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Will Fewer Babies Break the Economy? · The Curve

• 0:00
  When was the last time that you thought about demographics? Probably never, but what if
• 0:07
  I told you they're one of the biggest forces shaping our future? Things like falling birth
• 0:12
  rates, age in population, governments, literally paying people to have babies. Like, it all
• 0:18
  is part of demographic changes. And in this final installment of Tempo's Temperature Check,
• 0:23
  we've got Zoe from Tempo, who takes us through this global baby bus that we're seeing.
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  Why is it happening? What it means for governments and how it can affect your
• 0:33
  investments. So this was one of those chats that really got me thinking differently about
• 0:37
  the future. So it's a bit of a ride, but stick with it, it's way more fascinating than you'd
• 0:42
  think a chat about birth rates could ever be. What we've been doing the last few times we've
• 0:48
  been speaking to you has been brilliant and insightful for me Zoe. We've spoken about Trump
• 0:54
  and has just general and all of us. We've spoken about AI and the impact or have we seen the
• 1:04
  boom, is the boom still coming? Love talking about that. And today, which I'm not convinced on,
• 1:10
  but apparently it's going to be interesting. She's like, oh no, oh no, it's demographics. I mean,
• 1:15
  I think I'm into it. Because when we last, when you did a little teaser for us and you see,
• 1:20
  we're going to be speaking about the idea of woman having less babies and stuff. I was like,
• 1:23
  cool, I don't understand how the wider demographics is a thing, but I'm really excited to hear more.
• 1:32
  How is the big believer and least people on the planet? So we're going to have a little debate,
• 1:37
  I reckon. To be honest, I don't know enough to know really about the stats and what's happening.
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  So I'm definitely not in like, can't, everyone needs to have 5,000 babies, but I also don't understand
• 1:51
  the link between necessarily that and the stock market. So that's what I'm really keen to hear more
• 1:55
  about. Yeah, absolutely. So what do I actually mean when I say demographics? So to your point,
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  so like 20, 30 years ago, everyone was worried about the world becoming overpopulated. We were going
• 2:05
  to have too many people, particularly all of these babies being born out of China. Then we had a
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  one child policy coming in China and that's really basically seeing their populations peaked
• 2:16
  essentially. So their population size is now shrinking. Don't have to worry about quite so many
• 2:21
  people in the global economy because you're seeing that elsewhere as well. So what you're
• 2:26
  actually seeing is that for most developed countries, like basically two thirds of the world,
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  their country's populations are now shrinking. This is so interesting. Two thirds. Yeah,
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  the only countries you're seeing where women are having enough babies to replace the current
• 2:42
  population is Africa. Wow. Yeah. That is so fascinating. And I think there is so much
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  to unpack in terms of what has fueled that. Things from women having capacity to have five children
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  as you know, like women just way more focused on careers and therefore not wanting to have
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  five, six, seven children, also the cost of having that many children,
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  also living in more deeply populated areas where having six or seven kids in an apartment versus
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  if you're on a big open feels country somewhere. But there must be so many things playing into that.
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  Yeah. And it's got to the point where there are actually countries like Korea, China,
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  places have actually tried paying people to have children. So it's basically you get a baby bonus
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  every time you have a child. I remember we spoke about the size of this country. Yeah, it really,
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  really is. And you know, countries trying to upair free childcare hours, just trying to create
• 3:47
  more family-friendly policies to try and encourage this. But it hasn't worked. Yeah.
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  I reckon women have just clocked on to the idea that for a long time, we've just purely been told
• 3:59
  like we are breeders and that is your job. And all of a sudden, people have attasted like they
• 4:04
  can choose now if they want to have kids or not. And yeah, I find the whole thing so fascinating
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  because on the one side, I'm absolutely like want nothing more than to be able to be a mum
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  one day. You know, I'd love to have a kid. But I really find this like the sacrifice of like,
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  because everyone's like, oh, you know, you can have everything. I'm like, I just don't know if that's
• 4:27
  possible. Like seeing my friends who have kids and how just much, I just, I cannot even fathom
• 4:34
  the idea of doing the job that I'm currently doing and having kids. And I think that there's just
• 4:39
  a lot of women who are starting to realise they can choose. Do you know what I mean? There's
• 4:44
  very many ways that you construct your life. It's so interesting to me that that's a global trend
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  and not just something that we're seeing in certain parts of the world because I don't know,
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  I would have thought it would be more congregated to like super western society that's like,
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  I don't know. I think it's just we've grown up in a world that has had it one way for so long.
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  And now women are like, we want to have it all. But the world hasn't caught up in terms of
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  supportive childcare policies that you support. You know, workplace, government level.
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  So saying, hey, here's $1,000 to encourage you to have a child. It's like, no, no, it's all the
• 5:27
  other things around in my, in my worlds that need to catch up, not just a little cash injection.
• 5:34
  Yeah. And I think it's, you know, it's a societal shift right at a time as well to
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  ward smaller families, for example. So, you know, people might still have kids, but they might
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  choose to only have one for whatever reason. And then you're only apprising one of you as a couple.
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  And so therefore, you know, fast forward 50, 60 years down the track. And there's only one where
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  there were two. And so what is the problem of that? Thank you. Yes, stunning question.
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  Like a shrinking population. So what is bad about that? It depends. It doesn't necessarily have
• 6:03
  to be a bad thing, but it does mean that some things about the way we kind of funded our systems
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  might need to change over time. And when I say that, what I mean is things like, for example,
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  most governments are set up to tax people on their earnings, right? So most of the revenue that
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  governments get to spend money on is coming from you paying tax when you do your job.
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  If there are fewer people doing jobs and more people retired, the balance of that gets out of
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  whack and governments trying to pay for healthcare, trying to help support those people in old age,
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  but there aren't so many younger people paying taxes anymore. And one way governments are
• 6:39
  solving that is actually through immigration, which is interesting going back to the Trump
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  conversation, I guess, about, you know, where that's heading. Is that typically, and we've seen
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  this in, you know, countries like New Zealand, countries like the UK, is that immigrants tend to be
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  concentrated in younger age cohorts. You don't get as many people who suddenly up their lives and
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  move countries in their 50s or 60s as you do in their 20s or 30s. How does that all connect?
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  Sorry if I'm missing something. I'm not totally following it. So if you've got more, if you've got an
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  aging population, so you've got more baby boomers, for example, they're not working, they're getting
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  paid a pension, they're retired, you to fund that money, you need to tax the younger people. But
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  if there's less younger people and more older people, then these people need to be taxed a lot more
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  to compensate for that. So if you don't have that new blood, literally coming through and younger
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  people to make that balance, that's when it gets really thrown out and you just end up having to pay
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  huge taxes when you're young. Pans are a really good example of this. They've been struggling for
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  years with aging population, and it's getting to the point where there are now, like, schools closing
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  down in districts, because there are just no kids and they're going to turn into retirement homes.
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  But if you think about it going back to the sort of fundamental investing perspective, you think
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  about what that means for companies that are caseuring towards age care, for example, or catering
• 8:02
  towards health and longevity solutions. You think about companies that can provide hearing aids
• 8:09
  or helping with your eyesight as you get older, cataract replacements, all of that sort of stuff,
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  you know. Stillening, I've always wanted to do a decent cataract replacement. It sounds so
• 8:19
  sexy. It's not quite the envy of it. It's always the unsexy companies. Not always. It's most often
• 8:25
  the unsexy companies that do the best. That's Warren Buffett's. StravaJeg, you invest in the unsexy
• 8:30
  boring businesses. It's so boring. I was going to invest if we're all talking about this cataract.
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  We make cataract sexy. Can we? That's our campaign. Yeah. So wait, so okay. Also just
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  proof of saying we're not making fun of people. Sorry, not. But let's just think about that then.
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  So if we zoom out and we think, okay, there is going to be a lot more people that are in the
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  sort of like, older end of the demographic than younger, because that's the trend that we're seeing.
• 9:00
  But we're also seeing people scramble to change that. So whether that's governments paying someone
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  to have a baby, my point is, at what point do we realize that this is just a decision and
• 9:12
  this is what people are wanting to live their life? Or can it be influenced by help with childcare,
• 9:19
  help with this, help with, you know, like, I guess what I'm trying to understand is like, do you
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  have any research that suggests that this is a trend that is going to stay for a long time? Or
• 9:28
  do we think that this is going to reverse in the next five, ten years? The research I've seen
• 9:33
  as this is a long-term trend that's been what we've seen is what we talked about sort of in this
• 9:38
  space is the fertility rates. So basically, how many babies does each woman need to have to replace
• 9:43
  the current population and that number is about 2.1? In New Zealand, and most other developed
• 9:49
  countries is about 1.51.6. In China, I think it's about as low as 1.1 now. So this is the average. Yeah.
• 9:56
  To replace the current population, right, have 2.1 babies per woman. Yeah. And so
• 10:03
  that's been trending down for decades. And I don't think a baby payment is going to turn it around.
• 10:10
  You know, it is a societal shift, but it's very unlikely we're going to see this really turn around.
• 10:16
  And it's not like also that it's a quick switch.
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  Even if this payment was so big that every woman we now had children, you know, that's nine months
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  and then you've got like 18 years before they're in the working age, you know, there's
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  it's a trend that you could see for a long time, even if there was this big windfall of births.
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  And even in countries like Scandinavia where they do have pretty progressive, you know,
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  bringtally policies, you know, I think get some sort of payment for up to the first three years
• 10:51
  of their life in some of those countries. It's pretty, pretty, you know, pretty supportive
• 10:55
  of you the thing. You're still seeing this declining fertility rate happening. This isn't so
• 11:00
  interesting. Which makes me think there's so many other elements to it, rather than just societal.
• 11:05
  Yeah. Yeah. But it has implications for, you know, companies that are exposed to those sectors.
• 11:12
  Like we saw a little mini baby boom during covers. The majority of jobs lost was was woman.
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  And we saw a baby boom, a mini baby boom. Oh my god. So this is a long term trained if
• 11:25
  women say in the workforce as much as we think they're going to.
• 11:29
  Probably one element of it, but yeah. Wow. This is fascinating.
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  And probably people just had a lot of spare time during COVID as well.
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  So I'm like, I know this might sound like I'm taking the first, but I'm just like, this is so
• 11:41
  interesting. And I've never heard explained in that way. Do you think that? Yeah.
• 11:47
  I have a question. Okay. Go ahead. Let's just merge the two AI and demographics.
• 11:54
  Do we need more people? Great. If we've got technology doing that. It's genius. Yeah.
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  Yeah. Well, and that's that's one of the things right. Like if you think about a Japan going
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  back to Japan as a prime example, they're probably 20, you know, 20 years ahead of most of the world
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  on this in terms of facing that demographic headwind. They have invested hugely in robotic
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  technology. I mean, you think about a car factory in Japan. What do you picture? All these
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  machine arms coming through very few people other than kind of a supervisor wandering around
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  just making sure everything is actually working because they've been struggling with this. And that's
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  the way you're seeing a lot of other countries going. So when you look at, for example, robotics
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  investment in China, that's picked up and it was picking up quite hugely at the moment.
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  Because they're also facing that labour headwind and labour is getting more expensive in China as
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  well. So there's this tipping point right, whereas if you've got fewer people being able to fill
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  jobs, there's more competition for actual jobs that really need people. And then you might get
• 12:50
  machines to do the rest. And you know, like a many example of this is what we saw during COVID
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  in New Zealand. So people in the fruit picking industry, for example, were investing in more
• 13:01
  machinery to help pick fruit, because they couldn't get people in who the seasonal workers in,
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  who would usually help out with that job. So replacing people's machines. So trends would be
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  can be some robotics companies. Robotics? Maybe age care. And maybe I fear fertility.
• 13:19
  Healthcare. Yeah, how that sounds more adult diapers and baby diapers.
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  Sorry, Japan. So it was more adult diapers than baby diapers. Do you know how to terrifying
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  stat the other day that one in five women are incontinent after from childbirth or something
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  along the lines of like childbirth, there's not enough rehabilitation for us to get our
• 13:44
  pelvic floor back in action that's so new that's gone incontinent. And that's probably where all
• 13:49
  the nephews are gone. I was thinking more like the reason not to have a baby. Have anyone talking
• 13:54
  for a reason? No, this is the thing. It's like I find it and I don't know if it's a baby robot.
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  Pits. Yes, pets. Actually, that's one child and one pet or no children and no children pets.
• 14:07
  Isn't that the trend? Yeah, that's actually been a really big trend in the last season.
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  I'm like, can we do a lot of episodes on this? This is so cool. I reckon if we just sit here
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  for like half an hour each of us and silence and just like thought about the world,
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  we'll be able to come up with a few trends. I don't have time for that right now.
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  And that's boring if you'd rather say as well. But you seriously sit down and one like, okay,
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  why is it like if you just, yeah, I think you could really kind of get into a bit of a whole
• 14:36
  of like what the world's going to look like. And then kind of comes back to the point of like
• 14:39
  why the investing can't exist, right? Because the things that you see and the opportunities that
• 14:43
  you might spot are very different. And you know, like what Zoe said, obviously you're researching
• 14:48
  a lot. So you see, you're actively looking, but all of us see this stuff. And we've got one
• 14:52
  all around the world. Tempo is a brand new investing app available in New Zealand. And we're so
• 14:59
  excited to be telling you about how it works and how you can use it. So in 2023, Tempo conducted
• 15:05
  a survey with a thousand Kiwis and they found that 27% didn't know where to start when it comes
• 15:11
  to investing. And that's a lot of people. So the great thing about Tempo is that their goal is
• 15:17
  to take the guesswork out of investing. So when you sign up, they ask questions like how do you
• 15:22
  feel about the idea of your investments going up and down because some do more than others.
• 15:27
  You tell them how much you want to save and they recommend a mix of their funds for you.
• 15:31
  It's guided investing. So you're getting investment advice from the experts, which is very,
• 15:35
  very cool. And because they track your goal progress so they can see actually how you're going,
• 15:41
  they can also recommend that you change your investments and the mix of how you've invested
• 15:45
  over time, which is really great. So if you would like to try Tempo, you can get a $10 kick start
• 15:50
  into your account. And if you would like to learn more about Tempo, you can head to the link in the
• 15:54
  podcast show notes. I am just aware of the time. I know we've had a lot of questions come in from
• 16:01
  people. They're like, how has been today? So can I just read out one of them? Let's just do that.
• 16:05
  Oh, this is a really good one. It's actually really good because of Tempo, because of people
• 16:11
  doing it themselves, because of all of the ideas that we're talking about with trends,
• 16:16
  that make it feel like you need to make decisions, whether it be buying or selling your investments.
• 16:22
  So okay, when I see headlines about the economy plummeting or whatever other dire news that I say,
• 16:32
  how do I decipher between the headlines? I should pay attention to make decisions on
• 16:37
  and the ones that I should ignore and pretend that I didn't read in the first place.
• 16:42
  Good question. Great question. A lot of the greatest questions. These are awesome.
• 16:46
  I would say 95 to 99% of it. If you're investing for 70 to 10 years, say you should probably ignore.
• 16:54
  Oh, it's good. I love how good I am to the point that it's so hard.
• 16:57
  But it's really hard because we're emotional and you see those headlines and we're human and you
• 17:02
  want to do something because it makes you feel more in control. Especially if you have investments.
• 17:07
  Yeah, it's like I need you to take action. And you see,
• 17:11
  Navidia, profit, cut, 50%, you're like, oh, that's fine. You know, and it's like,
• 17:17
  or Navidia share price, worst day ever. And it's like, it's fine. No worries.
• 17:22
  Meanwhile, you're like, it is hard. It is hard, but yeah, money is emotional,
• 17:28
  investing is emotional. So the more that you can remove that emotion,
• 17:32
  can play like the easier it will be. And it's still something that I struggled with.
• 17:35
  And look, I think the other element to that is that a lot of what markets to react to is not
• 17:42
  actually the number. So say, you know, you're expecting profit growth of a company of 10% and it
• 17:47
  comes in at 8%. It's like company X disappoints market, you know, analysts downbeat, you know,
• 17:55
  something like that. And actually, you still may accept profit. You're still like a solid number
• 18:00
  if you're looking at the fundamentals, but markets tend to respond to expectations. So it's
• 18:06
  all about where the expectation is versus reality. But if you think about 8% year on year growth
• 18:10
  the next 10 years, you know, the news headlines kind of are sensationalized as well, I would say.
• 18:17
  And that's like the really good point with AI is that expectations are off the charts. So if
• 18:24
  anything comes in, even like mildly below expectations, which is so high, that could have a really
• 18:31
  big impact negatively, but it's still still really good growth. You know, it's like that when
• 18:38
  things get away on themselves or get too far ahead or get your fingers too excited. I mean,
• 18:43
  that's what happened with DeepSecrite was before anyone even had a chance to actually analyze
• 18:49
  the implications of the model, you know, model adding competition to market markets. We
• 18:54
  oh, they did it cheaper and faster and it's a Chinese company that's coming and that's
• 18:59
  going to threaten you as dominance sell. You know, there's kind of a knee jerk reaction and you
• 19:03
  and you've seen that being corrected, right? And share price of a lot of those companies and
• 19:06
  subsequent way. And I know this isn't always should be encouraging people to do, but I was so proud
• 19:10
  of myself. So I actually went shopping when it was on sale. And that's what you first. I know
• 19:16
  that's not it. I know that's not what I do. It's not what I do with all my money. It's just a small
• 19:20
  amount because it makes me feel like when we're I feel involved in what's happening in the world.
• 19:24
  And I think that sometimes when it comes to trends or news headlines, it's like, well, what's the
• 19:30
  point in being informed if I'm not going to be doing anything about it? But it's like, actually,
• 19:33
  there's a way of feeling involved while not risking or being super risky with your money.
• 19:38
  So if that says exactly exactly what we also do at a top-down level when we're talking about,
• 19:44
  do we tilt towards New Zealand or do we tilt towards the US? One of the factors that comes
• 19:49
  into players, whether or in simple terms, whether or not that market is on sale or not,
• 19:52
  whether or not for various factors, the price on that is low relative to where you think your
• 19:58
  earnings growth is going to come in. If you've looked at New Zealand, New Zealand's top market
• 20:01
  versus the US top market over the last two years is done terribly. So you're like, oh, okay,
• 20:07
  well, New Zealand's top market then looks cheap relative to the US. So let's buy some New Zealand.
• 20:14
  If you were just looking at the historic performance, but yeah. So you're on sale thinking, isn't wrong?
• 20:19
  Yes, thank you. I really feel like I needed that. I'm like, so, and then you know,
• 20:23
  when you just can tell, you need a bit of like validation. Thank you. But you've also got to make
• 20:28
  sure what you're buying. You're going to wear and it's good quality. That is so cool. I love
• 20:32
  that. You're infesting and quality. It's going to last for you. You're not just going shopping to
• 20:36
  like the bargain bin of Zara. Like fast, fast, fast, you know, wear it free for it. It's the
• 20:42
  thing that's a deal. That's the coolest thing I've heard in ages. I've loved that. Thank you.
• 20:47
  You think by this time we would have heard like all the analogies, all the, yeah, but we haven't
• 20:52
  we haven't? Not at all. Yeah. Thank you so much for joining us for our tempo,
• 20:57
  temperature check. These are essentially conversations to help you understand what's going on in the
• 21:01
  market and really hone in on a specific topic. We hope you enjoyed it and please let us know what
• 21:06
  you thought about it. So it's by commenting wherever you're listening.