If there is one word that captures many Europeans’
response to the continent’s financial crisis, it is denial. Witness
the description by the editors of France’s newspaper-of-record,
Le Monde, of France’s S&P credit-downgrade on January
13 as “un
non-événement financier.” The fact that this
“non-event” will increase France’s borrowing-costs (not to
mention
those of the EU’s own bailout fund) at a
time when France’s government is already struggling to contain
spending apparently escaped Le Monde’s
attention.
This habit of ignoring reality, however, goes beyond
blinkered reactions to one-off occurrences. It’s also reflected in
many Europeans’ perceptible inability to acknowledge some of the
deeper dynamics driving the crisis.
Here most of us think of unaffordable welfare states and
other sinking ships to which many Europeans cling like limpets. But
there is one element at work in Europe’s crisis that even fewer
Europeans will openly acknowledge: the economic forces set in
motion by Europe’s slow-motion population implosion.
The demographic facts concerning European
population-trends are clear. The replacement level for a population
(what keeps it stable) is a fertility-rate of 2.1 children per
woman. According to the UN, the average fertility-rate of European
women
was 1.53 between 2005 and 2010. The figures
for Greece (1.46), Spain (1.41), Portugal (1.36), Italy (1.38), and
Germany (1.36) were especially depressing. France (1.97), Britain
(1.83), and Sweden (1.9) did marginally better. Ireland alone
managed to attain the 2.1 threshold. All these figures represented
decline from 1955-1960
rates: Greece (2.27), Spain (2.7), Portugal
(3.29), Italy (2.29), Germany (2.3), France (2.7), Britain (2.49),
Sweden (2.23), and Ireland (3.58).
These developments translate into more old people, fewer
young people, and, eventually, shrinking populations. But it also
shifts what’s called “the dependency ratio”: the ratio of retirees
per member of the labor force. On some estimates,
Italy, Spain and Germany will have very high dependency ratios by
2050: every two workers will be supporting one retiree. Those
working will also have to pay either greater contributions or
higher taxes to fund existing pension systems.
The present situation is further worsened by another
ominous trend: the growing
exodus of tens of thousands of young EU
citizens searching for work to Latin America, North America, and
Asia. Similarly, hundreds of thousands of young immigrants to the
EU from developing nations are heading home. The odds that many
will return to Europe in the near-future are dim.
These facts have made some Europeans willing to ponder the
necessity of labor-market and welfare reform, not least because
those countries that have weathered the crisis better than others
(e.g., Germany and Sweden) actually implemented such changes in the
2000s. Getting Europeans to talk publicly about the continent’s
population-trends and their economic consequences, however, is a
different matter.
Why? One reason is that many Europeans have long been in
thrall to the over-population gospel. Long before Paul Erhlich’s
The Population Bomb (1968) — whose doomsday
future-scenarios of a world devastated by famines, mass disease,
and social unrest unleashed by overpopulation never materialized —
numerous European economists had bought into this
thesis.
In 1798, the Anglican vicar and one of the first modern
economists, Thomas Malthus, published his Essay
on the Principle of Population. This argued
that growing populations would produce an increasing labor-supply.
The result, Malthus insisted, would be lower wages and therefore
mass poverty. “The power of population,” he claimed, “is so
superior to the power of the Earth to produce subsistence for man,
that premature death must in some shape or other visit the human
race.” Another English philosopher-economist, John Stuart Mill, was
so convinced by Malthusian arguments that he actually spent time in
London parks distributing birth-control pamphlets to bemused
onlookers.
By the 20th century, plenty of other prominent European
economists were getting into the act. Knut Wicksell, a Swede whose
thought was immensely influential upon often otherwise-opposed
economic schools of thought, loudly proclaimed depopulation’s
economic benefits. Likewise the German economist Wilhelm Röpke
conjured up visions of a world overrun by teeming masses unless
birth rates radically declined. (Oddly enough, John Maynard Keynes
was one of the few economists to abandon his earlier Malthusian
views and
argue — to the British Eugenics
Society no less! — that population-growth helped
create demand and thereby fuel prosperity.)
But it’s not just economists who have propagated
anti-natalist positions. For decades, European governments
have been pushing population-control
programs upon developing nations (including trying to force them to
legalize abortion) by making foreign-aid dependent upon adopting
such policies. The phrase “neo-colonialism” comes to
mind.
Then there’s the Swiss theologian Hans Küng
who — as if locked in a 1970s time warp
—
avowed in 2010 that the Catholic Church’s
teaching on contraception was facilitating “overpopulation.” And,
as always, we have environmentalists adamantly maintaining that
population growth is putting the planet’s future at
risk.
The existential scale of Europe’s present economic crisis
may, however, at last be providing space for those Europeans
unconvinced by neo-Malthusian orthodoxies to crack the consensus on
these matters. One such figure is Ettore Gotti Tedeschi, the
Italian economist who heads the Istituto per le Opere di
Religione (otherwise known as “the Vatican Bank”).
In article after article, Tedeschi has
observed that graying and dwindling European
populations imply not only reduced demand but also higher tax
burdens on those who are young and working. The resulting shrinkage
of disposable income discourages those of child-bearing years from
having more children. This in turn gradually narrows the dependency
ratio, thereby creating even greater strains on Europe’s
already-tottering welfare states and over-loaded tax
base.
So while deficit-reduction and welfare reform matters,
perhaps the biggest long-term test for Europe is to break the
vicious cycle fueled by population aging and decline that could
worsen the already-bleak fiscal future for young Europeans. But
this will require many Europeans to do something they find even
more difficult than scaling back welfare programs. And that is to
break through the politically correct taboos that presently
strangle objective discussion of Europe’s population challenges,
and concede their miscalculation of the economics of
population.
I’m not holding my breath.
