Italians seem to be going extinct – the economic and political consequences of relentless population declines

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When I moved to Rome in 2007 to become a roving European correspondent for The Globe and Mail, I suddenly felt relatively youthful as I walked the streets of Italy’s cities and towns, as lively as they were, even though I was already in my 40s. Italy was an old country full of old people, where packs of children and teenagers were hard to find.

Seventeen years later, I still don’t feel that I am on the verge of senior-citizen status in my adopted country, because the average age continues to rise as the birth rate goes in the opposite direction. In the year I arrived, Italy registered 564,000 live births, according to Istat. Last week, the statistics agency reported that the figure for 2023 was 379,000. While Italy is still densely populated by Canadian or U.S. standards, there is no doubt it is in the throes of a slow-motion national suicide.

Istat last year forecast an Italian population of 48 million by 2070, down from 59 million in 2023. The United Nations predicts a population of 44 million that same year. The replacement rate of 2.1 children per female was last achieved in 1976; it is now 1.2, and the rate in some Italian regions is far less. Eurostat says Italy has the oldest population in the European Union, with a median age of 48 (in Canada, it is 41; in Nigeria, 17). Together with Portugal, Italy has the highest proportion of residents north of age 65, at 24 per cent.

Italy is not alone in demographic decline. The West and Europe in general, especially Eastern Europe, are seeing fewer and fewer births. The medium- and long-term economic and political implications are worrying. They range from fewer taxpayers supporting more geriatrics to democratic upheaval. And there is no easy solution. Italy’s right-wing government, led by Prime Minister Giorgia Meloni, was elected in 2022 partly because of her resistance to immigration and has gone so far as to impound migrant rescue ships operating in the Mediterranean. If there is one thing the country needs as Italians go the way of the dinosaurs, it is more immigrants.

I used to think that declining birth rates in Italy, Europe and elsewhere (the population in Africa is still surging) were a blessing. Environmentally, a shrinking population is exactly what this sorry planet needed to slow the destruction of the biosphere and reduce humanity’s collective, heat-trapping carbon footprint to prevent the polar ice caps from melting. In the past decade, the forest canopy in Italy has expanded by some 600,000 hectares – no small amount for a country half the size of Alberta – owing indirectly to depopulation, as meadowlands and pastures revert to wooded areas.

Smaller populations, in time, would make housing more affordable. In Italy, rural depopulation has left many hundreds of towns and villages largely empty. A few years ago, I wrote about towns so desperate for residents that their mayors were selling abandoned homes for a single euro as long as the new owner committed to renovating the property. Since 2019, the Italian government has offered rock-bottom income tax rates, as low as 7 per cent, to foreign pensioners who shift their tax residency to depopulated areas in Southern Italy.

Today, I am not sure that gently declining populations are a largely benign phenomenon, and there have been ample warnings about humanity riding off into the sunset.

As early as 1937, when populations everywhere were exploding and the concern was the potential inability to feed the planet, John Maynard Keynes gave a lecture titled “Some Economic Consequences of a Declining Population,” a remarkably prescient bit of research. His main concern was falling investment, as companies expected fewer customers down the road. Falling demand, he reasoned, would trigger high unemployment.

More recently, other economists have argued that living standards would deteriorate – stagnate at best – as population growth goes into reverse. Were that to happen, national wealth would be at risk, with perhaps dire consequences. For instance, how to pay for ambitious net-zero agendas when government revenues are at risk?

The more immediate concern is the rising tax burden on the working young as national health care and pension costs rise relentlessly. Countries with the lowest fertility rates – Italy, South Korea, Japan, Spain, Greece, among others – will see ever-greater upward pressure on tax rates. Then what? Employees who are taxed to death will do one of four things: evade taxes, revolt, endorse parties that pledge tax cuts or move to low-tax countries. Intergenerational tension, or worse, seems inevitable.

I suspect that the fertility problem in Italy, where families can no longer afford to feed and educate two or more kids as the cost of everything from rent to fuel climbs, and in Europe in general, will be worse than the official forecasts suggest. The vicious circle already seems to be at play. Fertility is declining, reducing the future population of child-bearing women, and that smaller population of women will have fewer babies. As a father, I miss seeing Italian towns and villages full of happy children. But I look forward to buying a discarded house for a euro.