A Boom In Customers

BEN WATTENBERG

November 09, 1990|By Ben Wattenberg

WASHINGTON. — UNNOTICED, but much welcome at a moment of economic gloom, two big new items of demographic news are upon us, each powerfully optimistic.

Among other things, the new demographic tidings should create -- presto! -- a new generation of business geniuses whose faces will adorn the covers of Forbes and Fortune.

A demographic milestone was reached during the first six months of 1990. The Total Fertility Rate in the United States climbed to an estimated 2.1 lifetime births per woman. The new figure is the highest since 1971. It is the fourth straight year of increase. Something big is going on that demographers had not expected, and it appears to be happening only in America: The Birth Dearth is ending.

Further, the United States has just enacted a new immigration law that substantially raises the number of legal, and skilled, immigrants. That too was unexpected only a few years ago. The new statute provides for a 30 percent annual increase in slots, from 540,000 to 700,000 (plus an extra 55,000 for the next three years).

In a country of a quarter of a billion people, the fertility and immigration increases may not sound large. Just wait a few years and you will learn otherwise.

Only two years ago the U.S. Census Bureau issued a series of ''most likely'' projections that were keyed to then-current fertility and immigration rates. When compared to projections keyed to the new rates, the difference becomes clear:

Thus, in the next decade alone, we can expect an additional 8 million people. That number grows to 17 million two decades out, and to 45 million additional people in 40 years' time.

The changed rates make a difference between an America that will grow in the future and one that would move toward a demographic freeze and then to actual population decline (a pattern that is now playing itself out in Europe and Japan).

We know at least one important thing about those new people: They will all be customers. They will need food, clothing and shelter. At different points in their lives they will also need diapers, cribs, roller skates, books, crayons, cars, lamps, sunglasses, rugs, VCRs and lawn mowers. They will buy tickets to football games, hire accountants and lawyers, go to movies rated NC-17, see the pediatrician, the dentist and the radiologist.

Welcome to the Customer Boom!

It should yield a boost for existing American businesses, which should gain customers from the 8 million previously unexpected people in the 1990s. The new customers will also provide the base for many new businesses.

All this provides a fertile commercial field. American businesses prospered in recent decades for many reasons, not the least of which is population growth. When World War II ended there were about 133 million Americans; today there are more than 250 million. By simply holding his share of a sharply growing market, a business executive could look very good indeed. Smiling and sunburned, there he was on the cover of business magazines -- a certified dynamic genius.

For a while, it looked as if the party would stop. Birth rates plummeted from Baby Boom highs (3.7 children per woman) to a Birth Dearth low plateau (1.8 children per woman). Politicians said the immigration numbers would not rise and might be cut.

If such conditions continued, businesses would have been able to grow only by increasing their share of the market, that is, by taking someone else's customers. Such a zero-sum set of market conditions produce few alleged geniuses -- and few big bonuses.

Now, the bad news-less growth scenario is out the window. Beyond providing more customers, the new trends also diminish the future Social Security shortfall, reduce the housing slump, shrink the per capita national debt and will keep the GNP rising.

If ''greed is good'' was the motto of the '80s, ''growth is good'' will be the motto of the '90s.

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