Thursday, December 26, 2013

42 Grandchildren for 100 Grandparents

Mark Steyn nails the demographic problem behind recent financial crises.  He points out that in Greece there are only 42 grandchildren for every 100 grandparents.  In such a society, who will pay for the pensions of the not so elderly? (Many Greeks retire at 50.)  Some key quotes:
Look at it another way: Banks are a mechanism by which old people with capital lend to young people with energy and ideas. The Western world has now inverted the concept. If 100 geezers run up a bazillion dollars' worth of debt, is it likely that 42 youngsters will ever be able to pay it off?
. . .
If the problem with socialism is, as Mrs. Thatcher says, that eventually you run out of other people's money, much of the West has advanced to the next stage: it's run out of other people, period.
. . .
The notion of life as a self-growth experience is more radical than it sounds. For most of human history, functioning societies have honored the long run: It's why millions of people have children, build houses, plant trees, start businesses, make wills, put up beautiful churches in ordinary villages, fight and, if necessary, die for your country.
My friend KT would look at the problem as having its roots in our culture, much like Steyn does.  I am not so sure, because this demographic trend seems a feature of post-industrial economies.  Russia, Japan, China and Germany all have this problem.  India does not, but it has not pulled most of its people out of poverty yet.  America's demographic problem has been mitigated by immigration from poor countries.

The subject of how subsidies and immigration policy affect birth rate are subject for another day.  Suffice to say that cradle to grave "safety nets" create disincentives to having children to take care of us in our old age.


  1. Fascinating stuff.

    And this is behind the immigration debate, why the corporatist wings of both parties want increased immigration. Corporations want both cheap labor and more consumers. And politicians want more consumption to boost GDP to help grow them out of the debt quagmire.

    With low domestic birth rates, and an aging population, we're facing our own Ponzi collapse in Social Security and Medicare. But any system that depends on perpetual exponential growth wasn't very well thought out in the first place.

  2. Thanks for the linky love, amigo! I still maintain it's cultural. Why have kids if life is all about you? The little rats take money out of your pocket that could send you on another vacation. And after all, life doesn't have any intrinsic meaning so continuing your culture doesn't have any real value.

  3. WC, some of the reasons for increasing immigration are legitimate. Having more workers, especially skilled ones, to increase national GDP seems worthwhile and will benefit all of us. I don't think we are facing the same collapse that Greece and Japan are or that Germany will. Our demographic curves have been helped by legal and illegal immigration. I think we are going to run out of immigrants soon as Mexico's birth rate is plummeting. I want immigration reform to shift immigration to a higher skilled work force.

    KT, The question of why people have fewer children has been analyzed by economists and it is a rational choice to increase the opportunity and success of one's offspring. The issue of why so many women choose to not have any children has not been answered.