Trenchant analysis with a metaphysical twist.
Demographics is destiny. Never in recorded history have prosperous and peaceful nations chosen to disappear from the face of the earth. Yet that is what the Europeans have chosen to do. Back in 1348 Europe suffered the Black Death, a combination of bubonic plague and likely a form of mad cow disease, observes American Enterprise Institute scholar Ben Wattenberg. "The plague reduced the estimated European population by about a third. In the next 50 years, Europe's population will relive - in slow motion - that plague demography, losing about a fifth of its population by 2050 and more as the decades roll on."
In 200 years, French and German will be spoken exclusively in hell. What has brought about this collective suicide, which mocks all we thought we knew about the instinct for self-preservation? The chattering classes have nothing to say about the most unique and significant change in our times. Yet the great political and economic shifts of modern times are demographic in origin. Three examples suffice:
1) The great trans-Atlantic rift. Europeans are pacifists, not merely in the Persian Gulf, but on their own Balkans doorstep. If they cannot be bothered to reproduce, why should any European soldier sacrifice himself for future generations that never will be born?
2) The shift in global capital flows to the United States: old people lend money to young people. The aging populations of Europe and Japan lend money to younger people in the US.
3) The deflation danger. To illustrate, an economist of my acquaintance proposes a thought experiment. Suppose by a magic spell all the inhabitants of the United Kingdom instantaneously aged by 30 years. What would be the effect on the current account balance, the rate of interest, the price level and the exchange rate? (Answer at the end of this essay).
Read the entire article on the Asia Times website.