In MfM's example about Germany the contraction of GDP would lead to a precipitous drop in capitalised asset values, and a "depression". There would be class war.
Consider also, that reduced population growth will make labor more expensive. Thus, you have rising wages, and increased traction for labor against capital.
The same thing is going to happen very soon in China as the labor force starts to contract due to the onset of the one child policy's effect on population levels. You already see low end production shifting to Vietnam due to the increase in Chinese wages.
Consider also the demand side of population decline. China's rapid ascent has been based on increasing demand in the United States, Japan, and Europe. To where will other states wishing to industrialize ship their goods when demand declines in these regions? And I'll give my consent to any government that does not deny a man a living wage-Billy Bragg
But with today's capital mobility investors could take their money to greener pastures if the assumed population decline is a localised phenomenon as opposed to a global one. You could have an Argentinean situation where workers need to take over productive industrial plants abandoned by their owners. When the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill-done. — John M. Keynes
First, because everyplace but Africa is at the point where birth rates decline. And Africa faces the scourge of AIDS that often takes people at the height of their working years.
The issue is that if pay in a producing country isn't enough to buy a product, then you have to find someone else to buy it. Who?
If demand in advanced countries declines with the population, then who buys the stuff.
FYI, I've got a copy of Veblen on my desk in front of me waiting to be read when I go eat. I just finished Freakonomics. I was not impressed. And I'll give my consent to any government that does not deny a man a living wage-Billy Bragg
Temporarily (if at all). Reduced population growth also decreases the future consumer base and thus future consumer demand for products, thus reducing future employee demand for labour. The same feedback works when there is population growth, and it works both for natural population growth and immigration. *Lunatic*, n. One whose delusions are out of fashion.
