The Death of Birth — Our Dismal Fertility Rates

Through Collapsed Fertility Rates, We Are Self-Exterminating

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The US Government’s Head Implodes: A Well Planned March to Financial Disaster

“Nature abhors a vacuum”. — Aristotle, c. 350 BC.

“… a trillion here, a trillion there, and suddenly you’re talking real money.” — Laurence J. Kotlikoff and Scott Burns, “The Coming Generational Storm: What You Need to Know about America’s Economic Future.” (Stated with a tip o’ the hat to Senator Everett McKinley Dirksen.)


Not long ago, my wife and I were enjoying dinner with another couple. They were planning a trip to several of France’s great wine districts and invited us to join them. After sharing a brief glance, my wife and I told them that we didn’t have the cash at the moment to pay for such a trip. “Borrow it,” they said. “That’s what we’re doing. It’s the American way!”

Their statement was all too true. The US teeters on the brink of recession, or worse, and we have only ourselves to blame. We haven’t burrowed our way into this deep, dark hole; we’ve borrowed our way into it. And now, as our bills come due, rather than mending our ways, we choose to aggravate the situation.

Bread and Circuses

Earlier this week, television viewers the world over were treated to the annual spectacle of the US president’s State of the Union Address. The show presented the expected level of pageantry — men in dark suits and colorful ties, lots of red on the women. As for content, despite calls for bipartisan efforts, the event quickly turned into a comical three-ring-circus, with the Supreme Court impassive, Republicans popping up like Jacks in the Box, and Democrats generally stone cold and sullen. (Good grief, Hillary, you’re running for the highest office in the land. At least cultivate a poker face; pouting is unbecoming for a presidential candidate.)


As for bread, President Bush asked congress to quickly approve an economic stimulus package — a “tax rebate” to energize the gimping economy. Congress has yet to finalize the details, so for now I’ll refer to the “rebate” total as $150 billion, the amount currently bandied the most. This was one of the president’s few proposals that received applause from both Republicans and Democrats.

Only the government could dream of getting away with such recklessness. The US is in dire financial straits because of a debt crisis — our debts and entitlement commitments (Social Security and Medicare, for example) already run far beyond what we can hope to service without great hardship. This morass is not a temporary shock from a Hurricane Katrina; the problem — out of control deficits — is fundamental to our economy.

So what’s the government’s solution?

Borrow more money!

There’s one thing that the politicians aren’t proclaiming, but that should be made clear to all: They are not dangling a rebate before American citizens, no matter what they choose to call it. The government isn’t returning a portion of taxes paid; they have spent all of the collected taxes and then some by a long shot. And this isn’t manna from heaven. This is money to be borrowed by the government and to be paid back later, with interest. And who will refund the loan plus interest? If you pay taxes in the future, dear reader, you will.

My wife has commented, with respect to the proposed “rebate,” that this would be financed by a loan even if we were running a fiscal deficit of just $0.10. True, but an even more telling statement is also true. It would be based on a loan, even if we had a balanced budget. In fact, it would be based on a loan, if we were running a surplus any less than $150 billion. But we aren’t running a surplus less than $150 billion, or a balanced budget, or a $0.10 deficit. We are already in the hole more than $9 trillion dollars, and that’s just borrowed money. It says nothing about the government’s implicit debt, about entitlement obligations that are committed under law, amount to tens of trillions of dollars, and are coming due in massive quantities as the Baby Boomers retire.

From whom will the government borrow this money? For years the Chinese have bankrolled a significant share of our deficit spending spree. So now the government will borrow more from the Chinese and hand the dough over to the American public, who will spend much of it on… unnecessary stuff made in China.


For an example of what I’m saying, take a look at this video.

Knuckle heads? Bone heads? Air heads?

“Vacuum heads” might be a much better description. The decision, to cure a debt crisis by increasing debt, shows that there isn’t much between the elected-ones’ ears. Either the politicians are foolish enough to think that this will deliver a net benefit to the economy, or they have a different agenda.

Why, one might wonder, would both Democrats and Republicans do such a thing, when it will at most give a short lived, little boost to the economy while deepening our overall fiscal crisis? It gives neither party an advantage over the other in an election year. One would have pondered a good question, to which there is a good answer.

Here’s a hint: Incumbency.

While the two major parties go at each other, those members of congress who are running for reelection have one thing in common that goes beyond party loyalty — the desire to be reelected. A little boost to the economy, timed to arrive on election-eve, will add strength to incumbency.

In the words of David Rosenberg, analyst at Merrill Lynch, “Since the rebate checks to individuals likely won’t be mailed out until May or June, the lift to consumer spending is probably going to be a short-lived third-quarter event.”

Just in time for the election. Gee, our representative/senator sure helped us — toys for the grandkids, couple of fine dinners out…

Those Darn, Stampeding Elephants

This blog has mentioned the penchant, not just in the US, for ignoring elephants charging around the room. When it comes to careening into financial chaos, such disregard seems to have become a favorite pastime.

The CNN article linked above states, “Getting people to spend more is only one way to fix the economy’s woes. To really get the economy back on track, what’s needed is an overhaul of the mortgage lending process in order to protect borrowers from overzealous banks pushing exotic loans that the borrowers really cannot afford.”

There’s one thing on which politicians and the mainstream media can agree: Blame the government and big business for this mess, but don’t hold the public responsible. (Wouldn’t want to offend voters or readers/viewers.) The fact is, however, that John and Jane Q. Public’s borrowing habits are a major cause of our current financial crisis. Slick salespeople may well be in part responsible, but I’ve read of no cases in which they’ve held guns to people’s heads to force them to take on subprime mortgages or to run up enormous credit card debts.

Some borrowers may have been over-encouraged or even intentionally mislead, but the borrowers are the ones who made the decision to incur their debts. The addiction to borrowing and committing beyond our ability to pay runs through American society as a whole.

At least one can credit politicians with a well-honed sense of irony. Unless we raise taxes and cut entitlements soon, the retirement of the Baby Boomers will gravely undermine and possibly ravage the US economy. Yet this current “fix” is proposed during the very month that the Boomers have started to retire.

My wife and I will be saving our “rebate,” not spending it on toys or dining out. In so doing, we will make the funds available to businesses so they can increase capital investment and employment. This will also offer us the prospect of earning a return, so we can afford to pay back this loan along with the interest that it incurs.

For now, borrowing is indeed the American Way. Sadly, many of us may soon be saying, “We’re going bankrupt. It’s the New American Way!”

Response to Collapsed Fertility Rates and Falling Populations: Part of a Russian March toward Totalitarianism?

Map of Russia 

In reference to Russia’s anemic fertility rates and shrinking population, Russian president Vladimir Putin has stated, “We are on the verge of a crisis… Our main priority today is to decrease the death rate and increase the birth rate, as well as to improve our migration policy.” Demographic forecasts predict that Russia will lose nearly one million people a year over the next decade. According to this report, it seems that, unfortunately, Mr. Putin’s authoritarian regime may be using the grave dangers of collapsed fertility rates as an opportunity to expand its power.

As shown in the article, an organization named “Nashi” is a “youth movement run by Vladimir Putin’s Kremlin that has become a central part of Russian political life.” At its annual camp, Nashi hosts 10,000 uniformed youths who engage in physical fitness routines, attend lectures, marry, and “move to a special section of dormitory tents arranged in a heart-shape and called the Love Oasis, where they can start procreating for the motherland.” Attendees at the camp must wear electronic badges, which enable tracking of their participation. Anyone who misses three events is expelled.

More than one foreign official has been harassed by Nashi, part of a 100,000 strong youth movement, after engaging in acts viewed as insulting to Russia in general or to the Kremlin in particular. Details of these practices suggest official complicity.

Other youth organizations now engage in even more radical activities. The Daily Mail states that these “pro-Kremlin youth groups are hounding gays and foreigners off the streets of Moscow. Mestnye [The Locals] recently distributed leaflets urging Muscovites to boycott non-Russian cab drivers.” This movement in Russia has not reached the fanatical levels that are possible, but it’s worth considering the historical precedent of such extremism.

In “The Rise and Fall of the Third Reich: A History of Nazi Germany” author William L. Shirer states that the Hitler Youth in 1932, the year before the Nazis came to power, numbered 107,956. That number would soon increase dramatically.

Shirer devotes several pages to the Nazi youth movement and makes numerous chilling observations. “From the age of six to eighteen, when conscription for the Labor Service and the Army began, girls as well as boys were organized in the various cadres of the Hitler Youth. Parents found guilty of trying to keep their children from joining the organization were subject to heavy prison sentences even though, as in some cases, they merely objected to having their daughters enter some of the services where cases of pregnancy had reached scandalous proportions.”

The author goes on to state “Similar moral problems (out of wedlock, youth pregnancies) also arose during the Household Year for Girls, in which some half a million Hitler Youth maidens spent a year at domestic service in a city household. Actually, the more sincere Nazis did not consider them moral problems at all. On more than one occasion I listened to women leaders … lecture their young charges on the moral and patriotic duty of bearing children for Hitler’s Reich – within wedlock if possible, but without it if necessary.”

Before the dawn of 1939, “the Hitler Youth numbered 7,728,259.”

Due to this Nazi history, contemporary Germany has been loathe to officially encourage procreation. The situation there, however, has become so dire (fertility rates hovering around the ultra-critical level of 1.3 for more than a generation) that childless chancellor Angela Merkel has made fertility a major focus of her administration.

It will behoove us to keep a keen eye on the semi-official Russian youth movement. Many countries can no longer ignore the consequences of their collapsed fertility rates. As a sense of desperation deepens, many a nation may well use the problem as an opportunity to promote totalitarianism.

Universal Health Insurance and the Coming Crises in Transfer Programs

On September 17, 2007, Hillary Clinton announced her proposal to provide health insurance for every American.

Clinton is not alone in forwarding such a proposition. Democrats John Edwards and Barack Obama had already fielded similar initiatives. In addition, universal health care is mandated by states such as Massachusetts, while California’s Republican governor, Arnold Schwarzenegger, supports a similar idea. Republican presidential candidates, on the other hand, tend to focus on changes in the tax code, to allow individuals greater latitude in purchasing health insurance. It would be hard for a presidential contender not to address the problem of the medically uninsured. There is, however, a problem with plans to create any new transfer program…

The cost.

Clinton claims that $110 billion per year will cover the 47 million currently uninsured. That averages about $2340 per year or roughly $200 per month per person. A quick glance at the cost of insurance, when one is paying with an employer, will show this to be an optimistic estimate of the costs. My wife and I and her employer currently pay significantly more than this to cover us through her work.

But let’s give Clinton the benefit of the doubt and suppose that she can figure out a way to cover the uninsured with such atypical government efficiency. That still adds up, in just 10 years, to an additional $1.1 trillion – for a nation that is already bankrupt.

Unfortunately for Clinton and the others who are proposing such additional expenditures by the federal government, Alan Greenspan, former chairman of the Federal Reserve, has a new book, “The Age of Turbulence: Adventures in a New World.” As can be seen in this (unfortunately poorly transcribed) interview of September 17, 2007, Greenspan makes it clear that the biggest problem facing the US economy is our extant commitment to transfer programs, especially Medicare. To get an idea of how large the Medicare crisis is, consider the fact that the program’s budgetary insufficiencies will exceed those of Social Security. And according to the Treasury Department, whose general assessment is shared by many economists, Social Security faces a $13.6 trillion shortfall.

According to Greenspan, “we either are going to have to raise taxes very sharply or cut benefits by half.” He goes on to say that prudent policy “would be to adjust the longer-term now, not when it becomes a serious problem for people who have already retired and are told after the fact that they will not be getting the real Medicare that they expected.” We can address this problem in the near term — before we reach a crisis point — by raising taxes (a solution that Republicans generally loathe) and by reducing benefits (a solution anathema to Democrats). And that is just to address our current shortages, without additional entitlements.

A sad irony is that those in greatest need are those who will be hurt the most by the unfulfillable promises. These are the people whose votes are being purchased through such false hopes. People need to be more self-reliant, to care for their own health and to rely on each other rather than the government, which is already drowning in liabilities. A bankrupt US won’t be bailed out, because every other developed nation on earth faces financial crises as a result of collapsed fertility rates — fewer taxpaying workers to support the coming tsunami of retiring baby boomers.

Another irony is the fact that higher taxes, which will be necessary to cover even reduced costs of current programs, will mean that young workers will be less able to afford children. A dramatic increase in taxes may well send the nation into a feedback loop, in which higher taxes lead to lower fertility rates which lead to higher taxes and even lower fertility rates. The loop may become a spiral — a death spiral — and large, new, expensive government programs will only exacerbate the problem.

The idea of universal health insurance is certainly attractive. It would be wonderful for our society to provide such protection. Unfortunately, we are already broke. The longer we wait to raise taxes and reduce benefits, the harder the adjustment will be.

In the words of Alan Greenspan, “I think it’s unethical and immoral for a government when confronted with these types of events not to take action. What do we elect people for?”