All over the industrialized world, and particularly in Europe and Japan, we are just a few years away from a major aging explosion. This problem is known as the baby boomers, which refers to the fact that after World War II the survivors celebrated their peace and liberty by having loads of children.
It is a term that supremely annoys me, because the problem is not the baby boomers of the late 40s but the baby busters of the 70s. For various reasons, mostly relating to socialism in one form or another, people (and mostly the baby boomers) stopped having children in the 70s. As a consequence the birth rate plummeted and in a few years we will all be suffering the consequences.
The relatively free Anglo-Saxon countries will largely escape the bust, but socialistic Europe and Japan are heading for a disaster with birth rates as low as 1.1 children per woman. In Europe much of this problem has been precipitated by the welfare state and universal pension.
Universal pension, like universal health care, is a Ponzi scheme in disguise. People “save” for their old age by paying taxes, but the taxes aren’t actually saved for the future but spent on a welfare binge in the present. When the time is due to collect one’s pension it is actually paid for by future tax payers. Thus, implicitly pension saving requires investing in children, because today’s children are tomorrows tax payers and workers.
This is true for all kinds of pensions saving, but particularly relevant for universal pension. Why? Because the welfare state gives socialists a strong incentive to send their pension bills to someone else’s children. It is the ultimate parasite recipe: 1) don’t have any children yourself and use all the money you save to binge and party like there is no tomorrow. 2) When old age comes bring out your straws and suck your neighbor’s children dry.
That’s essentially what the socialists of the 1970s did. The problem is not as large in freer countries such as the United States, Australia and New Zealand but even these countries won’t escape the baby bust.
Now, if I were Mussolini, Chavez, Bush or Obama I would solve this problem with some crazy government scheme that would only create new problems. But I’m an advocate of liberty and would therefore like to see peaceful solutions.
Once you have identified the problem it is not really that hard to think of the free market solution. In this case the solution is simple: children investment funds. It works like any ordinary mutual fund except that rather than investing in a portfolio of companies one invests in a portfolio of children.
The return on such an investment will be a function of the present birth rate. If the birth rate reaches 2.1 or higher the return on such an investment will be low compared to other investment opportunities, but if the birth rate goes below 2.1 the wages of children in the future will make the investment more profitable. With a birth rate nearly as low as 1 child per woman, such as in Russia, Italy or Japan, the investment will become very profitable. Therefore the investment fund acts as a birth rate stabilizer. It gives economic incentives to counteract low birth rates.
Designing such a fund within the confines of individual rights is a bit hairy, but doable I believe. The trick is that a parent cannot make a legally binding economic commitment on behalf its child. Parents cannot farm their children for profit. Therefore the agreement must be between the investment fund and the parent, not the investment fund and the child, at least not until the child is 18 years old.
To solve this there can be separate funds for raising children and for investing in students above the age of 18. The children’s fund will then be a contract between parent and fund, while the student fund will be a contract between student and fund.
In a free world such funds would have two effects. First, it would counteract the low birth rates in industrialized countries. Second it would actually quantify economically the future cost of low birth rates, thereby giving people in the present an indicator of future costs. With such free market indicators available people become equipped to make intelligent decisions about children in the present for the future.
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4 kommentarer In " The children really are our future "
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november 26th 2009 at 1:23 pm
The current Norwegian fertility rate is 2,0 children per woman, which is a lot higher than in most European contries with less of a welfare state.
Svar: as I said in my article, there are fascist “solutions” and in Norway we have chosen to orphan children and by force place them in government kindergartens. This has allowed the birth rate to stay high, but fascist policies has long term negative effects (in addition to being immoral of course).
What is you contribution to finance future pensions, Onar? Working like a dog, reproducing like a rabbit or saving like Scrooge?
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november 26th 2009 at 5:27 pm
Nysgjerrig: presently birth rates have been increasing slightly in Norway from around 1.7 births pr. woman to about 1.9 the last time I checked. If you are correct they have now reached 2.0. This increase is due to the fact that many middle aged women who have postponed having children are having them now. We have seen the same effect in France. But the birth deficit has lasted for many years, and the problem is still going to hit us hard. There are countries that are worse off, of course, but this doesn’t mean we have no problem. And, of course, Norway is not an island to itself, uninfluenced by economic problems in the rest of the world.
Onar: the US birthrate of 2.1 children pr. woman is the result of Latin American immigrants. Caucasians in the US are as bad as Europeans at having children. But immigration will stop, without walls and legislation, due to the simple fact that the birth rates in Mexico and the rest of Latin America have fallen dramatically and continue to do so.
There are many causes of this decline, one being modern mans assault on traditional values, another simple evolution. Nature has favored species that get horny because they have more sex, and sex leads to having more children. Horniness, falling in love etc exists to overcome our inhibitions and reasoning. Had this not been necessary for survival, it wouldn’t have evolved.
But modern man, in his infinite wisdom, has found means to counteract Mother Nature through contraception combined with abortion. Richard Dawkins called this “rising above nature”, proving that he is a moron. What it means is that we have removed the point of the mating instinct completely from the equation. We might just as well have removed it altogether, as it no longer serves the purpose for which nature selected it. It might have been the case that we could survive without it now, given lower infant mortality and better healthcare than in the past. But declining birth rates all over the world shows the opposite.
In my opinion this is likely to lead to the extinction of our species, or at the very least a subset of it: socialists and others who reject traditional values.
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november 27th 2009 at 1:22 am
A very good 8and relevant for this) discussion about
fertility rates and the “red state/blue state” phenomenon in the USA can be found here:
http://www.stat.columbia.edu/~cook/movabletype/archives/2008/02/red_states_blue.html
Go read it!
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desember 1st 2009 at 2:14 pm
Since you mention that you believe there is a connection between the welfare state and fertility:
Which countries in Europe have the lowest fertility rates? Are these countries typical welfare states? Has this low fertility rate been stable over a number of years or is there just a temporary dip due to the fact that women now have better access to higher education and careers, and therefore postpone having babies for some years?
What is the current fertility in Singapore and Hong Kong?
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