Economic Health

This whole issue of economic health is fascinating. The Bank of Japan adopted negative interest rates in January, which means you pay the bank to hold your money. Japan has been experiencing deflation and economic stagnation for at least two decades.

Germany has a zero interest rate at the moment. At least depositors don’t have to pay the bank to hold the money. The ECB has adopted negative interest rates.

Paul and Anne Ehrlich wrote “The Population Bomb” in 1968, basically suggesting that the world as we know it would end, if no action was taken to curb population growth. Their theories have been proven wrong.

There is a strong inverse correlation between household affluence and birth rate.

Monaco is the world’s oldest country, with an average age of 51.1, with Japan and Germany tied for second and third, with median ages of 46.1, according to the CIA World Factbook. The fifteen countries with the youngest average age are in Africa, and have average ages ranging from 15.1 years in Niger, to 17.7 years in Benin. The nine countries with the highest birth rate are in Africa. The six countries with the lowest birth rate are Germany, South Korea, Singapore, Japan, Saint Pierre, and Monaco.

Paul Hodges, who writes the “Chemicals and The Economy” column for ICIS, quotes IMF data regarding demographic shifts. In the article, Hodges says that for the first time, the world now has more than 1 billion people who are 55 or older. Projections are that the 55+ crowd will be 20% of the population by 2030, which is twice the percentage it was in 1950. You can read the article at here.

From an economic perspective, this matters. First, sovereign entities have been loading up on debt to make good on pension benefits and other promises to an aging population. This problem is especially acute in developed economies, will get worse before it gets better, and won’t end well.

Second, in many developed countries, there is a cultural aversion to children. One might be fine, two could be okay, but four, six, eight? Not so much. There are pockets of exceptions, but overall, this aversion is real, and the trend isn’t economically healthy.

Third, Africa and the Middle East/Central Asia have the highest birth rates in the world. These regions also have statistically significant percentages of their population living in poverty, and in at-risk environments.

What are the take-aways, if any? Birthrate by itself won’t solve long term economic problems. Other factors, such as a working legal system and enforceable property rights, are critical. These concepts come from the top down, and require a commitment to competence, accountability, growth, and service, in essence, good governance, rather than the self-serving narcissism and in some cases evil that exists in too many poverty stricken countries.

It is critical for the long term economic health of a country that it adopt a welcoming attitude to large families. Whether any particular household has children is not the point. It matters though, that the society encourage and embrace childbirth and families. While the U.S. doesn’t have a replacement birth rate, its saving grace has been its relative openness to immigration. Regardless of one’s views on immigration, we can say with certainty that immigration is good for the economy.

On February 25, 1870, Hiram Rhoades Revels (R-Mississippi), was sworn in as the first African-American Congressman in history. On January 20, 1870, Congressman Revels was elected by the Mississippi legislature to fill the Senate seat once held by Jefferson Davis, former president of the Confederacy.

Jefferson Franklin Long of Macon was elected to Congress, and began his term on December 22, 1870. He made history on February 1, 1870, when he became the first black member of Congress to speak on the floor of the U.S. House of Representatives. Long was born into slavery, and taught himself to read and write. Long was a prominent member of the Republican Party, and supported Governor Alfred Colquitt’s candidacy in the 1880 governor’s race. You can read more about him at here.

In 1867, the first Reconstruction Act was passed by a Republican dominated U.S. Congress, dividing the South into five military districts and granting suffrage to all male citizens, regardless of race. A politically mobilized African American community joined with white allies in the Southern states to elect the Republican Party to power, which in turn brought about radical changes across the South. By 1870, all the former Confederate states had been readmitted to the Union, and most were controlled by the Republican Party, who had an anti-slavery plank in its founding platform.

Quote of the week:

“What lies behind us and what lies before us are tiny matters compared to what lies within us.”
From “Meditations in Wall Street”


Randy Brunson
Randy Brunson is the founding shareholder of Centurion Advisory Group. Mr. Brunson
has invested most of his thirty five year career in the area of financial services.

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