Demographics and the Dustbin of History

Karl Zinsmeister's essay Old and In The Way presents a startling — but all too plausible — forecast of Europe's future. To the now-familiar evidence of European insularity, reflexive anti-Americanism, muddle, and geopolitical impotence, Zinsmeister adds a hard look at European demographic trends.

What Zinsmeister sees coming is not pretty. European populations are not having children at replacement levels. The population of Europe is headed for collapse, and for an age profile heavily skewed towards older people and retirees. Europe's Gross Domestic Product per capita (roughly, the amount of wealth the average person produces) is already only two-thirds of America's, and the ratio is going to fall, not rise.

Meanwhile, the U.S population continues to rise — and the U.S. economy is growing three times as fast as Europe's even though the U.S. is in the middle of a bust! Since 1970 the U.S. has been more than ten times as successful at creating new jobs. But most impportantly, the U.S.'s population is still growing even as Europe's is shrinking — which means the gap in population, productivity, and economic output is going to increase. By 2030, the U.S will have a larger population than all of Europe — and the median age in the U.S. will be 30, but the median age in Europe will be over 50.

Steven den Beste is probably correct to diagnose the steady weakening of Europe as the underlying cause of the increasing rift the U.S. and Europe's elites noted in Robert Kagan's essay Power and Weakness (also recommended reading). But Kagan (focusing on diplomacy and geopolitics), Zinsmeister (focusing on demographic and economic decline) and den Beste (focusing on the lassitude of Europe's technology sector and the resulting brain drain to the U.S.) all miss something more fundamental.

Zinsmeister comes near it when he writes "Europe's disinterest in childbearing is a crisis of confidence and optimism.". Europeans are demonstrating in their behavior that they don't believe the future will be good for children.

Back to that in a bit, but first a look on what the demographic collapse will mean for European domestic politics. Zinsmeister makes the following pertinent observations:

Percentage of GDP represented by government spending is also diverging. In the U.S. it is roughly 19% and falling. In the EU countries it is 30-40% and rising. The ratio of state clients to wealth-generating workers is also rising. By 2030, Zinsmeister notes, every single worker un the EU will have his own elderly person 65 or older to provide for through the public pension system. Chronic unemployment is at 9-10% (twice the U.S.'s) and rising. Long-term unemployment and drone status is far more common in Europe than here. In Europe, 40% of unemployed have been out of work for over a year. Un the U.S. the corresponding figure is 6%. Zinsmeister doesn't state the obvious conclusion; Euro-socialism is unsustainable. It's headed for the dustbin of history.

Forget ideological collapse; the numbers don't work. The statistics above actually understate the magnitude of the problem, because as more and more of the population become wards of the state, a larger percentage of the able will be occupied simply with running the income-redistribution system. The rules they make will depress per-capita productivity further (for a recent example see France's mandated 35-hour workweek).

Unless several of the key trends undergo a rapid and extreme reversal, rather soon (as in 20 years at the outside) there won't be enough productive people left to keep the gears of the income-redistribution machine turning. Economic strains sufficient to destroy the political system will become apparent much sooner. We may be seeing the beginnings of the destruction now as Chancellor Schröder's legitimacy evaporates in Germany, burned away by the dismal economic news.

We know what this future will probably look like, because we now know how the same dismal combination of economic/demographic collapse played out in Russia in the 1980s and 1990s. Progressively more impotent governments losing their popular legitimacy, increasing corruption, redistributionism sliding into gangsterism. Slow-motion collapse.

But there are worse possibilities that are quite plausible. The EU hase two major advantages the Soviets did not — a better tech and infrastructure base, and a functioning civil society (e.g. one in which wealth and information flow through a lot of legal grassroots connections and voluntary organizations). But they have one major disadvantage — large, angry, totally unassimilated immigrant populations that are reproducing faster than the natives. This is an especially severe problem in France, where housing developments in the ring zones around all the major cities have become places the police dare not go without heavy weapons.

We've already gotten a foretaste of what that might mean for European domestic politics. At its most benign, we get Pim Fortuyn in Holland. But Jörg Haider in Austria is a more ominous indicator, and Jean-Marie Le Pen's startling success in the last French presidential elections was downright frightening. Far-right populism with a racialist/nativist/anti-Semitic tinge is on the rise, an inevitable consequence of the demographic collapse of native populations.

As if that isn't bad enough, al-Qaeda and other Islamist organizations are suspected on strong evidence to be recruiting heavily among the North African, Turkish, and Levantine populations that now predominate in European immigrant quarters. The legions of rootless, causeless, unemployed and angry young men among Muslim immigrants may in fact actually be on their way to reifying the worst nightmares of native-European racists.

One way or another, the cozy Euro-socialist welfare state is doomed by the demographic collapse. Best case: it will grind to a shambolic halt as the ratio of worker bees to drones goes below critical. Worst case: it will blow itself apart in a welter of sectarian, ethnic, and class violence. Watch the frequency trend curve of synagogue-trashings and anti-Jewish hate crimes; that's bound to be a leading indicator.

The only possible way for Europe to avoid one of these fates would be for it to reverse either the decline in per-capita productivity or its population decline. And reversing the per-capita productivity decline would only be a temporary fix unless it could be made to rise faster than the drone-to-worker ratio — forever.

Was this foredoomed? Can it be that all national populations lose their will to have children when they get sufficiently comfortable? Do economies inevitably grow old and sclerotic? Is Europe simply aging into the end stages of a natural civilizational senescence?

That theory would be appealing to a lot of big-picture historians, and to religious anti-materialists like al-Qaeda. And if we didn't have the U.S.'s counterexample to look at, we might be tempted to conclude that this trap is bound to claim any industrial society past a certain stage of development.

But that won't wash. The U.S. is wealthier, both in aggregate and per-capita, than Europe. A pro-market political party in Sweden recently pointed out that by American standards of purchasing power, most Swedes now live in what U.S. citizens would consider poverty. If wealth caused decline, the U.S. would be further down the tubes than the EU right now. But we're still growing.

A clue to the real problem lies in the differing degrees to which social stability depends on income transfer. In the U.S., redistributionism is on the decline; we abolished federal welfare nearly a decade ago, national health insurance was defeated, and new entitlements are an increasingly tough political sell to a population that has broadly bought into conservative arguments about them. In fact, one of the major disputes everyone knows won't be avoidable much longer is over privatizing Social Security — and opponents are on the defensive.

In Europe, on the other hand, merely failing to raise state pensions on schedule can cause nationwide riots. The dependent population there is much larger, much longer-term, and has much stronger claims on the other players in the political system. The 5%/10% difference in structural unemployment — and, even more, the 6%/40% difference in permanant unemployment — tells the story.

Essentially, Euro-socialism told the people that the State would buy as much poverty and dependency as they cared to produce. Then it made wealth creation difficult by keeping capital expensive, business formation difficult, and labor markets rigid and regulated. Finally, it taxed the bejesus out of the people who stayed off the dole and made it through the redistributionist rat-maze, and used the proceeds to buy more poverty and alienation.

Europeans responded to this set of incentives by not having children. This isn't surprising. The same thing happened in Soviet Russia, much sooner. There's a reason Stalin handed out medals to women who raised big families.

Human birth rates rise under two circumstances. One is when people think they need to have a lot of kids for any of them to survive. The other is when human beings think their children will have it better than they do. (The reasons for this pattern should be obvious; if they aren't, go read about evolutionary biology until you get it.)

Europe's experiment with redistributionism has been running for about a hundred and fifty years now (the beginnings of the modern welfare state date to Prussian state-pension schemes in the 1840s). Until recently, it was sustained by the long-term population and productivity boom that followed the Industrial Revolution. There were always more employed young people than old people and unemployed people and sick people and indigents, so subsidizing the latter was economically possible.

Until fairly recently, Euro-socialist governments couldn't suck wealth out of the productive economy and into the redistribution network fast enough to counter the effects of the long boom. Peoples' estimate of the prospects for their children kept improving and they kept breeding. In France they now call the late end of that period les trentes glorieuses, the thirty glorious years from 1945 to 1975. But as the productivity gains from industrialization tailed off, the demographic collapse began, not just in France but Europe-wide.

Meanwhile, the U.S. was not only rejecting socialism, but domestic politics actually moved away from redistributionism and economic intervention after Nixon's wage/price control experiment failed in 1971. The U.S, famously had its period of "malaise" in the 1970s after the oil-price shock ended our trentes glorieuses— but while in Europe the socialists consolidated their grip on public thinking during those years, our "democratic socialists" didn't — and never recovered from Ronald Reagan's two-term presidency after 1980.

The fall of the Soviet Union happened fifteen years after the critical branch point. Until then, Westerners had no way to know that the Soviets, too, had been in demographic decline for some time. Communist myth successfully portrayed the Soviet Union as an industrial and military powerhouse, but the reality was a hollow shell with a failing population — a third-world pesthole with a space program. Had that been clearer thirty years sooner, perhaps Europe might have avoided the trap.

Now the millennium has turned and it looks like the experiment will finally have to end. It won't be philosophy or rhetoric or the march of armies that kills it, but rather the accumulated poisons of redistributionism necrotizing not just the economy but the demographics of Europe. Euro-socialism, in a quite Marxian turn of events, will have been destroyed by its own internal contradictions.

Yours is a great hypothesis:

But the great point this article makes is the impact on the economy when population growth drops past replacement. Two thirds of the Western economy is dependent on consumer spending. [Sure, ultimately, all of it depends on cumsumer spending --- TQ] Consumer spending is fueled by young and middle aged adults, who are in the acquisition phase of life and many of whom are raising families.

I am afraid this is a speculation, however. Firstly, the ecomomy can move along just fine by replacing the old stock with new; one does not need expansion of the population for the growth of economy.

Secondly, it is a misconception that the young people "fuel the economy." It may be based on the misleading observation that businesses target the young, but this is often because the latter are influencers, not necessarily buyers. To the contrary, it is people over 40 that are in their prime of the earning power and the retirees who spend out of wealth --- these are the people who pay.

Finally, what you posit is the economy of scale: that efficiency is higher in a larger population than in the smaller. I do not think anyone has observed such economies or diseconomies.

I'm really surprised no one has linked the interminable Japanese recession or the stagnation in Europe to the problem of their greying populations. This is because another, more plausible reason is readily available: in both cases the population is unwiling to abandon broken, outdated institutions. In teh case of Japan, for instance, plenty of advisors told them what to do, but the instructions are simply not culturally acceptable. In Germany, similarly, most economists, including those who advise the government, knew for quite some time that the the traditional, paternalistic state is no longer viable. This too is not culturally acceptable yet.

The difficulty is a fundamental one: suppose you have perfect foresight and knowledge, how do you lead an ignorant populous?

When it comes to masses, knowledge is not as important as sentiment. Consider, for instance, that our Constitution is in plain view for two centuries, hence known, yet no country bothered to adopt its basic elements. This is becuase the sentiment in those countries lies elsewhere; ignorance is clearly not the ussue.

The white European population is declining and aging, but don't the immigrant demographics compensate for that?

I assume that you are being sarcastic. Since people are not inter-chageable, the large influx from outside the Continent is the single most serious aspect of the problem. Birth rates rise and fall. At the worst, the fall in the birthrate will cause a temporary crisis. But a change in the population base will permanently change the nature of the respective Societies. Europe needs a contemporary Kipling, to put the dynamics of what is going on in perspective.

No one can predict the precise point when the birthrate will surge upward, once more; but one suspects that it will, sooner rather than later. Certainly, the generation who are now children, may live to see a real incentive for having children in the inability of the State to care for the aged in the near future, causing families to look to their own families for old age security. But whatever, the birthrate will turn upward again, just as that of the American Indian did, to make fools of the pundits around a century ago, who were predicting his rapid extinction.

William Flax Return Of The Gods Web Site

I used to live in Belgium. To say working there was a run in a hamster wheel is to understate matters. The taxes are so high that I had to be paid partially in kind - such as the rent on my flat being paid.

Human beings simply will not work, thrive or reproduce if every aspect of their lives is buttoned down, regulated, taxed and controlled. Why work if everything you do is going to the Moroccan layabouts arguing in cafes all day? Why have children if you can't earn enough to escape the grip of state education? Why look forward to the future if your power to shape it is limited? Why vote if all the parties adhere to the same, dry pro-European consensus (which is consequently folks like Haider do well)?

Europe has severe problems. The Euro has exacerbated them - I am glad Britain has ducked many of them by staying out of it. I was shocked to read that GDP per head in the UK is actually set to exceed Germany next year. Whether Labour is smart enough to realise the source of our success is our relative freedom in comparison to the Continent is another issue.

Regards, Ivan

Firstly, the ecomomy can move along just fine by replacing the old stock with new; one does not need expansion of the population for the growth of economy. I agree, but that's the problem. Europe is not "replacing the old stock with new."

To the contrary, it is people over 40 that are in their prime of the earning power and the retirees who spend out of wealth --- these are the people who pay. Again, I agree, particularly as to "big ticket" items such as homes and autos. I was referring primarily to over-60, where Europe and Japan are becoming top-heavy.

Finally, what you posit is the economy of scale: that efficiency is higher in a larger population than in the smaller. I do not think anyone has observed such economies or diseconomies. Actually, that's not my point. In a consumer-driven economy a greying population will lead to reduced consumer spending which will result in reduced production and sales which will result in lower incomes and tax revenues at precisely the time the governments need the revenue to pay old-age pensions under their welfare schemes. The size of the national economy has little to do with the problem.

This is because another, more plausible reason is readily available: in both cases the population is unwiling to abandon broken, outdated institutions. In teh case of Japan, for instance, plenty of advisors told them what to do, but the instructions are simply not culturally acceptable. In Germany, similarly, most economists, including those who advise the government, knew for quite some time that the the traditional, paternalistic state is no longer viable. This too is not culturally acceptable yet.

Again, I agree. Reform to a free market economy on the US model would most decidedly help Japan and Germany. But they are still caught in a demographic vice. With a greying population and depleted ranks in the 20-60 range, Japan does not have a sufficiently large domestic market to support its economy and must rely on exports, but its wage structure is now too high to repeat it's 1960's experience. One answer for Japan and Germany would be to turn to the US example and encourage entrepeneurs, high-tech research and development, services (including consulting), and globalization, many of which involve offshore subsidiaries and production. But such a change would require more than free market reforms, it would require cultural change.

Again, I agree. I reflect on the basic deal Bismarck made with the Socialists in the 19th Century, that the means of production would remain in private hands if the government guaranteed a cradle to grave welfare state. Liberty can be scary as well as exciting. Many people prefer security to liberty.

I wouldn't include Mexicans or many Muslims, for that matter, in that Malthusian future. I run into Iranians all the time in business. Granted, they are upper and middle class Iranians who attended school here and stayed when the Shah was overthrown. They talk, look like, act like, and do business like Americans, downplaying any Muslim affiliation. If they're a threat, they deserve an academy award.

The Mexican phenomenon is no threat to the U.S. In the process of becoming Americans they will change American culture, but that's okay, each new immigrant group changes it.

Americans of northern European ancestry don't have children. At least not enough to replace themselves. Take away immigration and we're Europe or Japan -- a land of geezers. From colonial days, U.S. immigration has been working class and the under class. It hasn't hurt us yet. The new immigrants aren't northern Europeans. That's fine. If I wanted to live with the Swedes, Germans, or French, I'd move to Europe. In fact, I can't abide them. I prefer some poor bastard who walks to the U.S. from southern Mexico, sneaks across the border, gets a dishwashing job and later a better job in construction, buys a little house, sends his kids to the community college, and within a generation or two is indistinguishable from other Americans. That's better human material than some German or Swedish bureaucrat, who lectures us while accepting our protection and who performs some make-work job or lives their entire life on the dole.

Europeans have to choose between 2 visions for the next century:
1. A prosperous set of countries maintaining culture and history, while economicallyadapting to the changes in the world
2. Lebanon writ large with the Developing World demographically overruning collapsing societies and literal or cultural civil wars.

If Europe wants 1, they need to deregulate (screw the EU), open trade, and become less socialist. They will also need to stop the government-leftist native population control programs called Sex-ed.

If they want two, they should just set cruise control.

When I was a kid, I took a job as a mason tender for this ancient mason. He was finishing up a really tall chimney on the gable of a building. I was up there with him and I asked what we would do if the pipe staging peeled away from the building with us on top. He said, "Well, I guess we'll just ride it down."

That's my bet. The Europeans are like the monkey with their fists in the socialist jar. No one is going to be first to let go, and they aren't going to stop their grasping ways. However I see them going the Argentina route myself. I was talking about this article to a friend of mine who is an unbelievable vice hound. He said he couldn't wait until European girls were doing him for the price of a Big Mac.

"..people have not duty to G-d or to each other"

This writer skipped over one of the major reasons why people have children: a sense of obligation and loyalty to their culture and people. Socialism has convinced europeans that they are atomized individuals whose only loyalty is to the state. As such, they live their lives as if their only loyalty was to themselves and to materialistic consumption.

Healthy "tribal" cultures place a variety of carrots and sticks in front of their members to procreate so as to ensure the survival of the tribe. Without this motivating force, people naturally follow the most convenient and hedonistic path....and live their lives accordingly.

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