alt Hacker NewsThe basis of capitalism is on growth. How can you continue to grow revenue constantly if there aren't more people to buy products or use your services. Additionally tax revenue decreases as fewer people are working, so less government services and employment would be available.
Schools is a good example, as there are less children, you need less schools and consolidate. So there are less jobs for teachers, now it looks like an equilibrium issue since over time it will balance out. But those teachers who are losing their jobs are adults, tax payers, consumers now and the loss of spending has a cascading effect.
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I don't think it's specific to capitalism. Any system needs workers to produce enough for retirees and children. If you have more retirees and less workers any system is going to struggle.
e.g. how do you sell 100 million smartphones when the population is only 50 million, and can hardly afford to buy 1 (and certainly not more than 1)? this leads to layoffs
how do phone shops like verizon or t-mobile stay open if people aren't buying? same for phone repair places? more layoffs
more laid off people means less people going out to dinner, ordering pizza, taking trips, buying new cars. those businesses close, and layoff people.
less workers means less tax revinue, either income tax, payroll tax, or sales tax (cuz people ain't buying shit). government offices cut bodies (layoffs) and reduce services. there are now less cops and more potholes.
how do billionaires, whose wealth depends on publicly traded companies and their stocks, keep making money when no one can buy anything? spacex and tesla can make up numbers and stay afloat, somehow, but most stocks will tank.