Demographics and Economics
The book Baby Boomers, Generation X and Social Cycles: North American Long-waves gives a detailed examination of the relationship between demographics and economics, including other population data. A much simpler review is presented here for this website.
Inflation and Deflation
Although Kondratieff used both price and production data to show that capitalist economies operated in a cyclical fashion, inflation and deflation are the most cited features of the Kondratieff wave in the popular press. Figure 1.00 shows three and a half Kondratieff waves plotted with the U.S. wholesale price index, showing clearly the periods of inflation and deflation. The periods of inflation and deflation have the same periodicity as population growth. Towards the upswing of the long-wave, we have baby booms, and towards the downswing, we have lower birth rates, the members of which are called Generation X. Figure 5.14 shows a number of economic activities that are synchronized with the Kondratieff wave. Each inflationary upswing of the long-wave has been accompanied by an energy crisis. Each downswing has been a period of deregulation, mergers and acquisitions, and speculation in stocks and investments followed by market crashes. Finally, the trough is reached with continued deflation and economic depression.
Population in Church Membership and Workforce
Figure A.04 shows the percent change per decade in Methodist church membership and in workforce. These two statistics represent changes in U.S. population growth. The Methodist church, which is the largest protestant denomination in the U.S., has a membership that starts at the age of 13. People enter the workforce at a later age. Notice how well synchronised the two statistics are. Church membership grows at varying rates, and is reflected years later by changes in the workforce. These two statistical series are synchronized with periods of inflation and deflation.
Demographics and Economics in Church Membership and Post Office Revenue
The U.S. Post Office is the nation’s largest and oldest monopoly. Its revenues give us a much needed long-term statistical series that is a reflection of the U.S. economy. When we map Church Membership growth with Post Office Revenue growth in figure B.08, we find that is well synchronised too. Remember that church membership starts at age 13, so the graph should be shifted left slightly to see the full impact. Population growth has a direct impact on Post Office Revenue, which represents the economy. Where population growth rates are at the two lowest points, post office revenue growth rates are at the lowest points also.
Gross Domestic Product
Although Kondratieff used both price and production data to show the periodic changes in capitalist economies, the modern emphasis has been predominantly on price and very little on production. The popular disseminators of Kondratieff’s work do not try to understand the causality, but emphasize inflation, deflation and a 50 to 60 year cycle. It is a mechanical, and sometimes mystical, approach to the economy that often fail with errant predictions. Production data is much more important than price data because production is the economy. Since we have moved off the gold standard and governments can adjust money supply at will, the inflation correlation with demographics can no longer be expected to be present all the time. As we have entered the greatest recession since the Great Depression, U.S. productive growth, given by the Percent Change per Decade in U.S. GDP, has fallen to the lowest level in 70 years. The only time that GDP growth was lower was in 1940, the year after the Great Depression. Figure GDP01 shows that the GDP growth in 1939 was negative. The U.S. Federal Reserve and the U.S government can increase money supply and raise prices, but can they raise production and consumption? There is a widespread belief that either monetary policy or Keynesian economics has the ability to do so. But this has not been proven and so far, the current economic policies have been relatively ineffective as figure GDP01 reveals. We will find out soon enough if they can defy the Kondratieff wave or become complete failures. Can doctors cure a disease when they can’t make a proper diagnosis? Unless the U.S. government, and governments around the world, make the proper diagnosis and take the appropriate, drastic and sustained action, it is unlikely that we will be able to avoid another depression.