Smaller labor supply + equivalent demand = labor commands a higher wage. Better social mobility for the working class & population and birthrates will rebound accordingly.

Not really a "crises" except for those having to forego the 80ft. yacht in Monte Carlo, and go with a 60ft. model, on account of having to pay their employees higher wages to get them to do the job.

Or, let in more immigrants, while at the same time putting out lots of nasty stories in the news media about the conduct of said immigrants, to get the domestic labor force to direct their anger at the newcomers, rather than the politicians / business people controlling the labor policies.

"The xenophobes who don't subsidize day care and parental leave die off, while the truly multicultural social-welfare societies thrive."

Are we talking about the United States as the former and Europe as the latter?

I think you'll find that the xenophobic US, who doesn't subsidize day care and parental leave, is thriving as far as population maintenance is concerned.

Most European countries, by contrast, are already multicultural social-welfare societies. There's some other reason the natives aren't reproducing.

In Germany, where my daughter was born (to me and my husband, both civilian foreigners), there are now so few children that they are considered a mess and a bother by the overwhelming number of people who don't have young children. The other mothers in the clinic where I gave birth were probably 2/3 foreign or first-generation post-immigration.

There are more than just the two choices of immigration and no immigration of youth. There is also emigration of the aged. You could always send those British pensioners down to India to live out their days. The pound will still go a lot farther down in India than in London.

This sort of thing happens within nations already. Think of the relationship NYC has with south Florida.

That's already happening to some extent. I lived in Bulgaria from 2005-2006, and Brits were buying up property there - especially along the Black Sea - like mad. Mostly retirees or people who had the money for a vacation home. By the time I left there were estimates that 5-10% of all the private property in BG was owned by Brits. Not sure if those numbers are accurate or not, but from what I saw, if they aren't now they will be soon.

In Italy they scaled back the national pension system more than 2 years ago and created quite a panic as people who had worked their whole lives were now told to expect pension benefits cuts as deep as 30%. Needless to say they did not embrace their inner hippy and declare that a good thing for the sake of that whole 'less is more' ethos so popular here.

The problem really is that ramping up a labor pool takes time and even were they to fling open the doors today and tell 500 million Asians, Africans and Arabs to come in and work, in Europe there's a big gap in how to fund retirees in the next 10-15 years. Now, one could adopt the Salon Uber Alles approach and just tell those senior citizens to fuck themselves and die for the greater good but then you'd at least have to pretend to listen to their concerns before blowing them off.

However, in the long run, something's gotta give. Either you accept that you are going to wither away and die, secure in your cherished cultural identity, but not reproducing enough to survive, or you open up your arms and embrace the stranger, and forge some new, synthetic, syncretic identity that may not be the same as what came before, but is healthy enough to flourish.

OK, that cannot be right, and while I am not a demographer, I think the problem must be with the way that fertility rates are calculated. My guess is that the rate is something like:

number of kids/population, and reflects the steepness of the slope of the demographic triangle.

So, if you have a few kids and a lot of people, that rate is going to be low. But think what happens in one generation. If the population bulge has passed through the system, the denominator will not be so high any more. The rate will go up, simply because you don't have such a big population to divide by.

I mean, it is possible that Italians have contracted a fatal ennui that is heritable and means that their culture is dooooomed.* It is also possible that people are reacting reasonably to the circumstances around them and choosing not to have kids. But I wish that when people discuss population contraction, they would look ahead further than one generation.** What would it mean two or three generations down the line, and how would the rates re-adjust? Why would you think that it would stay at 1.2 indefinitely (especially if that is an artifact of the equation for fertility)?

*The thought that their culture is population-dependent is very strange to me. The signature traits of Italian culture developed over hundreds of years when their population was a tiny fraction of the current population. You need isolation to develop a unique culture, not numbers.

**And DUDE! I'm more than a little piqued that a lot of the rationale for saying we need more people is that it will be extremely difficult for fewer young people to support the aging generation. Are you kidding me? That generation spent the world's supply of oil, groundwater, fish, timber, capacity to absorb carbon, and rare elements in one sixty year blowout. Now, suddenly, they're getting worried for us? Dudes, pile it on. It isn't worse than you've already done. At least severe population contraction will only suck for one transition generation. The other problems you've left us will plague us for centuries. Severe population contraction is one of our best tools for addressing those.

Andrew,

in the long run, something's gotta give. Either you accept that you are going to wither away and die, secure in your cherished cultural identity, but not reproducing enough to survive, or you open up your arms and embrace the stranger

In the long run, we've got to create an economy that can be healthy with a mature demographic and without population growth. Whether that happens at 9 billion or at 12 or at 20 it must eventually happen.

It is a false dichotomy to say that that a population must either grow or wither away and die. Personally, I'd prefer we learn this now rather than wait until we're forced to do so by resource exhaustion, and while "my share" of the earth is 1/6.5B not 1/12B.