climate change — Alpha.Sources

The fertility wars

The political flurry in the US over the virtues of parenthood and a high birth rate is part of a much larger cultural moment in which the debate on the significance of falling global fertility is pitting two increasingly militant and unyielding sides against each other. We have trade wars, culture wars, even actual wars; we can now add fertility wars to the list. When Elon Musk, a US entrepreneur and businessman, calls Ms. Harris an “extinctionist”, because she has linked the reluctance of young people to have children to “climate anxiety”, he means it, just as he means it when he concludes that “the natural extension of her philosophy would be a de facto holocaust for all of humanity!”

How to get handle on this? With difficulty, but in the end, hopefully with precision and clarity. First, I will briefly show that the fertility wars have been fought for a long time. I will then draw the contours of three separate positions in the fertility wars today—on the Conservative right, on the left, and a feminist perspective—before offering a suggestion on where this discourse goes next, and where it ultimately ends up, if we are sufficiently unlucky or un-attentive.

The looming downturn in capex and the rise of EVs

I think Simon Ward is right to predict that a downturn in investment will be the next shoe to drop in developed market business cycles, even as easing inflation offers respite for households’ inflation-adjusted disposable income and spending. This has been a key theme for me and my colleagues at Pantheon Macroeconomics for a while. In the U.S., Ian Shepherdson believes that this will drive the economy into a mild recession, while we are a bit more sanguine in Europe for the simple reason that the euro area economy effectively has been close to recession since the end of last year. Simon Ward notes that the capital goods component of the global PMI hit a new low in April, that inflation-adjusted profits in G7 slowed sharply last year, and that nominal money is contracting. Crucially, he adds that credit standards are now tightening significantly in Europe, as well as across the pond. Flat-lining profits in inflation-adjusted terms, a contraction in nominal deposits, the lagged effect of higher interest rates and tightening credit standards is bad news for private capex, including inventories, as measured by the national accounts. The silver lining is that a slowdown in investment should, combined with softening inflation, persuade DM central banks to kick back from the table on rate hikes. The key question, however, remains whether a slowdown in investment and aggregate demand is adequately priced-in by equities. I doubt it.

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