This is a guest post by Richard Armstrong who is an early stage investor in many startups in both SE Asia and globally. Plus Richard has cofounded several companies.
Guest Author: Richard Armstrong
Elon Musk often likes to talk about how we need to fight population decline. He likes to refer to it as one of the biggest problems we as humanity is facing.
And it is obvious that a decline in population means a lot of potential consequences like it’s negative impact on GDP.
But is it really a bad thing?
Especially in the face of the rapid advance of AI.
This is the topic I will explore today.
It is clear that depopulation is upon us
If you look at the above graph you’ll notice that working age people in developed markets (eg. US, Europe) have dropped from 0.5% annual population growth in 2000-2009 to being about -0.3% today and for the foreseeable future.
As the number of new births decline but average lifespan continues to increase, you start to see a rapid ‘aging’ of the workforce. Meaning people get older and older, which generally puts more tax on the system.
These older folks tend to spend a lot less (eg. transportation, apparel, etc) and do not contribute much in terms of taxes. Because most of them are retired and therefore taking more resources out of the system in the form of social security, pensions, etc.
So the burden of supporting the economy falls on a smaller and smaller group of working age folks.
But is this really so bad given the advance of technology like AI?
By this I mean… is it really so bad that the number of people is in decline. Let’s think about this in terms of simple supply and demand.
The number of people is going down (ie. decline in supply) as technology rapidly advances meaning less and less people are needed to get the same outputs.
With the key technological advance of course being ‘AI’.
We are already seeing AI gain rapid penetration in the workplace doing a plethora of tasks that humans used to do. But we also see AI rapidly advancing in robots.
So in the near future you will most likely see smart robots doing manual jobs that humans had always done before (eg. cleaning, painting, nurses, etc.)
And so there will be less demand for those areas of work.
Less people means the value of each individual goes up
I’ve talked about about how AI will likely reduce the demand for people as labor. But already you can point to how many people do not make a sufficient living to lead a decent life.
For example the World Bank estimates that in 2024 about 9.2% of the world’s population, or about 720 million people, live below the poverty line of $2.15 per day.
Also in the US it was estimated by the US Census Bureau that in 2022 about 11.5% of the. population, or about 38m people, lived below the federal poverty line.
This is a lot of people whose time and labor are essentially not valued sufficiently to provide for their daily needs.
And it is only natural that as the population declines, this number will go down. Plus the remaining folks will generally be valued higher, which translates into higher wages, etc.
I think of depopulation as almost being like the world keeping us in equilibrium
If you think about it, it almost feels like the world knows things before we do and prepares for them. It is how the world manages to keep its equilibrium just as we’ve seen in nature.
If the number of bees declines, then you see a domino effect on the entire ecosystem related to bees until things are in balance again.
And to me depopulation and AI are like the same thing. It is as if the invisible hand of nature is helping fuel the development of AI to make up for this population decline that we will continue to experience.
With the end result being that everything more or less remains in equilibrium.
A world will less people is probably not a bad thing
A smaller population with a larger GDP could be very good for the world.
If there were less people below the poverty line and as a whole we led happy lives as a result, than I can probably live with that.
Sure, GDP might decline. But so too would things like our depletion of natural resources and damage to the planet.
We’ve kind of taken for granted this assumption that global population should always increase and that this is key to growth.
But perhaps we are entering into a new era.
An era in which the global population declines each year, but GDP continues to grow as a result of the rapid efficiency growth due to AI.
Would that be a worse world to live in? I don’t think so.
