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This is an audio transcript of the FT News Briefing podcast episode: We answer a listener question about population growth

Marc Filippino
Good morning from the Financial Times. Today is Monday, October 18th, and this is your FT News Briefing.

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High energy prices are looming over the airline industry’s recovery. And in today’s show, we’re doing something a little different and a little fun. We’ve got a question from one of our listeners.

Adham Al Oka
Is economic growth linked to population growth and if so, why?

Marc Filippino
So we found just the right FT correspondent to answer it.

Federica Cocco
Adham, you’ve touched upon one of the main economic dilemmas of our time. So this is a million dollar question.

Marc Filippino
I’m Marc Filippino, and here’s the news you need to start your day.

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Higher energy costs have rippled through global markets, and they’re hitting airlines too. The FT’s acting transport correspondent Philip Georgiadis says higher fuel costs could trip up airlines as they recover from the pandemic.

Philip Georgiadis
Airlines haven’t really had any revenue. They’ve not been able to control that. They’ve had very few passengers and travel restrictions and so on. So they really had a laser focus on costs and try to get them down as much as possible unfortunately, laying off a lot of staff, restructuring their businesses, looking at their fleets. But these fuel prices are costs that they really can’t control.

Marc Filippino
So can airlines absorb the cost? How much will this hurt?

Philip Georgiadis
I think invest, if you’re an investor in an airline, you’re pretty sanguine. You’ve just had a pretty rough time, and you have quite a long time horizon. So I don’t think they’re too worried about this. But obviously for airlines and when thinking on a quarter by quarter profitability basis, it is a little bit more of a worry for them. And actually, Delta Air Lines, the big US carrier, last week warned that it would probably slip back to a loss in the final quarter of the year because of the rise in fuel prices. So that gives you an idea. It’s not existential for airlines, but coming out of the pandemic, this is really the last thing that they need. And what’s actually made it worse is that normally many airlines would hedge the fuel price so they will lock in a price for a future expected fuel requirement for, say, the next year or so in order to try to guard against spikes and volatility in the oil market. But almost all major airlines actually gave up on that following the pandemic because they really blew up when the oil price went into meltdown last year. The oil price tumbled, but they had already paid for a large amount of oil at a higher price that they then couldn’t even use because no one was flying. And after that, many CEOs and CFOs swore off hedging. So now they’ve been left pretty naked and exposed to this rise in oil prices.

Marc Filippino
Given what’s going on, are airlines thinking about climate change at all and making efforts to find greener solutions? Are there even greener solutions out there, Philip?

Philip Georgiadis
I think this is just about the biggest question that the airline industry is facing. There are electric planes out there, but it’s a very new technology and the battery technology doesn’t yet exist to power a large plane full of people, a large distance. What there are at the moment, and they are in existence and some planes are flying on them, are things called sustainable aviation fuels, which is basically a biofuel which is much better over its lifecycle for the environment. And there’s a whole industry and a whole movement at the moment trying to get those costs down. The only problem is they are even more expensive than jet fuel, even after the price rises.

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Marc Filippino
Sometimes our wonderful listeners reach out to us, either on Twitter or email or LinkedIn. And when they do, they often have these just fantastic questions. Here’s one of our question askers.

Adham Al Oka
My name is Adham Al Oka. I’m 37 years old. I work as an HR manager, and I live in London.

Marc Filippino
Adham reached out to us with this great question about population growth.

Adham Al Oka
Is economic growth linked to population growth and if so, why?

Marc Filippino
Unfortunately, I don’t know the answer to this question. Fortunately, I have basically the entire FT staff available to me who will let me ask these kind of questions on Adham’s behalf. In this case, Federica Cocco, a statistical journalist for the FT, has been working on this exact topic — population growth. And she’s here with me now. Hey, Federica.

Federica Cocco
Hi, Marc.

Marc Filippino
First, first off, this is such a good question, right?

Federica Cocco
Yeah. Actually, Adham, you’ve touched upon one of the main economic dilemmas of our time. So this is a million dollar question.

Marc Filippino
But it’s not really an easy one to answer. Is it, Federica?

Federica Cocco
Well, it’s kind of straightforward, actually. If we were to do a 30-second podcast, then the answer would be yes. Population growth is linked to economic growth. Now, whether it’s a good thing or not, that’s another matter. It certainly does bring up some pretty huge problems for our economy if population starts to decline, which is what it’s expected to happen.

Marc Filippino
Right. And to that point, Adham brings up these really nuanced points, right? I’m going to play the first one now.

Adham Al Oka
I’ve been thinking since couple of years about overpopulation, and it’s got a negative impact on the environment.

Marc Filippino
Valid point, right, Federica?

Federica Cocco
Yeah, of course. So fewer people are good for the environment, there’s no doubt about it. And also, you could argue that perhaps as a society, we’re a bit too consumer obsessed, and we should sort of curb our obsession with growth.

Marc Filippino
Right, and this is a major point coming out of the pandemic. Environment is a big topic in a lot of governments. Adham has another point, though, that I want to play that kind of adds another layer to all this.

Adham Al Oka
I have read in a recent FT article about the long-term negative impact of China’s one child policy on the Chinese economy and the fear of economic decline due to population drag.

Marc Filippino
You know, that’s a whole different thing. Fewer people is better for the environment, but it could slow economic growth.

Federica Cocco
Well, so we’ve known for a while. In fact, in some countries, in the in the western world like Sweden, for example, the decline in the birth rate started at the end of the 1800s. So this has been happening for a while in Europe, in countries like South Korea, you know, even in the US. It’s kind of declining everywhere. But the important thing is that now it’s going below 2.1 births per couple. What this means is that that couple are not going to be able to replace themselves when they die if they don’t have more than two children. But the western countries have been able to correct for this by importing a lot of migrants. And so in the US, for example, that’s happened for a while. What’s interesting now is that a lot of developing countries, including China, they’re also seeing the birth rate go below 2.1.

Marc Filippino
Right. And we’ve long talked about this problem in places like Japan, right? Where the ageing population is dying out and there’s not that replacement. And Japan is, as you said, really kind of open, started opening its doors for the first time to people outside of their country to try and get that replacement rate up.

Federica Cocco
Yeah, but it’s possibly not enough because, as I said, other countries are also experiencing this decline in births. And coupled with that, as you as you mentioned with Japan, this is a huge problem. People are living for longer. So for example, in the 1960s, there were six people of working age, so that’s aged 16 to 64, for every retired person. And so I think about my grandmother, she had six children, and now that she’s in her 90s, they all take turns looking after her. But my parents, for example, only had two children. And that ratio globally now is three working age people for one retired person. So this raises questions at a societal level of who takes care for the elderly, and that’s leaving aside the economic issues. That’s a huge problem, too. But it doesn’t end there, right? Because we have an economic issue to deal with, which can be summarised in, you know, working age people, they’re the ones that pay taxes. So who’s going to pay taxes if a greater share of the population is actually retired? And when you get older, when you and I get older, who’s going to pay for our healthcare and our pension?

Marc Filippino
So bottom line, if you have one message for Adham to take away from this conversation, what is it?

Federica Cocco
One is that people of working age, they also tend to consume and buy. And so if we have fewer young people, we’re also going to have fewer consumers. And so that’s another implication for the economy. Another thing that there’s there was a recent study on, you know, young people 16 to 64, let’s say, because they’re involved in production and in work, they also create a sort of marketplace of ideas and that creates growth. You know, the steady growth that we’ve had in the past 200 years has been largely thanks to technological progress. And so if we have a smaller share of the population that is engaged in that, then growth is also going to suffer. Now demographers are studying this issue very deeply because, as I said, it poses such great dilemmas for society. One thing that they seem to agree on is that population decline is inevitable because practically women are just choosing to have fewer children. It’s inevitable. So what we need to do as a society is a sort of reorganise ourselves so that it’s not a steep drop and we kind of have a soft landing, and we learn to live with a smaller population.

Marc Filippino
Federica Cocco is a statistical journalist for the FT. Thank you so much for your time, Federica.

Federica Cocco
Thank you.

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Marc Filippino
And if you have a question about economics or financial markets, we’d love to hear from you. We’ll find the right FT correspondent or editor to answer it. You can tweet to me my handle is @mfilippino or our show’s Twitter account, which is @ftnewsbriefing or shoot me a good old fashioned email. I’ll put the address in the show notes.

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You can read more on all of these stories at FT.com. This has been your daily FT News Briefing. Make sure you check back tomorrow for the latest business news.

This transcript has been automatically generated. If by any chance there is an error please send the details for a correction to: typo@ft.com. We will do our best to make the amendment as soon as possible.

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