Other People's Babies

Global Fertility Replacement Rate = 2.33

The problem with socialism is that you eventually run out of other people's money. 

 Bill Frezza has a slightly different take on a slightly different problem: Entitlement Democracy. The problem with Entitlement Democracy is that you eventually run out of other people's babies.  If you think the current fiscal cliff is bad, just wait:

The aggregate U.S. federal and state unfunded liabilities required to pay for all the entitlements promised by politicians past-namely Social Security, Medicare, and defined-benefit pensions for public employees-now exceed $100 trillion. Tomorrow's workers, including those yet unborn, have no particular kinship to the people who will be feasting on their paychecks.

And it only gets worse, as you can see on the graph above the world as a whole is hovering just above the replacement fertility rate, the United states is hovering just below.

It takes a live birth rate of 2.1 children per woman to maintain a stable population. Birth rates across Southern Europe have plunged below 1.5, and are expected to drop even further as Euro Zone economies continue to contract. Hong Kong, Singapore, Taiwan, and Japan are converging on birth rates closer to 1.0, literally halving their population each generation. Even the Black Plague didn't do that
 

Like the Titanic, we are steaming full speed ahead oblivious that we are about to capsize.  Yes, the support pyramid is about to turn upside down.

The fatal flaw in this scheme is the skyrocketing dependency ratio. The number of young people entering the workforce (should they be lucky enough to find jobs) is not growing fast enough to support the exploding population of non-working 60, 70, 80, and 90-somethings.
 

There is no denying it, as Baby Boomers age out of the workforce, the only way to maintain the entitlement status quo is to either increase revenue or increase debt. The cliff we are approaching is far higher than the "fiscal cliff" we approach today, in fact the "fiscal cliff" is more of a bouncy house than a cliff.  The true cliff we are hurtling towards is more like the Grand Canyon.

Bill Frazza's article can be found here:  http://www.realclearmarkets.com/articles/2012/12/10/will_aging_childless_voters_enslave_my_future_grandchildren_100034.html

.And an interesting study on the global implications can be found here:

 

http://www.newgeography.com/files/The%20Rise%20of%20Post-Familialism%20(ISBN9789810738976).pdf

 

READY, SET, GO !!!

 

 

The problem with Entitlement Democracy is you eventually run out of other people's babies.

 

 

Photo: DonVick, Acapulco's La Quebrada Cliff

 

Cheers!

 

~Finntann