Politics, et Cetera

A publication from The Political Forum, LLC

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Tuesday, September 15, 2015

They Said It:

More than any other time in history, mankind faces a crossroads.  One road leads to despair and utter hopelessness and the other to total extinction.  Let us pray that we have the wisdom to choose correctly.

Woody Allen, Without Feathers, 1975.

 

WHAT’S THE MATTER WITH EUROPE . . . AND JAPAN. . . AND CHINA?

We’ve repeated this mantra more times than we can count over the decades, but for old time’s sake, we’ll repeat once more today:  “The economic is the cultural; and the cultural is the economic.  The economic is the cultural; and the cultural is the economic.”  Or, to put it another way:  the distinction between economic policy and social policy is a mirage, a fantasy concocted by those who wish seem “conservative” and thus levelheaded on matters of finance, but who wish not to seem “conservative” or cold-hearted, mean-spirited, or – gasp! – religious on matters of social import.  It’s all complete nonsense, of course.  And the biggest social and cultural stories in the world today are also the biggest economic and political stories.  All of which is to say that we’re not really repeating our mantra for old time’s sake, but because it bears repeating, over and over again.  It is, after all, the foundation for the stories that will move populations and markets radically over the next several years.

In the United States in particular, we tend to think of “birth” and the public policy issues surrounding it as strictly cultural matters.  On one side of the wide-ranging birth issue, we have the cultural “progressives.”  They insist that anything at all to do with births is not merely a sign, but a concrete manifestation of one’s dedication to women’s health, women’s advancement, women’s social standing, women’s material happiness, and women’s humanitarianism.  On the other side, we have the cultural conservatives, who believe, instead, that birth is the very embodiment of traditionalism and traditional values; entailing a respect for children as the images of their creator, as the fundamental product and ratification of the family, as a symbol of all that connects man to his ancestors and to his God.

Naturally, this dichotomy has fostered an entire industry dedicated to dividing the nation along cultural lines derived from questions surrounding birth.  In Blue America, for example, abortion and its legality are matters not just for the state, but for its guiding documents.  In Red America, by contrast, abortion is the most heinous of crimes.   In Blue America, “control” of birth is not merely the chief example of the need for a right to privacy, but is so critical as to mandate “free” access for anyone and everyone.  Meanwhile in Red America, birth control is merely one more means by which the overreaching state seeks to impose its will on a formerly free people.  Blue states with large post-religious populations have low birth rates and high abortion rates.  Red states with large religious populations have high – or at least higher – birth rates.  And so it goes. .  . . It’s all about the culture.  Or so we are told.

In truth, of course, birth is both a cultural and an economic issue, and everything in between.  Indeed, it is the essential component of many, if not all of the major issues plaguing the globe today.

Consider, for example, the migrant problem in Europe, which threatens to dominate much of the world’s attention for the next several months and much of the EU’s resources for the next several decades – assuming, of course, that the EU survives several decades.

The standard line on the human tide that is sweeping ashore in Europe at the moment is that it is a byproduct of war and a relic of imperialist culture.  The Middle East and Africa are in shambles and its people are understandably fleeing, thanks to the greed and power-hunger of the Brits, the French, the Dutch, the Germans, and the Johnny-come-lately Americans.  In response, the erstwhile colonialists – the Western Europeans – are continuing their decades-long pattern of atonement by accepting as many migrants as they possibly can.  At the same time, the Eastern Europeans, who were not colonialists and were, in fact, colonies of sorts, object to the influx, not being as enlightened and accepting as their Western brethren.  Hence the crisis.

Even those who have bothered to dig beyond these superficialities have nevertheless still generally focused on the cultural aspects of the crisis.  A fairly recurrent theme – which we parsed in our own right some weeks ago in “Reading List, Part III,” – is that which lays much of the blame for the current mess on the cultural collapse of the once formidable West.  Last week, the incomparable Walter Russell Mead detailed this collapse in a Wall Street Journal op-ed as follows:

Europe today often doesn’t seem to know where it is going, what Western civilization is for, or even whether or how it can or should be defended.  Increasingly, the contemporary version of Enlightenment liberalism sees itself as fundamentally opposed to the religious, political and economic foundations of Western society.  Liberal values such as free expression, individual self-determination and a broad array of human rights have become detached in the minds of many from the institutional and civilizational context that shaped them.

Capitalism, the social engine without which neither Europe nor the U.S. would have the wealth or strength to embrace liberal values with any hope of success, is often seen as a cruel, anti-human system that is leading the world to a Malthusian climate catastrophe.  Military strength, without which the liberal states would be overwhelmed, is regarded with suspicion in the U.S. and with abhorrence in much of Europe.  Too many people in the West interpret pluralism and tolerance in ways that forbid or unrealistically constrain the active defense of these values against illiberal states like Russia or illiberal movements like radical Islam.

Europe’s approach to the migration crisis brings these failures into sharp relief.  The European Union bureaucracy in Brussels has erected a set of legal doctrines stated in terms of absolute right and has tried to build policy on this basis.  Taking its cue from the U.N.’s 1948 Universal Declaration of Human Rights and other ambitious declarations and treaties, the EU holds that qualified applicants have an absolute human right to asylum.  European bureaucrats tend to see asylum as a legal question, not a political one, and they expect political authorities to implement the legal mandate, not quibble with it or constrain it.

We don’t disagree with any of this.  And indeed, if you click the link above to our piece last month, you’ll see that we have made many of the same arguments about this specific crisis, and we might add, for years before about a host of other crises.  But that’s not to say that this cultural explanation can, by itself, sufficiently explain the current mass migration into Europe in toto.  And nor, for that matter, can it explain the varying reactions to the crisis among the countries of the EU.  It cannot explain, for example, why Germany might be more willing than any of its neighbors to accept young, able-bodied migrants from throughout the world.  For that, we have to look beyond the culture exclusively.

Germany, like most of the rest of the West is a demographic mess, a proverbial time bomb waiting to explode.  As Joel Kotkin notes, Germany “faces a chronic labor shortage.”  “Its workforce is,” Kotkin writes, “expected to decline by 7 million by 2030, leaving the country with annual deficits of upward of 400,000 skilled workers.”  For Europe’s largest economy and one of its most efficient yet generous welfare states, this means hard times to come.  Last week, Robert Preston, the economics editor for the BBC explained exactly how and why this falling working-age population will translate into economy woe for Germany,  aside from the unfilled jobs and the consequent lost productivity.  To wit:

As for the dependency ratio, the percentage of those 65 and over compared with those aged between 15 and 64, that is forecast to rise from 32% to a very high 59% in Germany by 2060.

Or to put it another way, by 2060 there will be fewer than two Germans under 65 to work and generate taxes to support each German over 65. . . .

One way of seeing the impact of ageing is in differences in the relative burdens on the public finances of support required by older people.

So in Germany, age-related spending on pensions, health and long-term care is expected to rise by a hefty five percentage points of GDP or national income by 2060, more than double the projected 2.3% increase anticipated for the UK.

Clearly, Germany – among others – has an economic incentive to bring in as many migrants as it can hold.  Chancellor Angela Merkel doesn’t want to overburden her social-welfare system or allow the migrants to alter the nature of German culture, but she does want them to come and work, thereby supporting her (and others, we suppose) in her dotage.  It’s no wonder that business leaders throughout Europe have, according to the BBC, complained that Frau Merkel is “skimming” the proverbial cream of the migrant crop for her nation’s benefit.  The squishy-leftist media has praised the Chancellor for her “humanitarianism,” in this crisis.  And far be it from us to suggest that she has been anything less than perfectly compassionate.  Nevertheless, it is no mere coincidence, we think, that Germany’s benevolence aligns so perfectly with its economic/demographic needs.

It should be noted, though, that the crumbling/demographically disabled welfare states of Western Europe are not the only parties in this migrant mess with an incentive to make the most of the current unrest in the Middle East and North Africa.  Others too have a vested interest in turning the disarray there into a mass migration event.  That is to say that the people of the overcrowded, under-developed economies of the Muslim world also have an incentive to follow so many of their forefathers to the New Promised Land.  Europe is empty and in desperate need of people.  The Muslim world is full and the Muslim people are in desperate need of living space – lebensraum, you might call it.  The inimitable Mark Steyn, who has been harping on this “demography-is-destiny” theme for more than a decade, wrote a column in a February, 2011 in which he noted that there were already tens of thousands of “migrants” making their way from Africa and the Middle East to Europe, largely because there was no one able or willing to stop them.  He put it like this:

According to the UN, global population is supposed to peak at about nine billion in 2050, then level off and start to decline. If you’re one of those eco-fetishists who think of humanity as a species, then that nine billion is the number to watch, up from six billion at the turn of the century.  But, if you don’t think of the world as one unified global parking lot, you’re less interested in the big number and more in its constituent parts: On the road to that nine billion, almost all the increase in global population will come from Islam and sub-Saharan Africa. . .” citizens” of countries which have done a cracking job of killing almost all human progress of the modern age.  In the first decade of the 21st century, Niger, which is over 90 per cent Muslim, increased its population by almost half – from just over ten million to just over 15 million.  In 2000, half a million of its children were estimated to be starving, but hey, that’s no reason not to add a few million more.  Its population is predicted to hit just under 100 million by the end of this century – in a country that can’t feed a people one-tenth that size.  Is it likely that an extra 90 million people will choose to stay within Niger?

Sub-Saharan Africa will double its population between now and 2030.  They’re poor and getting poorer.  Excepting South Africa, the Dark Continent’s per capita income averaged $355 in 2004, but is expected to fall by almost 20 per cent to $290 by 2030.  Good for the planet?  Well, it depends how you think about it.  A few years ago, a Unicef report found that more than one billion children in the developing world were suffering from the most basic “deprivations” – lack of food, lack of education, lack of rights.  Yet by 2020 each of them – or at any rate the half who are girls – will have had an average of three children each.  Who in turn will lack food and education and much else, and will be at higher risk of many genetic disorders.  It would be asking an awful lot for untold millions of them to remain in the teeming, disease-ridden shanty megalopolises into which Africa’s population is consolidating – rather than to, say, head for the lusher fields of. . . . [Europe]

Here’s the question for “Fortress Europe”: What’s to stop that vast “caravan of humanity” just walking in and taking it the way Robert Mugabe’s thugs took any Zimbabwean farm that tickled their fancy?

Steyn takes some flak, both from the mainstream press and from other conservatives, for his preoccupation with demography and specifically the demography of Islam.  Nevertheless, it’s hard to deny that he makes a point here.  This is more than just the Western world surrendering to Islam and killing itself culturally; it’s the Western world very much surrendering to Islam and killing itself economically, socially, demographically, religiously, GEOgraphically, and so on.  Western Europe can’t be bothered to defend its heritage, but it also can’t be bothered to have enough babies to maintain itself in the standard to which it’s grown accustomed.  And so it winks and nods at the people who can help themselves while helping their ageing hosts as well.  Win-win, right?  Except that it doesn’t work that in way in practice, as the banlieues of Paris, the rape-rings of Rotherham, and the gay-bashing-gangs of Amsterdam attest.

Not that we want you to think that this problem of “births” is exclusively as problem confined to Europe and its demographic mirror-image in the Middle East.  It is not.  Indeed, “births” are an economic problem throughout the world.

Anyone who has paid any attention to global markets or global economies over the last three decades or so is aware that Japan was once the chief economic rival to the United States.  Many people spent the late 1980s and early 1990s worrying about the Japanese just as much as they’ve spent the last few years worrying about the Chinese.  For some reason or another, however, Japan never fully made the transition to full-fledged, post-export economy.  And as any schoolboy knows, the result has been two “lost” decades now of economic stagnation.

Why has this been the case?  Well . . . for the most part, that’s beyond our skill set.  At least part of the problem with Japan’s economy, though, and with the government’s repeated attempts to stimulate that economy over the last few years is the Japanese people’s own disinterest in economic growth.  Growth requires laborers.  And the Japanese have never been interested in importing laborers and, over the course of the last half century or so, have grown less and less interested in giving birth to any either.  Japan is, quite frankly, in a demographic death spiral, the likes of which no society has ever overcome.  In a recent piece for IEEE’s Spectrum (and electrical engineering magazine), Vaclav Smil, the Distinguished Professor Emeritus in the Faculty of Environment at the University of Manitoba, presented the gory details:

[I]n the long run the fortunes of nations are determined by population trends.  Japan is not only the world’s fastest-aging major economy (already every fourth person is older than 65, and by 2050 that share will be nearly 40 percent), its population is also declining.  Today’s 127 million will shrink to 97 million by 2050, and forecasts show shortages of the young labor force needed in construction and health care.  Who will maintain Japan’s extensive and admirably efficient transportation infrastructures?  Who will take care of millions of old people?  By 2050 people above the age of 80 will outnumber the children.

Fortunes of all major nations have followed specific trajectories of rise and retreat, but perhaps the greatest difference in their paths has been the time they spent at the top of their performance: Some had a relatively prolonged plateau followed by steady decline (both the British Empire and the 20th-century United States fit that pattern); others had a swift rise to a brief peak followed by more or less rapid decline.  Japan is clearly in the latter category.  Its swift post–World War II ascent peaked in the late 1980s, and it’s been downhill ever since: in a single lifetime from misery to an admired — and feared — economic superpower, then on to the stagnation and retreat of an aging society.

Unfortunately, as East Asian nations go, Japan’s problems with “births” may not be the biggest worry for us or for the global economy.  For years now, we have written – and others smarter than we have written more engagingly – that China faces sever problems related to its infamous One-Child policy.  The most exceptional and attention-grabbing of these problems, and thus the one to which we have dedicated the most time and space, is the sex-ratio imbalance.  As you well know by now, China has a problem in that its families have been limited to one child for decades and most parents prefer that one child to be a male.  Thus, the country has and will have generational cohorts with the most skewed sex ratios in history, which is to say exceptionally large populations of young men with no prospects of marriage.

While this skewed sex-ratio is as fascinating as it is unpredictable, it is hardly the only or even the most economically significant problem that China faces with births.  As a nation that artificially suppressed birth rates among a still-developing population, China has long faced a first world problem – the “graying” of its people – with a third world economy.  Or as the world-renowned demographer Nicholas Eberstadt put it when he saw this coming more than a decade ago:

Between 2000 and 2025 China’s median age is set to rise very substantially: from about 30 to around 39.  According to [United Nations Population Division] projections for 2025, in fact, China’s median age will be higher than America’s.  The impending tempo of population aging in China is very nearly as rapid as anything history has yet seen.  It will be far faster than what was recorded in the more developed regions over the past three decades and is exceeded only by Japan.  There is a crucial difference, however, between Japan’s recent past and China’s prospective future.  To put the matter bluntly, Japan became rich before it became old; China will do things the other way around.   When Japan had the same proportion of population 65 and older as does China today (2000), its level of per capita output was three times higher than China’s is now.  In 2025, 13.4 percent of China’s population is projected to be 65-plus; when Japan crossed the 13.4 percent threshold, its per capita gdp was approaching $20,000 a year (constant 1990 ppp dollars).  One need not be a “Sinopessimist” to suggest that China will be nowhere near that same economic marker 22 years from now.

At the risk of burying the lead in this piece, we think it’s important to point out here that we’re not the only ones who think that China and its birth-related dysfunction constitute a major story with the potential to shake China’s economy – and, by extension, the global economy – for years, maybe decades to come.

Everyone knows that the Chinese government and Chinese businessmen are, together, facing a rather unstable economic future.  The government has been trying for years to reform and restructure the country’s export-led model of growth, without overwhelming success.  And to make matters worse, the current economic slowdown, the market meltdown, and the currency catastrophe have combined to reveal the limits of the Chinese government-controlled modified-command economy.  If China wants to compete in a global marketplace, its soft-totalitarian statist model will have to loosen up even more than it has over the last three decades.  But that’s not the worst of it, apparently.

Last month, Chinese President Xi Jinping reportedly told party leaders that the nation must shift its priorities or face certain calamity.  Kwongwha Kim, reporting for Bloomberg News, cited a source who said that Xi told party leaders that he “is considering shifting his priority [from GDP growth] to population growth.”  Kim continued:

Xi’s economic planners may for the first time emphasize “population policies” over gross domestic product in the country’s next development blueprint, said the person, who asked not to be identified because the talks are private.  The focus sets the stage for a host of rule changes regarding health, pensions, social welfare and possibly lifting the caps on children some families can have, the person said.

More than three decades into an industrial boom that has created the world’s second-largest economy, China’s struggling to get rich before it grows old.  The working-age population shrank for the first time in at least two decades last year as growth slowed, echoing Japan’s downturn in the late 1990s.  As part of the shift, the party may lower its hard growth target of 7 percent to a range between 6.5 percent and 7 percent and make that a flexible guideline, the person said.

Mu Guangzong, a professor at Peking University’s Institute of Population Research, said that avoiding the same fate requires immediate action to loosen birth limits and strengthen the social safety net for the elderly.

“Reform is lagging too far behind and has been too cautious,” Mu said.  “We must move from restricting childbirth to encouraging it as soon as possible.  We must complete a thorough change of population policy.”

That all sounds great – except for one little catch.  The problem that the Chinese face in reviving their birth rate is the same problem that every society in a similar situation has faced, namely the fact that falling birth rates seem to be irreversible.  Once demographic decline starts, there’s no stopping it.  And once it hits critical mass, the rest is just cleaning up the mess.  Bloomberg’s Kim again reports:

The challenge China faces is motivating parents like Feng Yanbin, 37, of Beijing, to give her daughter a brother or sister.  The cost of raising a second child has deterred Feng and her husband, even though they’re eligible.

“To have a child in China is a test of a family’s economic strength,” Feng said.  “The policy has been changed, but the younger generation in the cities still need to consider their economic situation before having a baby.”

About 1.5 million couples had applied for a second child under the new policy as of May, according to the National Health and Family Planning Commission.  That lagged official projections of an additional 2 million new births annually.

The results have fueled calls for a more dramatic approach as Xi finishes the country’s next five-year plan. . . .

“The dependency ratio is increasing, the pace of aging is quickening and the working-age population is shrinking,” said Ren Yuan, a deputy director of the Institute of Population Research at Fudan University in Shanghai.  “The 13th five-year plan needs to be tailored to manage the sustainable and balanced growth.”

Good luck with that. . . .

We have long argued in these pages that the problem with Big Government isn’t the cost or the intrusion or the regulation.  The problem with Big Government is Big Government.  That is to say that Big Government compels its citizenry to rely on the state for services formerly provided by parents, children, extended families.  Once people grow accustomed to dependency on government, it’s nigh on impossible to break them of that dependency.  It is literally unheard of for post-bureaucratic populations to emerge from dependency, re-becoming self-reliant, family-supported, and economically independent.  In the entire history of man, such a thing has never occurred.

Abortion, birth control, religious faith and the like may seem like strictly cultural issues, but they are not, even in the United States.  They are issues that affect and are affected by economic considerations and social developments, in addition to cultural forces.  Separating the respective effects of the economic and cultural components would be impossible, we’re afraid, even for the most talented and rigorous statistician.  And that’s because the effects simply cannot be divided into discrete pockets.  It’s all interrelated.

So as you watch the Migrant Crisis in Europe, or monitor the economic situation in China, or shake your head at Japanese Prime Minister Shinzo Abe latest failed attempt to revive his economy, keep saying this over and over to yourselves:  “The economic is the cultural; and the cultural is the economic.  The economic is the cultural; and the cultural is the economic.”  It may not help you sleep at night, but at least it will remind you that the distinctions we Americans usually observe in our politics are both contrived and complicating.  They may make for a convenient shorthand, but they also make for terrible analysis and even worse policy.

 

Copyright 2015. The Political Forum. 8563 Senedo Road, Mt. Jackson, Virginia 22842, tel. 402-261-3175, fax 402-261-3175. All rights reserved. Information contained herein is based on data obtained from recognized services, issuer reports or communications, or other sources believed to be reliable. However, such information has not been verified by us, and we do not make any representations as to its accuracy or completeness, and we are not responsible for typographical errors. Any statements nonfactual in nature constitute only current opinions which are subject to change without notice.