Demographics And Russia: Why Their Economy Was Done No Matter What

We often discuss demographics and how important it is. Over the last decade, it became obvious that most of the developed world is facing a population decline. This was a reversal of the rhetoric we heard since the 1970s of how overpopulation was a threat. Now we have people espousing the idea that humanity might be in for a population collapse over the next half century.

Regardless of whether that outcome takes place, there are some countries who certainly will face that end. One of them is Russia.

Before getting into their situation, there is one thing to keep in mind. As much of a threat as population decline is, it is worsened by the fact that people get old before they die. This is horrific for a country especially from an economic standpoint.

For Russia, the population time bomb was ticking. There was no way to sit back and allow things to remain for Putin. He simply did not have the luxury of time.

Demographic Nightmare

Before looking at the economics and, hence, politics, we have to size up how bad things are for the Russians.

Here is the demographic tree that details the ages of the population. As we can see, things really turned at the fall of the Soviet Union. This period in the early 1990s saw a major decline in the number of births.

Source

The challenge is, war, is a young person's game. Look at the last wave of large births. That was the late 1980s. The problem here is those people are now in their early 30s. The drop off means that it is going to be very tough for Russia to fill its military.

Then we have the next challenge.

Source

Russia has a very low life expectancy. This means that the population is in faster decline since people do not live as long as many in the rest of the developed world. While the female life expectancy is 77, the male is only 67. Here we see how the demographics can quickly turn to crisis in the next 25 years.

Major Economic Decline

Now that we see how dire the demographic situation is, we can begin to understand how the economic decline was going to happen regardless of what took place. The fact the West is trying to get back at Putin for the aggressive actions is only accelerating the inevitable.

Why is this such a problem?

Again, if we look at the chart and move it ahead 10 years. Take the year 1965 which places those people around 56 years of age. If we add another decade to them, they will be 66-67. That is past the productive years of economic activity. While some still remain in the workforce, their contributions are reduced. Plus, with such a lot life expectancy, especially for males, many will be dead by that time if things continue as they are.

Much of that part of the chart that bows out will be gone.

Which brings up to the next section which has the majority of the population. From the late 1960s through the early 1990s, we see a nice expansion. Here again, we get the first wave of people nearing those retirement years. That will start to eat into the productivity of that group.

At the same time, after the fall of the Soviet Union, the education system went into decline. Much of the knowledge base is from those who were trained during the Soviet era. Guess where these people fall on the chart? If you said near retirement age, you are correct. Over the next decade, they will be exiting.

All of this means there are painful times ahead for Russia. This has nothing to do with the politics since this is superior to that. It is a basic fact that the Russian government cannot change. Their demographics are going to cause major economic contraction over the next few decades. It is a country that is going to join the likes of Japan and Italy as demographic nightmares. Some are already questioning if Japan is a "disappearing country".

It is very difficult to have a strong economy without people. When they are older, they are less productive, requiring more services. This is a double-whammy. They do not contribute economically but do carry a cost. Where is the money going to come from if the younger generations are smaller in number?

And this is the crux of the matter. No matter what Russia does, it faces the same path as Japan, Italy, South Korea, and China. All are in the same boat because, except for Italy, none of this do very well with immigration.

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