The economics of western retirement are largely based on the long held assumption that there will always be more young people than old people. The young people spend and pay taxes that support the older folks. Clearly for this to work, there must be more young people than old people. Social security works on this principle, but so do all private retirement plans. If you and millions of your cohorts are living off of dividends, there sure better be lots of young people purchasing everything from t-shirts to automobiles to houses.
This my friends is a classic pyramid scheme. And like so many of the greatest frauds, it is done right in front of our eyes, out in the open.
This is why governments are so concerned about fertility rates. The pyramid scheme cannot continue without births outpacing deaths. At 1.6 births per woman, the US rate is much less than the replacement rate of 2.1. That's bad. But even at 2.1, that's not enough to keep the pyramid scheme going. You cannot have one or two working people supporting each retiree. How many does it take? I don't know, but more than that.
Fewer children not more
I am not an adherent of the religion of man made climate change. But like most rational people, I do consider myself to be an environmentalist. That's it, this is not a post about environmentalism and how evil the oil companies are. But just as a general proposition, can we not all agree that there is a limit to how many people can inhabit the earth? Have we reached that limit? I have no idea. But Elon, no one needs six children, much less twelve or fourteen.
And the costs. The cost of raising children has risen dramatically. It is clear to me that this is due to the ever increasing size of government and governmental regulations. And sadly, large governments intruding into every aspect of your life are not going away.
So people are having less children and will continue to have less children for the foreseeable future. And that means that voluntarily or involuntarily, the great pyramid will come to an end. First it will become top-heavy, and then it will collapse. We can sit around and wait for that to happen, or we can move away from the scheme altogether.
But first, I think we need to acknowledge the success of this pyramid scheme to date. Since the turn of the last century it has worked beautifully. But during this time period the western world grew rich and bountiful and people had lots of children. If this was to continue, we could continue to rely on the pyramid.
But I submit that the fewer children that we are seeing today is the primary signal that our abundance has plateaued. Bet on the pyramid if you like, but we cannot rely on it.
What are the alternatives? Because I do not believe it is any one thing.
For people who scream the loudest about climate change, the one thing I always want to ask is: How many children do you have? If climate change is the problem you believe it to be, surely having less children, having less people in the world using carbon, is an obvious solution. Let's work to increase green space per capita. Why does no one ever talk about that?
And I am not kidding here; fewer people using the same or less resources would go a long way towards helping the environment and improving our standard of living. For people who believe that we should import people to make up for the lower fertility rate, I say: That defeats the purpose of having less children. And besides, today's immigrants are not interested in contributing to western culture and lifestyle, and have little or no loyalty to our nations. The truth is, they cost us more than they contribute. No, they are not a good solution.
But I am not completely opposed to immigration. Offer the best and brightest entry and an easy path to citizenship. But we must confirm that each immigrant has an affinity for our culture. If not, tell me again, why do you want to come here? If Juan is going to live and work here for some time and then go home, he has no loyalty to our nation. And if the guy's name is Jihad; I assure you, his parents did not name him inner struggle.
One expense that has gone through the roof and surely affects the fertility rate is housing. More people and flat or almost flat housing stock means higher costs. Most of the responsibility for this lies with government and their senseless regulations. It is really not complicated: If you want cheaper housing, build more of it. Not a hundred units here and there. Ten million more units. For a start.
And all you so-called environmentalists, don't get mad at the developers. Direct your always irrational rage at those responsible: The people having all the children.
On a cultural level, we should reconsider the stigma of intergenerational housing. Yes, have your parents move in with you and help with your children. It is a win for all. In countries with no social security, this is a common arrangement. Each family should look at this with an open mind. Sure we all want to move out from our parents as soon as possible. But when you get to be thirty-five, with a child, maybe two, and aging parents with limited income, surely you should view this differently.
Another cultural factor is the welfare state. We simply must encourage people to be part of the productive economy. Yes, again, having fewer children is part of the solution. This is common sense: Each child should add to your expenses, not your income. Please, stop and read that again.
Now technology must and will play a role in solving this problem. If we have a smaller percentage of the population working, we must improve worker productivity. Here I think we can look to Japan (fertility rate 1.2) and Korea (0.72) for technological solutions. But here again, we need fewer children, not more. We cannot need both more high productivity-producing technology and more workers. No the goal is fewer workers, collectively using less natural resources, and each of us being much more productive.
One hopes that fewer people would mean less collective energy usage. And it might. But all this high-productivity technology will probably mean higher energy needs in the aggregate. Certainly more electricity will be needed. Burn coal? Natural gas? Bad for the environment. Rely on renewables? For now, that's just childish dogma. Look at the situation in Germany.
No the answer is blindingly obvious: Build more nuclear. This may not be a perfect solution, but I have yet to hear a better one.
Now technology must and will play a role in solving this problem. If we have a smaller percentage of the population working, we must improve worker productivity. Here I think we can look to Japan (fertility rate 1.2) and Korea (0.72) for technological solutions. But here again, we need fewer children, not more. We cannot need both more high productivity-producing technology and more workers. No the goal is fewer workers, collectively using less natural resources, and each of us being much more productive.
One hopes that fewer people would mean less collective energy usage. And it might. But all this high-productivity technology will probably mean higher energy needs in the aggregate. Certainly more electricity will be needed. Burn coal? Natural gas? Bad for the environment. Rely on renewables? For now, that's just childish dogma. Look at the situation in Germany.
No the answer is blindingly obvious: Build more nuclear. This may not be a perfect solution, but I have yet to hear a better one.
Now since Paul Ehrlich's disastrous 1968 book, The Population Bomb, the consensus has been that more people is better and sustainable. Let's keep the pyramid strong. It is worth noting that the people most supportive of this idea benefit from it the most. Government types.
So it is not without great risk to genuinely support a population decline. But fewer people means more resources per person. It also means the pyramid will no longer work. Surely we can live without it. We can live better without it.
And what choice do we have?