The following post was written on October 16, 2012:
Do high social spending and low birth rates seem related or unrelated? I’ve mentioned this subject to a quite a few people. Some react like any relationship is completely ridiculous. Others think it’s totally obvious that it’s cause and effect. Opinions? Here’s an article (a few years old) from the Mises Institute making the case that low birth rates follow from high social spending, particularly from the existence of generous state-supported pensions that obviate the need for children to provide for your old age.
Is it completely implausible that lots of people don’t have children just out of pure love for the little tykes? And, given the chance, that some would live a life where all the money they make can be spent on themselves and then their retirement paid for by someone else?
Here are some European “fertility” rates (expressed in terms of average number of births per woman per lifetime – 2.1 is needed to maintain stable population):
Germany – 1.36 (According to the Guardian 9/21/12 it’s “the lowest in Europe – and falling fast”) http://www.guardian.co.uk/world/2012/sep/21/germany-birthrate-low-falling
Spain – 1.47 (from Wikipedia )
Italy - 1.4 (from IndexMundi )
Japan is in the same boat – 1.39 (from Google public data )
Here’s an article by the very smart Megan McArdle on how this low fertility makes paying for the social security and other promises completely impossible.
In fact, all of these countries (and lots more, including most of the EU, China, Korea, etc.) are going to have collapsing populations by the mid-21st century.
So how is the U.S. doing? Compared to just about all the other advanced countries, the U.S. has had a fertility rate in the neighborhood of replacement level for the last 20 years or so (before that it was higher). But wait! The U.S. birth rate has just had four straight years of decline and now for the first time is below replacement level:
Four years? Hmmmmmm. A recent time of hugely increased government deficits and spending, particularly on transfer programs from social security to Medicare, Medicaid, food stamps, social security disability. Cause and effect? You be the judge.