Streetwise Professor

November 13, 2008

If you believe that . . .

Filed under: Economics,Politics,Russia — The Professor @ 8:42 pm

The disjunction between the first two stories in today’s Johnson’s Russia List could not be more striking:

Kommersant
November 12, 2008
Russia Has Bright Future in Poll

The majority of its citizens (82%) expect Russia to join the ranks of the world’s ten leading countries in the next 15-20 years, according to a new poll by the All-Russia Center for the Study of Public Opinion. Thirty-seven percent of respondents say Russia should “regain the superpower status the USSR had,” compared to 34 percent in 2003. “Lagging behind the advanced countries in economic development” is seen by 44 percent of respondents as the main obstacle to that Russia’s progress in the world.

Confidence is mounting. In 2003, 35 percent of respondents thought Russia would become one of the most “economically developed and politically influential” of the world’s countries. Now 45 percent say so, although that figure was 2 percent greater at the end of last year. General director of the All-Russia Center for the Study of Public Opinion Valery Fedorov attributed the slight reversal of opinion to the complex economic this year.

And now, for something completely different:

Russia population to decrease by 34 mln by 2050- UN forecast

UNITED NATIONS, November 13 (Itar-Tass) – Russia’s population by 2050 will decrease by 34 million, according to a forecast made by representatives of the United Nations Population Fund (UNFPA) who on Wednesday presented here a regular report State of World Population 2008.

At present 141.8 million people live in Russia and by 2050 this figure will be 107.8 million people, according to the UNFPA report.

There are both objective and subjective issues here. First, how is it objectively possible for a country with a rapidly shrinking population to assume world leadership, and to become one of the world’s most “economically developed and politically influential” countries? Second, subjectively, how can large numbers of people believe that a dying country can achieve such status?

The answer to the first question is pretty obvious: there’s no way. The answer to the second is by no means obvious. It suggests a disconnect from reality, whether driven by fantasy or denial or something else I know not. Or maybe it reflects genius, as it is sometimes said that the sign of true genius is the ability to hold simultaneously two mutually contradictory thoughts in mind.

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12 Comments »

  1. “Second, subjectively, how can large numbers of people believe that a dying country can achieve such status?”

    Fed Communist fantasy for 70 years what can you expect of a citizenry that has been treated like captive zoo animals. After the pathetic and needy USSR old fogies die off can the young do anything with what remains? And, with the time that remains for them to join the west in a meaningful manner? If you removed Russia’s natural resources as their good luck the past decade Russia would look more like Zimbabwe with snow.

    Reading the “Free Bakhima” site what strikes me about most that signed in paltry numbers given the horror of her situation is the grovelling and absolute ignorance about what a fair trial and a civil society really means. They plead for mercy from Medvedev in the most Byzantine sense rather than justice. And, they are the educated middle class.

    Comment by penny — November 13, 2008 @ 9:41 pm

  2. Professor:

    Hello, there is a baby boom occurring right now in Russia. The rate at which the population has been decreasing has slowed dramatically over the past couple years and many believe that it will turn net positive shortly.

    Go sit on the playground in my apartment complex and speak with all the young mothers on the benches. There are so many young kids that there’s not enough schools. They are building new schools as fast as they can here in Krasnodar due to the baby boom. Go to the Galleria Mall on Krasnaya Street any weekday and you’ll see pregnant women and mothers with young kids everywhere.

    This is another one of those stories (like the lack of media freedoms) which may be a half truth but which then gets twisted by certain groups to fit their agendas. Yes, there are deaths than births each year but go back over the past 15 years and look at the trend. The gap has gotten dramatically smaller. If the two curves continue their trajectories there will be more births than deaths sometime in the next 5 years.

    Professor, you know as well as anyone that statistics can be twisted many different ways.

    Comment by Timothy Post — November 14, 2008 @ 10:03 am

  3. Hey, Timothy–

    1. Yes, it is well known that there is a baby boom. It is also well known that this is a predictable consequence of an earlier baby boom in the early-80s, and that as this cohort of women matures birth rates will fall. Indeed, they will fall hard as the next cohorts of women entering the ages of peak fertility is very small, reflecting birth dearth during the late-Soviet period, and the 1990s. The UNPFA presumably knows about the birth bubble, and takes it into account in its demographic projections. Indeed, every demographic analysis (including official and academic studies in Russia) recognizes this phenomenon, and nonetheless makes similar predictions of substantial declines in Russian population over the next decades. That’s why your straight line projection based on the past narrowing of the gap clashes with the consensus demographic projections.
    2. The birth rate is important, but the major driver of these demographic forecasts is the death rate.
    3. Yes, statistics can be twisted or misinterpreted, but these dire demographic projections are not outliers.
    4. Your observations are subject to sample selection bias;-)
    5. The rate of decline in population has decreased, but not as dramatically as you suggest. But you are really grasping at straws to consider a .65 percent per annum rate of population decline as good news. The decline during the 90s was catastrophic, and unprecedented for a nation not at war. The decline of the 2000s, and that forecast for the coming decades, would have been unprecedented if the 90s hadn’t have been so bad.

    The ProfessorComment by The Professor — November 14, 2008 @ 11:33 am

  4. I agree with the Streetwise Professor: anecdotal evidence can be misleading when it comes to analyzing demographic trends as there is no way of controlling sampling errors and sampling bias.

    Timothy, you write: “Go sit on the playground in my apartment complex and speak with all the young mothers on the benches.” I am not surprised that you can find young mothers with children at playgrounds. Young women without children are not likely to hang around a playground all day.

    Likewise, you write: “Go to the Galleria Mall on Krasnaya Street any weekday and you’ll see pregnant women and mothers with young kids everywhere.” Again, there is the issue of whether this particular mall is more likely to attract young mothers on a weekday. I would say yes, because women who do not have children will invariably be working. Why do you see pregnant women? Same reason: sampling error. Women in their final weeks of pregnancy (i.e. when they are most visibly pregnant) are also less likely to be working in Russia and more likely to be seen strolling around a mall than at work. Consequently, the anecdotal evidence you provide is biased in terms of sampling: you choose precisely those locations and those times when you are likely to have the largest concentration of young mothers with children.

    Also, pregnant women or women with one child is not a sign of a baby boom. It is the decision as to whether to have a second, third or fourth child that will be meaningful in terms of birth rates. Most women are likely to have at least one child, so the issue is whether large numbers of women will have a second. If your anecdotal evidence consisted of hordes of pregnant women pushing baby strollers with a third child in tow, then it would be a bit more meaningful as proof of a true “baby boom” based on women having more than one child.

    There is another factor at play: migration within the country. Large cities tend to attract young people as this is where you are likely to find jobs. This can also distort your anecdotal evidence: not only do you select locations where you are likely to see children, you are also in a city where you are likely to find a younger population entering into their childbearing years.

    As for the boom in school construction, as the SWP correctly notes, this is a consequence of the late 80s baby boom entering into their adult years and having children as well as a likely consequence of migration of young women to the city from smaller cities or rural areas. The boom you see is comparable to the echo generation in the United States. It is not necessarily a sign of women having many more children, rather an indicator of a much larger number of women simply having children. This will lead to a need for more schools in the short term.

    Michel

    Comment by Michel — November 14, 2008 @ 1:27 pm

  5. 1. Let us assume that the UN’s demographic forecast is spot on (and I will later question that). So Russia’s population falls to 108mn in 2050. Since presumable it assumed that the adult mortality rate remains high, the labor force as a percentage of the population will actually remain far higher than in the West.

    But how is 108mn people a disaster? That was Russia’s population around 1955, and it held together well. Meanwhile, it’s not as if even with 150mn people Russia would be able to compete demographically with the US or China – in either case both are still far superior.

    Probably the real reason SWP and other alarmists are concerned is due to the old psychological reaction to falling population in pre-industrial times. Typically they indicated war, famine and state collapse. Today, population decline usually occurs due to aging populations and low birth rates out of choice. Considering, however, that this phenomenon has arrived only in the last 40 years or so, it is a tiny portion of human history and it is to be expected that few will throw off off innate fears about population decline associated with their inbuilt evolutionary heritage.

    2. “Yes, it is well known that there is a baby boom. It is also well known that this is a predictable consequence of an earlier baby boom in the early-80s, and that as this cohort of women matures birth rates will fall.”

    For the n-th time, what matters from the long-term perspective is not the absolute size of the cohort of child bearing age, but the total fertility rate which is independent of it – and which has risen from 1.3 in 2006 to 1.4 in 2007 and more than 1.5 in 2008 according to preliminary data.

    It is true that that cohort will be reduced by around 40% starting from 2013 and hitting a low in 2035, but there will be rebound from then on until 2045. In the long-term these effects are canceled out.

    So SWP, please take your pick – either a) don’t mention the effects of Russia’s specific age pyramid on future demography, or b) don’t talk about long-term demography.

    3. “The birth rate is important, but the major driver of these demographic forecasts is the death rate.”

    That’s false. If there’s one thing I learned when playing around with different figures on Matlab is that projected fertility has a much higher impact than death rates. I.e. whether the fertility rate goes to 1.3, or to 1.7, or to 2.0, is much more important than whether death rates stay in sync relative to Sweden, or converge to Sweden’s rates by 2050.

    In fact there’s even an advantage to high death rates amongst 40-60 year olds – it relieves pressure on dependency ratios).

    (The death rate only has a big impact on demography in countries where it’s statistically significantly high amongst women before and of childbearing age. Russia does not fall into that category, and those that do – e.g. much of Africa – the problem is one of excessive population growth).

    Two more things. First, SWP and Michel both blow hard about the drop in fertility due to age structure reasons from 2015. However, Russia today has a large number of people in their 50’s and 60’s. In ten years time, many of them will be dead and there will be a reduction in the death rate due to this reason alone, concurrently with the birth rate reduction. Why not mention this?

    Secondly, the prospects for increasing life expectancy I consider bright in the decades ahead, and there are a number of factors why which I covered in my demography posts. (Of course, this will worsen dependency ratios. Everything is very interconnected in this sphere).

    4. “But you are really grasping at straws to consider a .65 percent per annum rate of population decline as good news.”

    I have no idea where you got that from. In 2007 Russia lost 477,700 (0.33%) people according to Rosstat, and 280,500 in Jan-Aug of this year (i.e. rate of decline is dropping). Furthermore, this data is of NATURAL growth, and excludes Russia’s immigration rates (by which the total population dropped 0.17% last year, and will probably drop by about 0.1% this year).

    5. “The majority of its citizens (82%) expect Russia to join the ranks of the world’s ten leading countries in the next 15-20 years, according to a new poll by the All-Russia Center for the Study of Public Opinion.”

    I fully agree.

    On a large-scale, the demographic determinant of national power will wither down to insignificance in the 21st century, where the preconditions for success are adapting to new high technologies (nanotechnology, IT) and countering limits to growth (hydrocarbon and mineral depletion, climate change).

    6. Tim’s observations correspond to my own.

    Comment by Da Russophile — November 14, 2008 @ 3:39 pm

  6. 1. Da Russophile writes: “But how is 108mn people a disaster? That was Russia’s population around 1955, and it held together well.” You conveniently forget that Russia at that time was part of a large state called the Soviet Union. What will a smaller population mean for Russia? Well, the numbers themselves are not as important as other factors. A small, sick, aging population that does not have enough people to maintain its army, its industry and its standard of living is not something that most state’s aim for as a model of economic and social development. The demographic decline will be felt by Russia starting in the next few years: the number of young men eligible to serve in the Russian army is falling quite rapidly. In the next few years, the Russian army will find it very difficult to recruit the soldiers it needs. Given that it did not invest sufficiently in moving to a completely professional army, this will make it quite difficult for the generals. The only way they will be able to meet their numbers is forcing more young men to serve. This won’t be popular.

    2. The Russophile writes: “For the n-th time, what matters from the long-term perspective is not the absolute size of the cohort of child bearing age, but the total fertility rate which is independent of it – and which has risen from 1.3 in 2006 to 1.4 in 2007 and more than 1.5 in 2008 according to preliminary data.” Well, 1.5 is still far below the 2.1 required to simply replace the existing population. So, you have a birth rate that is still below replacement levels and a much smaller cohort of women that will be entering their child-bearing years. The end result will still be an aging and shrinking population. Going from 1.3 to 1.5 simply slows the decline somewhat, it does not stop it.

    3. Da Russophile writes: “That’s false. If there’s one thing I learned when playing around with different figures on Matlab is that projected fertility has a much higher impact than death rates.” Well, perhaps you have been playing around in your lab, but there are two factors that influence population growth and decline: births and deaths. I do agree, very high birth rates will compensate for death rates that are high. For most of human history, infant mortality was very high: if you had 5 or 6 children, you could expect at best 2 or 3 to survive to adulthood. So, yes, if you have large numbers of children being born, this can lead to a rapidly growing population even if larger (but not as large) number of people die before reaching very old age. However, this is not the case in Russia. Birth rates are still well below replacement levels, death rates are still quite high as compared to Europe and North America and there is a lot of resistance in Russia to immigrants settling in Russia. Consequently, this will lead to an aging and shrinking population. Birth rates are not likely to go up any time soon to the levels they need to be to replace the population, and until you cut back drastically on the consumption of alcohol, tobacco and narcotics, you are not likely to see any real improvement in death rates.

    Da Russophile writes: “Two more things. First, SWP and Michel both blow hard about the drop in fertility due to age structure reasons from 2015. However, Russia today has a large number of people in their 50’s and 60’s. In ten years time, many of them will be dead and there will be a reduction in the death rate due to this reason alone, concurrently with the birth rate reduction. Why not mention this?”

    Well, we do mention it as we do acknowledge that the population is going to shrink as does the UN forecasts. You will have fewer people, and consequently there will be fewer people left to die. You will also have an aging population with fewer workers. The only solution: massive in-migration, but given the level of xenophobia exhibited in Russia, this is unlikely as the most likely migrants will be young men from Central Asia.

    Comment by Michel — November 14, 2008 @ 5:07 pm

  7. I am reading Paul Goble’s blog, and I come across a post that he made today that supports some of my points in the previous comment. Paul writes:

    Window on Eurasia: Russian Military Boards Increasingly Violate Rights of Draftees
    Paul Goble

    Tallinn, November 14 – Confronted by the need to draft a far higher percentage of the country’s draft-age cohort, Russian military committees this fall often have refused to recognize deferments, ignored the findings of medical examinations, or demanded and received bribes from many others, according to an investigation by the Union of Soldiers’ Mothers Committees.

    An article in “Novyye izvestiya” reported on both why such violations appear to have increased this fall and on the significant variations in the way different voenkomaty, as draft boards are known in Russian, have been behaving even within the Russian capital itself (www.newizv.ru/news/2008-11-10/101183/).

    The reason these officials feel squeezed to fulfill their quotas “at any price” is that this fall they were expected to draft almost twice as many men as last spring, 219,000 compared to 133,000, at a time when the number of 18 year old Russians is declining and projected to fall significantly further in 2009 and 2010.

    Source: http://windowoneurasia.blogspot.com/2008/11/window-on-eurasia-russian-military.html

    Here, you can see the effect of the 1990’s baby bust. As there are fewer young men that were born in the 1990’s (comparable to the fewer young women born in this period), the Russian army is already finding it hard to meet its needs in terms of recruits. It needs more soldiers even though the number of eligible young men is dropping. That is what you call bad planning and ignoring demographic reality. The generals must have been reading Da Russophile’s blog ;)

    Comment by Michel — November 14, 2008 @ 5:23 pm

  8. You guys have obviously thought about and understand this topic far better than I do. ))))

    My only point is to offer some anecdotal perspective on the ground here in Krasnodar. Often what I see here contrasts with the picture painted by media reports. So, while there may be an overall macro population decline in Russia, there is also (as the Professor pointed out with the first of the two articles above) a widespread feeling of optimism amongst the people here in Krasnodar. Life is, indeed, getting better and progress is tangible.

    It’s sometimes funny for me to read blog posts and articles about Russia and its perceived “decline” while I sit in new cafes and watch the people enjoy themselves. Just last night I went to a new restaurant called “The Beer Trust” (I think it’s a play on words with Brain Trust). The place was packed (granted it was Friday night) with regular upper middle class folks drinking, eating, talking, and laughing. The scene wasn’t that different than what you might find in any develop city around the world.

    Keep this in mind as you think about Russia over there in the US that the country “on the ground” is very different than you might imagine.

    Comment by Timothy Post — November 15, 2008 @ 4:37 am

  9. LR. The .65 percent number is derived from the UNFPA. [ln(107.8/141.8)]/42 years=-.0065=-.65 percent/year. I haven’t seen the UNFPA report, but since the article represents that it forecasts the “population” of RF circa 2050, that would suggest that it takes into account immigration as well as “natural” changes. Re nanotechnology, etc., I am heartily skeptical that Russia will be a leader in this area, or any other high tech area, in the coming decades. The formation of another state corporation to “lead” in nanotech is just another testament to the misguided statist thinking that dominates Russia. Huge bureaucracies, especially state bureaucracies, are notoriously inefficient and especially notoriously un-innovative. For both nanotech and IT, innovation has been incubated by dense networks of academic institutions and businesses, often supported in the knowledge generation phase by government funding. Nanotech has yet to see widespread commercialization, but if IT and biotech are reasonable models, the key to developing products has been small-to-medium size startup companies funded by sweat equity and VC. That’s not the Russian way. Роснанотех will just be another black hole that will produce little.
    Timothy–Did you see the WSJ article about Sochi? http://online.wsj.com/article/SB122662926061727241.html I’d be interested in your feedback re its characterization of what’s going on in Krasnodar.
    Timothy–To use a quote from my old professor, the late George Stigler (a real bourgeois reactionary,LR;-): “The plural of ‘anecdote’ is not ‘data.'” Also, the fact that people are having a good time on a Friday night is not exactly the best barometer of a country’s long term prospects, or its current economic circumstances. Al Capone and his successors made a lot of money 1929-1932 with his very own “Beer Trust” supplying “upper middle class folks drinking.” ;-) And again, re sample selection bias–how representative is a bar catering (by your own description) to “upper middle class folks” [A/K/A bourgeois]?
    LR–re bourgeois reactionaries: I’m reading The Bourgeois Virtues, by Deirdre McCloskey, a well-known economic historian. I took a class from Deidre at Chicago in the 80s, except then she was a he (Donald McC.) Anyways, it is in some ways an heir to Adam Smith’s “Theory of Moral Sentiments,” and argues that bourgeois capitalism is a moral system compatible with human nature. I’m sure the book is at the top of your Xmas wish list;-)

    The ProfessorComment by The Professor — November 15, 2008 @ 9:56 am

  10. Professor:

    The WSJ article was written by Anton Troianovski who spent a couple days with me here in Krasnodar. He speaks Russian fluently (his parents speak Russian) and he recently graduated from Harvard.

    The article is a good one. The basic premise is that there are currently more questions than answers and that there will be some big challenges ahead.

    Not a lot of new ground covered for those of us who are familiar with the Sochi Olympic preparation but a solid article nonetheless. Plus, he quotes my business partner )))

    Comment by Timothy Post — November 16, 2008 @ 5:48 am

  11. @Michel,

    “You conveniently forget that Russia at that time was part of a large state called the Soviet Union.”

    Most of the regions of real value were in Russia. Central Asia was a net drain. The Baltics are politically unreliable and a negative. Belarus and Kazakhstan were useful, but they are aligned with Russia today. The only real loss is Ukraine, and there’s a fair chance that it, or at least the eastern/southern bit of it (the one will most industry and agricultural production), will drift back towards Russia’s orbit.

    “A small, sick, aging population that does not have enough people to maintain its army, its industry and its standard of living is not something that most state’s aim for as a model of economic and social development.”

    Substitution of capital for labor.

    “Well, 1.5 is still far below the 2.1 required to simply replace the existing population. ”

    That makes the assumption the improvement will stall at 1.5. Considering that planned family sizes are at around 2.1 according to surveys, and considering that the Soviet TFR flunctuated from 1.8 to 2.1 throughtout the 1960-1990 period, it might not be entirely plausible.

    “Well, perhaps you have been playing around in your lab, but there are two factors that influence population growth and decline: births and deaths.”

    It’s a math software package. :)

    Re-birth rates/death rates

    In the long-term death rates are inconsequential (in low infant-mortality countries, as we both agree). The fact that Russia’s are high only means that it’s having a demographic crunch (measured in absolute population, not the labor force) a decade or two ahead of countries like Germany or Japan.

    “The only solution: massive in-migration, but given the level of xenophobia exhibited in Russia, this is unlikely as the most likely migrants will be young men from Central Asia.”

    Those migrants are low-skilled and will be of little benefit in building up modern manufacturing or hi-tech. The current 300,000 yearly inflow is quite enough.

    @SWP,

    “The .65 percent number is derived from the UNFPA. [ln(107.8/141.8)]/42 years=-.0065=-.65 percent/year. I haven’t seen the UNFPA report, but since the article represents that it forecasts the “population” of RF circa 2050, that would suggest that it takes into account immigration as well as “natural” changes.”

    Oh dear. What is it you’ve been saying about the dangers of relying on questionable models, citing GW and finance?

    (The key point about the UN’s, the CIA’s, US Census, etc, demographic forecasts on Russia is that they assume fertility will remain low (i.e. at around 1.3). Considering that in recent years reality has superseded the models their assumptions and hence conclusions are not infallible).

    “Re nanotechnology, etc., I am heartily skeptical that Russia will be a leader in this area, or any other high tech area, in the coming decades.”

    What you describe as ‘statism’ above has worked pretty well in countries like Korea, Taiwan and Singapore. But actually state support has if anything come later than would have otherwise been optimal…

    “Nanotech has yet to see widespread commercialization, but if IT and biotech are reasonable models, the key to developing products has been small-to-medium size startup companies funded by sweat equity and VC.”

    Actually there are a lot of those, Russia’s IT sector is dominated by small firms and VCists are showing interest in it, which can be confirmed by some casual Googling.

    http://news.cnet.com/Is-Russias-tech-future-in-Israels-tech-past/2010-11398_3-6218872.html

    http://www.spiegel.de/international/business/0,1518,485390,00.html

    Comment by Da Russophile — November 16, 2008 @ 10:07 pm

  12. […] Professor is wondering about Russia's future: “First, how is it objectively possible for a country with a rapidly shrinking population to […]

    Pingback by Global Voices Online » Russia: A “Dying Country” or a World Leader? — December 2, 2008 @ 8:02 pm

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