If we didn't have a pyramid scheme underlying the basic economic system, growth wouldn't be such a determining factor in city attractiveness and population increase wouldn't be a significant fuel that drives the growth.
Okay but back to reality: I now see how population decline could lead to a crisis while things adjust (eg: some cities collapse like detroit, some flourish). Thanks for the detailed reply. This is a complicated topic and I expect some people have much more thought out alternatives to our current predicament than I would come up with here.
I realize you addressed this in your second paragraph, so as I said this comment isn't adding much, but I think it's worth spelling out: anyone who wants to have a dream of retiring before they die, better pray that the "overpopulation crisis" actually materializes as severely as possible.
When people "save for retirement" they put money in a 401k, they don't fill a cellar with creamed corn and MREs. Those investments are nothing more than earmarks on future production. The value of a stock is ultimately built on the right to receive a share of profits from the labor of the working generation. The same is true for bonds and other financial instruments.
No matter how you structure the retirement system, the physical reality is that the retired generation gets a cut of the goods and services produced by the working generation. As the latter gets smaller relative to the former, you have problems.
Yes, but that system is unsustainable -- it requires constant growth, something the finite-sized earth cannot tolerate. It would be like nature creating a strategy that, to survive, requires the parent organism to have cancer.
The problem is that, instead of accepting and creating sustainable methods, we accommodate unsustainable growth rates by creating unsustainable social institutions.
Modern social institutions are a large-scale Ponzi scheme, a fraud that cannot go on forever.
The broader answer is that it upends economic expectations. Say I'm thinking of building an office tower. If I know there will be fewer workers in 10 years, instead of more, I'm less likely to build it. If I'm pricing stock in a company, and I know there will be fewer customers in 10 years, instead of more, then I'm going to value that stock lower. What happens to the value of Facebook stock if we realize that there will be fewer and fewer teenagers as time goes on? The economy of the present is hugely dependent on expectations about the future.
Finally, though I don't think any European country is in danger of facing this yet, you need a certain critical mass of people to build a truly world-class city with world class arts, culture, etc. Cities smaller than about a million people don't have the consumer base or the tax base to really offer world class amenities. Now, this is admittedly a matter of aesthetics, but if you look at a place like Detroit, which went from 1.8 million to less than half that, you can see that the city is not just a smaller version of itself, but something lesser entirely.
And it's not just because of Detroit's poverty. Nobody wants to invest in a city that's shrinking. Contrast Detroit to Philadelphia. Philadelphia is one of the poorest major cities in the country, but it's population very slowly inched up during the 2000's. And while it's not the site of a high-end construction boom like say Toronto, it's a flourishing city. People are opening up new restaurants, new shops, etc, and reshaping downtown to be a much more livable place than it was just ten years ago.