John Reilly posited two possible ways to deal with the aging of the population in the Western world:
- Have more kids
I know which one I would choose, but we ended up getting some combination of both 1. and 2. However, 2. was modified to be solved by immigration instead of more children across the West. The exact mix of 1. and 2. varies by country, but this program has been widely implemented in one form or another.
It is interesting to speculate why we chose to solve 2. by means of immigration instead of natural increase. In part, it probably seems easier. A number of nations have attempted to implement policies to increase the birthrate, and all have failed, with a couple of exceptions.
Also, immigration, in the US at least, ended up serving an interesting coalition of interests. Democratic strategists such as Stanley Greenberg saw a way to eventually create a permanent majority. Small- and medium-size business owners who are the core of the Republican party saw profits, and had delusions of Mexicans being natural Republicans. Feminists saw a way to offload childcare onto other women. Economists saw a way to keep GDP and tax revenues growing.
You can make your own assessment of how accurate these assumptions are.
Terror War, Geezer War, Culture War
At this point, it seems likely that President Bush's initiative to modify Social Security will die a quiet death. Certainly the Administration's friends and well-wishers better hope so, because this project has the potential to destroy his presidency. Still, at the risk of beating what I very much hope is a dead horse, we may note that the issues involved really do go beyond the structure of the US federal social safety net. Here is Mark Steyn's take on the subject:
After months of expressing deep concern, grave concern, deep concern over the graves and deep grave concern over whether the graves were deep enough, Kofi Annan managed to persuade the U.N. to set up a committee to look into what's going on in Darfur. They've just reported back that it's not genocide. Phew, thank goodness for that. It turns out it's just 70,000 corpses who all happen to be from the same ethnic group; could happen anywhere. But it's not genocide, so don't worry about it.
That's the transnational establishment's alternative to Bush dynamism: Appoint a committee that agrees on the need to do nothing. By happy coincidence, that's also the Democrats' line on Social Security. In a sense, these two issues are opposite sides of the same coin. It was noted in the chancelleries of certain capitals that, in a speech aimed in large part at a global audience, the president didn't even mention Europe. Why would he? One reason why the Continent is in no position to make any kind of useful contribution to the war on terror or reform of the Middle East is because of its inability to get to grips with the looming disaster of its own state pensions liabilities.
That's not strictly true. The budgets of European countries are constrained, but they are not that constrained. Even at current levels of expenditure, Europe could mount a military capable of force projection, if it had a mind to do so. Steyn is nonetheless right about the connections between geostrategy and the reform of the social safety net. Indeed, he is more right than he knows, since the see-no-evil strategy has been embraced not just by the EU and the Democrats, but also by the Bush Administration.
The problem that the US is going to face over the next generation is the increase in the percentage of the population who are pure consumers: old people, who cannot work and should not be asked to. The younger people who are working are going to have to pay much more to support them. There are two points to note about this necessity.
It does not matter whether the support is structured as private savings or as a public benefit. If the economy is not producing enough to fund one, it will not be producing enough to fund the other.
Private savings are irrelevant. The question is whether the economy will be producing enough goods and services at the the time they are needed. If it isn't, then the money in the IRAs and the stock in the portfolios will be so much worthless paper. If it is, then the money will be available for a transfer program.
There are just two solutions:
Civil Liberties. We could create a constitutional right-to-die and make sure that enough seniors exercise it. This would not be hard. All it would require is an extension of the Roe-Casey personal-autonomy right and some augmentations of the pain-management component of insurance coverage. Several courts and many legal theorists have already endorsed this approach, though the US Supreme Court backed off.
This strategy sounds radical, but we must remember how radical a right to abortion and to contraception would have sounded fifty years ago. There are many reasons why people support those things, but we must remember that the original backers were chiefly interested in limiting population growth. They were as surprised as anyone when the courts agreed to constitutionalize the issue. The impending bumper-crop of elders is a demographic challenge of the same order, and it could be met in the same way.
Demographic Reform. The obvious remedy for a situation in which there are too few workers is to increase the number of workers. This can be done through immigration, but at a cost. Most social pathologies, from underperformance in the schools to a widening income gap, are products of immigration. It's not the immigrants' fault: the problem is that wage levels are going to be depressed in any situation when there is an unending supply of cheap labor. The other solution is to raise the birthrate. That sounds like a good idea, but no one knows how government policy could do it. We do know from European experience that generous family subsidies do not encourage people to have more kids. Go figure.
So, I no more have a solution than President Bush does, but at least I know I don't have a solution. The president's remedies are a diversion. If they have any effect at all, it will be to undermine the political support he needs to conduct the Terror War.
Copyright © 2005 by John J. Reilly