be in a similar situation as Japan very quickly.

As an aside, many point to immigration as a solution. This has traditionally been the answer for the problem within a particular country. However, in addition to the list above, we see Canada, South Korea, and the most of Western Europe in the same situation. In other words, it is going to be tough finding enough immigrants to fill all those countries.

Of course, if we look at things through this lens, we can see how things are set to really go downhill. One cannot avoid the connection between the economy and demographics. If the later is against you, the former is screwed.

At least this was the case in the past. But will it hold true going forward?

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As with any discussion today, we need to look at the idea of technology. There is no doubt that robotics is a huge field that is ever expanding. We are going to see a huge boom economically, in part, due to robotics and AI. Will that make up for the decrease in working people?

This is a hard question to answer. For a country like China, it could be the solution. China is still heavily dependent upon manufacturing for their economic output. While they are trying to transition to a consumer based economy, it is slow going. Thus, they have to increase production greatly to double its GDP by 2035, which is the goal.

The challenge I see with this is that automation is available to everyone. Why would a company pay a Chinese firm to produce its product if it can buy the same robots and produce it at home? In this instance the savings in shipping costs helps to make it a profitable move.

We also had a situation with COVID that completely exposed the world to how dangerous it is to have the majority of our global manufacturing in a couple epicenters (both located in China).

Another factor in this is robotics is a slow industry. Even though it is accelerating, robotic technology is not easy. Unlike software, robots have the challenge of dexterity. Today, they still are not great a picking things up and moving them around. Robotic hands really do not mirror that of humans, at least not in the production realm.

Fortunately, while this is a pressing matter, it is not urgent, not for most of these countries, Japan aside. There is time to ride the technological development curve for robotics to help alleviate the shortages over the next couple decades. China, for example, might see its population grow for another 5-7 years, by some estimates, before it begins the long-term decline into the end of this century.

Software could also make up a big part of the difference. Obviously, many expect a major economic boom from AI. If this comes into being, countries that are at the forefront of that technology stand to profit handsomely. They could see their economies double or even triple depending upon the size they are starting at.

This is a very difficult situation to navigate. As we see with Japan, if we get it wrong, there are decades of pain and turmoil. However, leading countries can use technology to possibly offset the demographic issue and still maintain their position.

What are your thoughts on the subject?


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I am a Chinese descendent, who lives in the United States. So I understand a bit of both country, at least my knowledge is not from media outlets that wants to bring wars between these two countries.

US and China have two different situation. US will always be a heaven for immigration. this country is built upon it. Young blood will move in to cover the loss of low birth rate.

China on the other hand, is totally opposite. Yes, there are expat, but there is not an easy process for naturalization. One of cause of their fertility rate issue is the policy called 996. Work from 9AM to 9PM, 6 days a week (learned from Japan). Jack Ma of Alibaba is one of the person, who started this. This is one of the reason why a large number of population cheered when he got in trouble with Ant Finance.

China's strategy is AI. Every time I travel back there, I see more automations. There are AI managed hotels, supermarkets, etc. As the matter of facts, with mobile payments and surveilling system, some stores do not have employees. Customers just pick the item, scan the QR code, take out their phone, scan the QR code from their Alipay or Wechat Pay, and walk out. Japan has a similar situation. I am not saying this would work in any country due to the opinion of surveilling system and integrity of customers though.

Robotics is not really slow there. They have cooking robots, cleaning robots, waiter robots, etc. Americans talk about losing jobs to China; Chinese are losing their jobs to machines. Well at least it covers the low birth rate problem.

I don't have full knowledge about Japan, so I won't describe their problems. All I want to say is that if their engineering put more effort in regular robots instead of sex ones. They are gonna be on top of that industry along with China.

To go back to the topic of this post. Robots is coming, some places are faster than others. Theoretically robots can help to take care of elders more and more. And since they are cheaper in term of cost, other merchandizes should also drop prices. I said theoretically because we know how "greedy" bigger companies are.

I won't worry too much about demographic changes since we already know what the backup is. Hey, less population could help the environment too.

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Thanks for the detailed analysis and, from my understanding of the situation, this is spot on.

China is advancing very quickly in terms of automation. It is the leading country in terms of robotic implementation and expected to continue to be leading that field. Japan is also doing it but, as you stated, that is out of necessity.

Americans talk about losing jobs to China;

This is an old narrative that Trump was able to tap into. That hasnt been true, on large scale, in 15 years. Most of the jobs in the US lost, over 80%, are due to technology.

Chinese are losing their jobs to machines.

This also doesnt bode well for the likes of Vietnam and Laos.

The one thing I would say that is omitted from your equation is that while robots can make up for the loss of workers due to aging populations, it cannot make up for the decrease in consumption. Robots do not buy stuff like humans do. That is where demographics really cause an issue.

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Thanks for the feedback.

I was joking about losing jobs to a different country. But you are right on Vietnam and Laos. I completed missed that part. Jobs goes to places with lowest cost. Robots is only one factor when jobs moves away from China.

For

Robots do not buy stuff like humans do.

Yes, they won't buy food, cleaning supplies like human do. I am not disagreeing with you, just trying to imagine the future. Don't you think that the market would shift to more robotics related consumer products?

Human will have to adopt more purchases from replacement parts for their robots, software upgrade services. Those are something we don't need to pay yet.

There may be more robots in our houses that humans. We would purchase new items, instead of traditionally merchandises. The human will buy stuff for the robots.

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Certainly there will be a portion of incomes having to go towards the servicing and upkeep of machines. However, in proportion, I feel it will be a much smaller amount.

And do not forget, there is a lot of stuff over the next couple of decades that will end up in a non-physical form. We saw this with music, video, and communication. We are going to see it with a lot more.

So while we will realize a great technological march, we are also going to see a lot of things pushed down to near zero marginal cost.

All this combined makes it hard for those countries to compensate for the big loss in population.

After all a few robotic parts does not make up for the loss of not buying a home since a couple does not exist.

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Why would a company pay a Chinese firm to produce its product if it can buy the same robots and produce it at home?

Just given how long it takes for things to spread, I don't see this happening for at least a few new years. Even with robots taking over jobs (at a lower cost than a normal worker), people are adverse to change. So they will continue to do so as the economy changes so it will take years for anything to take place. I don't see a future in the job industry and I am even worried there will be no job market when robots take over.

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...people are adverse to change.

People are adverse to change but companies are not. And if there is a choice of being in hot water again due to a pandemic or saving their quarterly earnings, we know what CEOs and other executives at corporations will opt for.

Look at how fast the automation already is happening in the West due to COVID. These companies cannot automate fast enough. Now we are seeing further supply chain issues.

Do you think Ford is not taking a very close look at their semiconductor issue and making plans for the future?

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I think they probably are. But I still think Ford itself is only going along with the mainstream idea of EV adoption. In their opinion if everyone else is suffering then its fine. But I think they decided to make changes to the semi-conductor issue purely because Tesla has been showing how bad they look in comparison.

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Well yes the EV push might be monkey see, monkey do. However, the supply chain issues are far bigger than just their push into EVs. And that I can guarantee is changing rapidly, even above the semis.

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I really don't know enough about robots, as a disabled person and if I lived alone I would like a robot the could clean the floors. May even one that could cook. I don't really know if any can do the above mentioned items. I do feel that interesting times are ahead. I have taken care of people in nursing homes, and they might have lived longer if they could have lived in their own home. Lots of people are living longer lives and we a lot of young people who can't or won't work and that means not very many workers to work in nursing homes or in the private sector. I feel like I am just rambling now. so that is all I have.

They have robotic vacuums already. Not sure how good they are right now, but that will likely improve in time.

Robot cooking is happening at the restaurant level more than the personal side from what I can tell. There is talk of dark restaurants which is a building with no lights since only robots/machines prepare all the food and it is delivered.

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Than you for letting me know, I do remember the robotic vacuums, I think my brother has one. As for cooking I had no idea. How do they know how food should taste?

Is that fertility rate purely biological based or does it consider personal choice as well. There are certainly factors in the world that are influencing both sides of that coin. Constant disruption and violence and the like makes people really want to reconsider brining a child into this world. On the other side, I know at least a handful of people who grew up in the same town as me. Near a large chemical plant by the way, and several of them were never able to have kids. Just random thoughts, I know that was just the intro to your post and not necessarily the point of it.

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Fertility rate is simply the average number of births per female. The reasons why they are where they are at us up to the debate of others.

The numbers tell the story; sociologists and other researchers try to answer why.

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Good points. Thanks for the clarification!

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No problem my friend.

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When you take into consideration the depopulation through vaccines, which has been forecasted by Bill Gates for quite a few years, the situation is even worse. Luckily technology is working on bots to take place of human labor.

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There is a case that can be made for that. We will see how that unfolds in the next couple years. If the "conspiracy" people are right, then we could see some impacts down the road. This is not a one shot deal (pun intended).

Few are questioning what is taking place. As always that will be a mistake.

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Robots as part of the workforce is a good aid to the situation. It one band aid on a very complex issue as the aging population become more then the younger population. Some other solutions might need to be done as well for it

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While automation sounds great for developed countries, I think it can pose major challenges for developing countries like India or Nigeria that have very large, young and mostly unskilled populations that would suffer from the lack of job opportunities

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You are absolutely right although developed countries have large unskilled populations also.

There is a global effect on all this. Few look at things globally, especially Americans. The fact that China is automating more ends up meaning there is less moves to Vietnam and Laos. Thus, those countries growth is slowed.

There is a spillover effect throughout the entire system. It is why we are going to see new economic models formed.

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I agree why would you import an item if the robotics can make it without transport and import duties added on. What is interesting is China doesn't have the resources like many other countries do and at some point countries that supply them will hopefully wake up. Africa needs to take back control at some point as they could easily be the continent everyone turns to. Greed and corruption has helped the likes of China and makes no sense why Africa is so poor with the riches in natural resources that they have.

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That is true but Africa needs what China is offering. That is not to say that there are not payoffs and bribes. I am sure there are.

However, it is always a two way street even if the population doesnt always get the total benefit.

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