If you browsed the title of this article quickly, your eyes probably played a trick you. Chances are good you saw “Western” instead of “Eastern.”
It appears that the sentiment of moral decay in the West is a popular one. Doing a Google search for “Decline of Western values” returned over 30 million hits. Searching for “Decline of American values” returned over 37 million hits. It appears that we are all convinced that our culture is going to hell in a hand basket, and the inflammatory rhetoric that comes in a presidential election cycle certainly isn’t helping.
In addition to being the largest generation in history, the Baby Boomers were also one of the most radical. As young people in the 1960s and 1970s, they shifted the political center of this country to the Left. Interestingly, now that they are in their 50s and 60s, they are pulling the center massively to the Right. The Boomers are proving the rule that we all ultimately become our parents.
Certainly, the West has seen its share of social change in the past 50 years. On the positive side, institutionalized racism such as the forced segregation prevalent in the pre-1960s South has been all but eliminated in America and Europe. More liberal attitudes toward divorce and remarriage have enabled people to escape unhappy marriages. There is generally a more accepting attitude towards a person’s privacy and an acceptance that people should be left to manage their own social lives without interference. Of course, the downside is that with all of this new-found freedom there has been a general breakdown of authority, an increase in broken families and children born out of wedlock, and a sense of anxiety that our society as we know it is in a state of decline.
Still, much of the angst felt by Americans and Europeans is unfounded. Many of the babies born “out of wedlock” are born to cohabitating couples who are married in all but name. And even in cases where the father doesn’t live with his children, there is an increased awareness of the need for parental responsibility. And perhaps most importantly, Americans, Britons, and French are still having children, even if they are forming families later in life. American births are at their highest levels since the original post-WWII baby boom.
The same cannot be said for much of Asia. While the concept of “family” is evolving in the West, it is simply evaporating in much of the East.
The Economist ran an article on the decline of marriage in Asia (see “The Flight from Marriage”), but this means something very different than it would in America. Divorce and non-married cohabitation are still rare on the Asian continent. No, Asians instead are simply avoiding domestic life altogether or postponing it indefinitely into the future.
The average age of marriage in Japan, Taiwan, South Korea and Hong Kong is now noticeably older than in the United States. Women in these countries now marry on average at the age of 29-30 and men at the age of 31-33. As a point of reference, the average age for American women and men is 26 and 28, respectively. If you include “common law” marriage or cohabitation-which, again, is still rare in Asia-the average age in America drops even further. And this average age does not take into account people who do not marry at all.
People who do not marry (or do the modern common-law equivalent) are far less likely to have children. Already, China, Japan, Taiwan, South Korea, and Hong Kong have some of the lowest birthrates in the world, well below the replacement rate of 2.1 children per woman. We’ve written about the consequences of this trend and of the coming Asian demographic crisis (See “The Land of the Setting Sun”).
A country without children is a country without a future. This is not moralizing; it is basic economics. The modern economy is not equipped to deal with aging and shrinking populations. To whom do you sell your products when your customer base gets smaller every year?
The British economist Sir John Hicks emphasized the role of population growth in the modern economy, remarking that,
Expectation of a continually expanding market, made possible by increasing population, is a fine thing for keeping up the spirits of entrepreneurs … Perhaps the whole Industrial Revolution of the last two hundred years has been nothing else but a vast secular boom, largely induced by the unparalleled rise in population.
While Hicks might be a bit harsh in his analysis, he is right that a rising demographic tide lifts all boats. Now that the tide is retreating, the countries of East Asia are entering an uncertain future. It will be several more years before the full severity of this demographic crisis hits, and in the meantime we expect these countries to enjoy a demographic dividend from the rise of the new emerging market middle class. In fact, we have made investing in this trend a major focus of The Sizemore Investment Letter.
But by the end of this decade, much of Asia will be in the early stages of a Japanese-style malaise from which they may never fully recover. And by that time, the United States and parts of Western Europe will be on the mend with a new demographic boom led by the Echo Boomers.
Emerging Asia should enjoy its time in the sun today, because its future would appear quite doubtful.
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