Piketty’s lesson for America: Make more babies

Piketty: Just call him Dr. Love.
Piketty: Just call him Dr. Love.
Image: Reuters/Charles Platiau
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The answer to economic malaise may be a bit of romance.

Or blunter still: baby-making.

French economist Thomas Piketty’s blockbuster economics tome Capital in the Twenty-First Century is many things to many people. For some, it’s a groundbreaking collection of data detailing the drivers of economic growth going back to the 18th century. For others, it’s a political polemic calling for policies to counteract the tendency of capitalism to drive wealth inequality.

But one of the most helpful sections of the book is its detailed discussion of an often-overlooked component of economic growth: population.

Since the pioneering work of Nobel laureate Robert Solow, economists have preferred to talk about about economic growth as an alchemy of productivity, capital, labor and technological change that only they can possible understand. Inputs like productivity and labor are easily proxied and pumped into the elegant formulas that economists love. But that’s only half the story.

The other half is the sheer bulk of humanity. (After all, the size of populations in China and India are a big part of the reason that everyone has been so excited about their prospects for growth.)

Piketty’s core argument—the one that has made him something of an economic rock star—is that the levels of growth and economic equality taken for granted in the developed world in the decades after World War II were actually outliers. And one of the reasons he suggests they were outliers was because of the surging birthrates of that period.

Now, birthrates in the US and rest of the developed world are falling. And population growth is expected to do the same. Piketty argues that productivity growth, which theoretically can continue forever, likely won’t grow fast enough to make up for the expected decline in population. The result? Global growth that’s much slower than we’re used to.

Of course, Piketty’s not a fortune teller. Perhaps productivity could explode higher, driving much more of a surge in economic growth than anyone expected. And perhaps decades-long trends in birth rates could spin on their heels. Alternately, people could start consistently living until they’re 120 years old. Both trend reversals would would prop up population. But it doesn’t seem wise to expect either.

So what can be done? Well, on the population front, here’s one simple proposal.

The United States is the only developed country in the world not to offer guaranteed paid maternity leave to women workers. Such support systems are one of the reasons why Nordic countries such as Sweden and Denmark boast some of the highest birthrates around the developed world. Piketty’s work suggests that’s not just the right thing to do, it’s also a boon for growth.

And that’s the perfect political cover someone—perhaps a prominent female presidential contender?—could use to run with this issue. After all, in a country that claims to prize mom and Apple pie above all, opposing maternity leave would look downright un-American.