For the last year and a half Ben Wattenberg and others have been writing ominous
articles and op-eds warning about the so-called “birth dearth” — declining
rates of population growth in many industrial parts of the world that will,
among other things, lead to a long-term aging of those nations’ populations.
When examined with a critical eye, the careful reader may end up scratching
his or her head wondering what Wattenberg is talking about.
Wattenberg offers two possible outcomes, both negative, that he argues will
result from low fertility levels in Europe.
First, he quotes French demographer Alfred Sauvy who “glumly and famously
predicted that Europe would become a continent of ‘old people in old houses
with old ideas.'” Is this supposed to be a serious reason to make people shudder
with fear? Because a depressed French demographer shuddered in horror at the
thought of a Europe populated with a lot of old people? The last time I checked
many of the people responsible for Europe’s faltering economy and double digit
unemployment were still relatively young (odd of a conservative to disparage
age considering the role an elderly man, Ronald Reagan, played in its rise to
ascendancy). At the very least it is incumbent upon Wattenberg to provide some
(any?) evidence that a society dominated by older people will be more sterile
and less innovative than younger societies.
Second, Wattenberg wonders who is going to support all these old people when
there are fewer young people to pay into Europe’s various tax-funded pension
schemes. This is an odd concern from someone who is toting credentials from
the American Enterprise Institute of all places. As a cursory glance through
the AEI’s position on the United States’ Social Security system reveals, the
solution to that problem is not more young people but an end to the Ponzi scheme
that government-funded pension plans have become (in other words, the answer
is privatization not fertilization). It is interesting, however, to see a member
of a free market-oriented think tank argue that people need to have more babies
in order to preserve failed government programs.
How would Wattenberg solve Europe’s problems? Immigration might provide more
tax payers to support elderly Europeans, but as Wattenberg notes European countries
aren’t exactly known for their friendliness to their current immigrants. The
odds they would welcome even more immigrants with open arms is small. This leaves
increasing fertility as the only way out.
There is only one problem with increasing fertility — it merely delays the
onset of problems in state-funded retirement programs at a cost of greater social
instability. Imagine we have 5 million old people and only 1 million young people
paying taxes to support them. Ideally we want two young people for each old
person (which is actually a rather small ratio — typically such programs need
4 to 5 workers per retiree to remain solvent without unduly high tax burdens).
The state encourages those 1 million young people to breed like rabbits and
actively promotes immigration. Soon 10 million young people are working to support
the 5 million old people. What happens, though, when those young people get
older? They need 20 million young people to support them and the generation
after that needs 40 million people and so on. As Wattenberg certainly knows,
regardless of what the birth rate is, state-funded pension schemes, like all
Ponzi schemes, must fail sometime, and usually sooner than later (Wattenberg
could argue that the productivity of those future generations will increase,
as it most certainly will, but this will not solve the problem as the demands
of the retired persons would also likely rise).
In 1984 Wattenberg wrote an excellent book titled The Good News Is The
Bad News Is Wrong which deflated media pessimism about the future. He should
take time out to re-read that and get off the pessimistic doomsaying.
Tres Gray: The ‘Birth Dearth’ in Europe. Ben Wattenberg, Intellectual Capital,
Jan. 21, 1999.