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Affluent Investor | May 28, 2017

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The Bubble vs. the Baby: How the Student Debt Bubble is Crushing Fertility


Debates over whether or not there is an “education bubble” — including  whether or not student debt is, at this point, a net good or a net bad — have become almost commonplace. We also see a lot of discussion about when we might see a real economic recovery and what the real prospects for growth might be.

This story on the NBC Today website, Dreams delayed or denied, young adults put off parenthood, shows us that student indebtedness, and a depressed job market, are not just hurting the present economy but are is also contributing to a huge drag on the future economy: the encroaching demographic winter.

“Flores and his wife, Karlee, grew up in religious homes, got married soon after graduating from college and assumed that they would also be young parents. Instead, the Salem, Ore., couple has started to wonder if parenthood is in the cards for them at all… Daniel is currently making about $17 an hour as a case manager for the Oregon division of child support. Karlee makes about $13 an hour as a business manager for a carpet company. Both say they are grateful for their jobs. But Daniel, especially, said he still feels like he is trying to find the type of career-track job that would allow him to make enough money so that Karlee could stay home with their children. The couple also has about $60,000 in combined student loan debt, and their monthly student loan payments are one reason they are living paycheck to paycheck.

Flores and Karlee represent a trend. Birthrates have sunk significantly since 2007, especially among young women.

For readers who have been taught the overpopulation myth, the impending disaster may be hidden from their view. But unless something changes dramatically, America’s de facto one-child “policy” is going to bring economic stagnation. (This is especially true in countries that provide for the aged by a pension system that requires more working young people than retirees.)

Economic bubbles are misallocated investments and resources. The lesson of Flores and Karlee is that, during a recession and anemic “recovery,” in a culture when it is easier than ever to not get married and not have children, a further and more massive misallocation is easily made. A demographic winter gets arranged in order to pay bills. Present indebtedness leads to less people in the future.

Investors will want to find regional economies where the population is growing either through babies or immigration or both. Hopefully people will wake up and “get busy” so America becomes one of those economies.

Clearly, any policy that encourage heavy debt loads on young couples is a nationally destructive policy.

Mark Horne has been studying the intersection of ethics and the economy since high school. He was raised in Liberia, West Africa and Kwajalein, Marshall Islands, as well as on the Atlantic coast of Florida. He graduated from Houghton College in 1989 and from Covenant Theological Seminary in 1998. He was ordained in the Presbyterian Church in America and has pastored churches in Washington state and Oklahoma, as well as serving as an assistant pastor in St. Louis.

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  • David

    “overpopulation myth”? Really? Check again. Seven billion and counting . . . rather quickly in fact. Starvation, environmental degradation, etc. Proper stewardship is the answer and that just might involve fewer babies.

  • uddeboda1

    Man and wife, who called managers earning $17 and $13………………..and a $60000 education debt……………….doesnt sound like the Greatest and richest nation on earthj……………more like a 3rd world nation……………… in Scandinavia, we have free education……..all the way, they even give students over $200 a month to help with books etc etc……………..and even the lowest paid jobs offer over $23 an hour, shelf stackers or flipping burgers at Mc Ds…………………….the average wage for a factory worker is about $57000……plus as many as 40 days holiday with pay……………..

    • NukeWaste

      And who pays for this? You do. Look at the way that you live. Good for you. I refuse. These two people wasted their college money on worthless degrees. It isn’t up to me to support them. My ole lady and I forwent having kids because we didn’t earn enough. If I wanted kids I would have become a doctor. You are in a mono-ethnic society. We would be the richest society on Earth if we didn’t drag along the losers. How would your country be doing if 50% of the citizens were stealing a free ride?

      • uddeboda2

        50% of your citizens on a free ride, thats your problem not mine, we handle the problems in a different way…………..

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