Trendspotting: China Embraces Pronatalism—Decades Too Late

NEWSWIRE: 4/1/19

• At this year’s National People’s Congress in China, lawmakers called for the loosening or even scrapping of family planning rules altogether. With the birthrate down sharply two years running, officials are requesting no less than a social transformation that could also include the end of penalties on single mothers with kids born out of wedlock. (The New York Times)
• NH: As we have often pointed out (see, most recently, "Investing Webcast: Neil Howe's Global Demographic Outlook"), China faces the most drastic demographic downshift of any of the world's large economies. From 1970 to 2017, China's working-age population (age 20-64) grow at 2.0% annually: That was nearly as fast as South America (2.3%) or India (2.4%). But from 2017 to 2040, its working-age population will shrink at minus 0.6% annually. That's the same rate of shrinkage that Russia and Europe are looking forward to. (Only Japan's is larger, at minus 1.0%.) It took most Western societies about 150-200 years to complete history's two signal demographic transitions--first to low mortality and then to low fertility. Most of East Asia did all this in a mere 30 years, that is, from the late 1940s to the late 1970s. So now the consequences are hitting with amazing suddenness.
• Demographers have seen this coming for a long time. When I met with social scientists in Beijing and Shanghai over fifteen years ago, they all agreed that the PRC's one-child policy made no sense. The writing was already on the wall. (See the report I issued with Richard Jackson in 2004, The Graying of the Middle Kingdom.) What's more, it was widely suspected that it would take a lot more than getting rid of "one child" to raise China's TFR. Why? Because most of the rest of "Confucian" East Asia (e.g., Hong Kong, Taiwan, Singapore, Japan, and South Korea) was already plunging to super-low fertility levels without any birth restriction. That has indeed come to pass. After "one child" started to be pared back in 2013--and after the law was finally scuttled entirely late in 2015--China experienced a small baby bump that lasted only one year (2016). In 2017, the rate resumed its downward trend. (See: "Trendspotting: 6/4/18.")
• Now China is contemplating further initiatives. One much-discussed idea is getting rid of all legal impediments to out-of-wedlock births. But again, it's questionable whether this would have much impact on fertility. Although Chinese women are starting to marry later in life, nearly all women in China and in the rest of East Asia eventually do get married. And births out of wedlock are very rare, at least by Western standards, even in countries where they are totally legal like Japan. This reform might have more to do with legitimizing the quasi-feminist "sheng nu" movement (literally "left-over ladies," referring to women still unmarried after their late 20s) than with babymaking.
• The very popularity of such proposals at the vast National People's Congress--which is probably the most democratic body in China--presents a challenge to President Xi and the PRC leadership. China's "one child" policy justifies much of the PRC's intrusive supervision of everyone's personal life choices. Prompted by overpopulation fears and enforced with varying degrees of severity for roughly 40 years, the law gave rise to two generations accustomed to forced abortions and sterilizations, few siblings or cousins, and widespread restrictions on mobility (the "hukou" system). It is hard for national, provincial, and urban authorities to abandon this control. It's even harder for them to give in to cultural currents (like "sheng nu") which undermine Confucian social hierarchy and don't prioritize long-term national dominance.
• My prediction is that the PRC will find a way to move gradually toward vigorous pronatalism without losing social control. Expect to see the introduction of payments, tax breaks, and other government benefits for parents along with social rewards that celebrate the role of those who give birth to the next generation. Authoritarian regimes like this sort of thing. Here is one area of policy where Vladimir Putin--who recently introduced an "Order of Parental Glory" for Russians who raise at least seven children--is leading the way for Xi to follow. 

• Walmart is building a high-end subscription service that will deliver anything (except fresh food) to your door via text message. The labor-intensive service is destined to lose money early on, which company executives have accepted as the cost of competing with another company that sacrifices profitability for scale: Amazon. (The Wall Street Journal)
• NH: Delivery to doorstep is a costly business, with minimal economies of scale. But so long as firms see customer habit acquisition as the holy grail, there seems to be no limit to the money they are willing to lose in pursuing delivery. It doesn't seem to matter that so many firms have failed to make this model work (including meal-kit delivery and many delivery services themselves) and so many others keep at it despite the hurt to their bottom line. In groceries, the bloodletting is especially tough given the new margin-thinning competition in the U.S. market from Lidl and Aldi.
• As ever in this space, the squid-versus-sperm-whale combat worth watching is between Amazon and Walmart. Amazon doesn't pay attention to its margins because its investors don't. Those investors apparently believe that Amazon, possessing the high-end brand, will end up inheriting the future in any case. Walmart, on the other hand, has to care about margins. But it's using its brute size and staying power to subsidize multiple incursions on Amazon's online and delivery territory. Give credit to the Bentonville leadership: They are not sitting idly by while the future gets snatched from them. (See: "Trendspotting: 11/20/17.")
• IMO, the next recession could be a big difference maker. Amazon is a premium, high-beta brand that feeds off elite aspiration. Walmart is a value, low-beta brand that feeds off middle-class survival. A long bear market and three or more negative GDP quarters--once these are in view--could make this a nice long-short idea.
• Contrite Boomer contributor Stephen Papamarcos apologizes to America on behalf of his generation. Papamarcos opines that Boomers fell short of the G.I.s’ impressive national service legacy (“What a party we threw for ourselves,” he quips), and remarks that they are leaving behind huge unfunded liabilities in their wake. (New York Daily News)
• Writer Matt Ford sees many parallels between Millennials’ response to climate change and young Boomers’ response to the Vietnam War. But he also underscores a major stylistic difference in their approach to activism: Millennials are trying to change the system from within instead of blowing it up. (The New Republic)
• NH: We're going to hear a lot more, from the political left, of this sort of breathless analogizing between young Boomer activists and young Millennial activists. This may seem odd for a party that has recently worried so much about the age of its leadership (see: "Trendspotting: 1/7/19"). But Ford is correct to point out that a lot of this generational tension is due to the growing youth support for a bold and sweeping (and expensive) national agenda. We never saw that from youth during the Gen-X era. Now we do.
• He is also correct to point out big differences between the aspirations of young Boomers and those of young Millennials. In an era of rising youth violence, Boomers wanted a less powerful establishment (an end to selective service, for starters), less centralization, and less regulation of the individual. In an era of declining youth violence, Millennials want much the opposite: a government that actually sets out to achieve aggressive national goals--everything from nationalized health care to an arduous "Green New Deal" which may sooner or later require re-imposing selective service.
• Where Ford goes wrong is to assume that youthful aspirations get swiftly and directly translated into political reality. No, that's not how history works. Most activist young Boomers voted hugely for George McGovern in 1972. He was their standard-bearer at the high-tide of New Left optimism. But McGovern went down to a crushing defeat. Sure, Boomers finally found their way to a less regulated and more lightly governed America, but they found it in the 1980s with Ronald Reagan.
• Ditto for Millennials. In time, absolutely, this generation will determine America's political future. But what that future America looks like can't be directly discerned from today's youth slogans. If the Democrats want a big victory in 2020, they would in fact do well to avoid a "children's crusade" (like McCarthy's campaign in '68 or McGovern's in '72). They would do better to choose a candidate who can draw on youth votes and youth energy without alienating the older generations who still pretty much own and run everything.
• According to the latest BLS data, 41% of veterans who served post-9/11 have a service-connected disability, compared to 25% of veterans of earlier eras. Medical advances and heightened awareness of mental health issues like PTSD have resulted in both higher survival and diagnosis rates. (Military.com)
• NH: The most obvious driver of higher disability rates is the combat soldier's higher survival rate from injuries--thanks to better medical training, new lifesaving technologies, and faster transportation to ICUs. In the Vietnam war, about 75% of service personnel survived their battlefield wounds. In post-9/11 combat in Iraq and Afghanistan, about 92% survive.
• But even a very generous estimate of this "survivor" effect cannot explain the increase in the disability rate, which amounts to nearly 700,000 more disabled vets. Much of it is also driven by a greater sensitivity to combat's lasting toll on the brain (TBI and PTSD). The toll itself has been known since the dawn of history. (Homer was probably describing it 3,000 years ago when he recounted the "divine madness" of Ajax.) But now, we hope, we can do something about it. This shift is not just happening in the military. Disability rates under Disability Insurance also show a long-term rise for much the same reason--greater incidence of diagnosed brain injuries, emotional disabilities, and pain from musculoskeletal disorders.
• On average, Millennial homebuyers attend more open houses and do more pre-purchase research than older homebuyers. Contrary to this generation’s want-it-now stereotype, risk-averse Millennial homebuyers do their due diligence before making a big decision with such “FOMO” potential. (Zillow)
• A new piece explores the reasons why Generation X has become the proverbial middle child of the media and marketing world. Demographics and social and historical forces dovetailed to create a generation whose identity is built, in part, on indifference to the idea of needing an identity at all. (The Boston Globe)
• NH: The good news is that Gen X is finally getting some attention! The bad news is that most of the stories--even the pretty insightful stories, like this one--are all about how this generation is always overlooked. Once again, we get the damning statistic: A Nexis search of generational names in recent newspaper stories shows "Gen X" is in distant last place behind Millennials and Boomers. We've been covering this theme for a while. (See: "Trendspotting: 2/25/19.") But it's not just the fault of other generations. Surveys show that Gen Xers are themselves less likely to identify strongly with any generation. Indeed, Gen Xers as kids learned early that, in an era when no one was paying much attention to them anyway, staying unobserved and underappreciated was actually a card they could play to their advantage. (See: "Trendspotting: 1/28/19.")
• Since 2015, the U.S. men’s suits market has shrunk 8% as workers ditch formalwear for more relaxed attire. Tailored retailers like Men’s Wearhouse are now promoting combinations previous generations would have found unthinkable, including suits with sneakers and jeans with blazers. (The Wall Street Journal)
• NH: A double-digit YoY sales decline is never good news. But that's what Tailored Brands (TLRD, owner of both Joseph A. Bank and Men's Wearhouse) is now dealing with. Upscale shops like Barneys and Brooks Brothers aren't doing much better. Over the last twenty years, Americans have been spending a declining share of their income on apparel. That's posed plenty of challenges for women's fashion and pushed the dry cleaning industry to the brink (see: "Trendspotting: 4/3/18"). But nowhere is the carnage worse than in men's formal apparel.
• What to do when even Jamie Dimon is showing up without a tie and even celebrities from Jerry Seinfeld to Prince William are showcasing their "normcore" look? The answer, apparently, is to re-equip the men's shop with casual dress downs and accessories. The managers of Joseph A. Bank hope they can switch from providing a standard uniform to working with guys to navigate today's more flexible yet harder-to-decipher social rules.
• A new luxury resort promises to help older tech industry workers build confidence and embrace their age. Unlike other services catering to mid-career workers, however, this resort serves a large number of stressed-out 30-somethings who “feel” old by their industry’s standards. (The New York Times)
• NH: This Modern Elder Academy has a very Boomer feel. The scenery and exercises look like they belong at the Esalen Institute. And the purpose--to revalorize age by dignifying it as a rite of passage to wisdom and experience--is definitely New Age. As a euphemism for "seniors" palatable for Boomers, "modern elders" isn't bad. It seems cutting-edge, but it also has depth and severity. Boston's Commission on the Affairs of the Elderly, which recently renamed itself the Age Strong Commission, also came up with a good contender. (See: "Trendspotting: 3/18/19.")
• Donald Trump, Jr. believes that media censorship of conservative content could be paving the way for a U.S. “social credit system.” Censorship is one key factor causing many conservatives to rethink their laissez-faire approach to antitrust regulation, especially concerning Big Tech. (The Hill)
• NH: Google and Facebook, watch out! It's no mystery that progressives on the left have a long bill of particulars aimed at the digital ad duopoly--everything from violating our privacy to abetting tyrants abroad to violating both the spirit and the law of antitrust policy. But what should really concern them is how many conservatives are starting to join the regulatory crack-down camp. (See: "The Next Big Thing: Google-Facebook: It's Not Over.")
• Their issue, as articulated by Trump, Jr., is ideological censorship--either in the form of "shadow banning" by Facebook and Twitter, or "demonetization" by Facebook, or the pulling of political ads. As Senator Josh Hawley (R-MO) put it at the most recent CPAC conference, federal law (Section 230 of the Communications Decency Act) makes the Big Tech companies immune from liability for "viewpoint discrimination." Reluctant as they are to support any new regulatory movement, even many libertarians will soon be persuaded that it is better to have speech regulated by laws or agencies with public oversight than to have it regulated by private parties with no accountability at all.
• "Woke capitalism," the striking new phrase coined by the left to describe progressive-leaning corporations, is also used by the right to describe the threat of Silicon Valley censorship. Yet if "woke" is the left's favorite word to describe our awakening to the truth, the right has its own favorite word (straight out of The Matrix): "redpilling." All of these sleep-to-awakening metaphors--for those of you interested in theology--come straight out of gnosticism, which imagines an utterly hostile reality which ordinary people accept only because they live in an illusory dreamworld. It's hard to find more disturbing evidence of America's polarization than this: Each side believes the other is manipulating the culture to get us comfortable with living in hell.

DID YOU KNOW?

Is "Snowplow" Parenting Creating Snowflakes? The recent college-admissions scandal (see: "Trendspotting: 3/18/19") is appalling in many respects. But as The New York Times observes, it’s only the latest and most public example of “snowplow” parenting gone awry. Unlike the helicopter parents of decades past, NYT writes that today’s parents resemble snowplows “clearing any obstacles in their child’s path to success, so they don’t have to encounter failure, frustration or lost opportunities.” Critics complain that snowplow parenting leaves kids unprepared for the real world. They point to survey results showing that parents often undertake basic tasks on behalf of their adult children, such as making doctor’s appointments and reminding them of looming deadlines. Nowhere are the effects of snowplow parenting more visible than on campus, where young adults get their first taste of life away from home. In the words of Julie Lythcott-Haims, former dean of freshman at Stanford, “The point [of parenting] is to prepare the kid for the road, instead of preparing the road for the kid.”