Will Europe Hit a Demographic Tipping Point?


The best hope for the youth of France, according to a recent New York Times op-ed, is, well, to get out of France.  Youth unemployment in France is running at 26%.  No wonder some might believe their best opportunity lies elsewhere, including their old colony of New France (Quebec). 

But this punishing level of unemployment is only slightly worse than the EU-wide rate of 23%. Countries like Spain and Greece have astonishing youth unemployment rates of nearly 60%. What does the future of these countries’ youth look like? Or their adults for that matter? Maybe it’s a future on another continent, including former colonies.

Young people in France are starting to test the economic waters in Quebec. Fairly recently Spain became a place immigrants came to for opportunity, becoming one of the primary draws for immigrants for both Africa and Latin America. But now Spain is again seeing people leave for greener pastures in Latin America. It’s a similar case in Portugal, where tens of thousands of Portuguese natives have moved to their former colony of Angola in recent years.  

In 1968 Paul Ehrlich’s doomsday tome The Population Bomb predicted mass starvation and civilizational collapse in much of the world due to overpopulation. But the more serious problem – particularly in traditionally higher-income countries – today is actually too few, not too many new people. The pivot to seeing this as the problem has come through something very basic: pension math. Across the developed world, public pension systems built on the assumption of continued population growth are now facing an actuarial day of reckoning as the bills come due while birth rates have plummeted.

A society needs a total fertility rate – that is, the average number of children born to each woman – of 2.1 just to maintain its population without immigration. Some European countries like France (2.03) and the UK (1.98) are in reasonably good shape, but they are the exception. The total fertility rate in Greece is 1.43, in Germany 1.36, in Spain 1.36, in Portugal 1.30, and in Poland 1.30.  Much of southern and central Europe hovers near the so-called “lowest-low” rate of 1.3 in which the population is naturally being cut in half every 45 years.

Simple birth rates alone have caused some to posit a societal going out of business sale in Europe. However, just as extrapolation of high population growth rates in the past led to wildly alarmist claims that proved false, so today we must be careful about not proclaiming Europe is doomed. But with the population on tap to be halved every generation, the runway to turn things around is difficult to conjure. And while we’ve seen many countries make the shift from high to low birth rates, there isn’t a huge track record of success in the other direction.

It’s against this backdrop that Europe’s youth unemployment crisis must be seen.  Not only are Europe’s young facing short term pain from economic crisis, they also face the long term prospect of being a small population cohort that has to spend their entire working lives (when they eventually find jobs) paying for previous generations’ lavish retirement benefits never properly funded. Along with this, they are the ones who will likely bear the brunt of reduced pension payouts for themselves while the current and nearly retired are fully protected from cuts. This is on top of the massive official public sector debts that have been accrued, along with many years of pain from IMF and EU mandated austerity in a number of countries. Contracting demographics is like a “force multiplier” for unfunded liabilities, and this generation may never achieve the affluence – and buying power – of their parents.

Immigration has been heralded as a solution to demographic issues, but this seems unlikely to bail Europe out. Unlike the US or Canada, European nation-states are built primarily on ethnic identities that make integration difficult no matter how progressive the policies.  Sclerotic economies and regulations that reward incumbents and large “national champion” firms while punishing entrepreneurs – immigrants are disproportionately entrepreneurial – don’t help.  With Europe having a large percentage of unassimilated and unemployed immigrants along with high native born unemployment rates, there has been social unrest all around. Immigrants have rioted, even in unlikely locales like Stockholm, while there has been an alarming rise in far right extremist groups among the native born.  Unlike immigrant-friendly North America, immigration has been as much problem as solution in Europe.

So what exactly is in it for a young person in Greece, Italy, Spain, or apparently even France to stay home? Increasingly not a lot other than avoiding the difficulty involved in moving to another country far from home where the culture, language, etc. are different. That’s a daunting challenge to be sure, especially in a continent where people are very rooted, not just in their country, but often their town, though this can be reduced if they move to a former colony. But it appears we are seeing early signs of migration out of some European countries.

It’s way too early to say what this will turn into, but if an exodus of the youth does take hold, it isn’t hard to imagine how this could hit a catastrophic tipping point in some countries. Facing unemployment, unfunded pensions, massive debts, austerity, and social unrest – as well as the prospect of getting stuck as the bag holder for all this – it isn’t hard to imagine a flight for the exits among the young. This would be like a demographic Lehman Brothers. Once confidence is lost, there’s a run on the bank, or in this case, a run for the exit.

This is far from assured, of course. But it’s not an inconceivable outcome if things stay on the present course. Solving the nexus of issues around growth-euro-debt is critical for Europe, as is cracking the code on immigration. It seems unlikely birth rates will improve until these items are solved first. In the meantime, the US and Canada should be revisiting their own immigration laws to make sure they are poised to respond to – and benefit from – another wave of European economic refugees heads their direction.

Aaron M. Renn is an independent writer on urban affairs and the founder of Telestrian, a data analysis and mapping tool. He writes at The Urbanophile.

Photo by funtik.cat (Dasha Bondareva).

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The struggle between using your head and using your heart

Ii's interesting how compassion is getting in the way of making tough decisions which will eventually lead to a better outcome. A logical thinker seems cold, distant and inhuman because he is thinking ahead whereas an emotional thinker is only thinking about what's best at the present time.

Example of an emotional thinker: welcome these immigrants to our prosperous country as they will have a better life and more opportunities.
Short term: the immigrant is happy and in a better position
Long term: there's more of a burden in society to create more jobs, more housing and more opportunities

Example of a logical thinker: the natives to our country are more important than immigrants. we will not welcome these immigrants in if we are unable to create jobs and opportunities for many of our people.
Short term: goes against human rights, upsets alot of potential immigrants
Long term: there is not much of a burden for taxpayer and the economy as the native population is maintainable and there is not as much of a strain on creating opportunities

There are no right or wrong answers these are just examples of the difference between using your head and using your heart.

Essays Capital Company

My official response to the article.

As you point out Renn, other countries with low birthrates have instead opted to go the immigration route. You may enjoy a recent study from the European perspective which rationalizes both their justification for depopulating, as well as outline the need for immigration to make up for their below-replacement birthrate: http://www.demographic-research.org/volumes/vol25/13/25-13.pdf

Their secularism, void of demands to give back to the European Gene Pool, and make the essential sacrifices that built civilization in the first place, is causing many Northern Europeans, to irrationally forgo reproduction. Eastern Europe has it far worse, but they have their reasons as well. Alcoholism is the biggest contributor to why Men in Russia don't live past 50. 12 abortions per every 13 women also helps out in that regard.

All of this then paints a picture where you have a very enormous welfare state. The continent is aging very rapidly. They are not producing the workforce of tomorrow by having children themselves. So they bring in immigrants in the millions from countries antithetical to the European way, to produce the workforce of tomorrow. Airbus, BMW, Ikea, VW, see the thinning of the youth population, aging of society, and see the failure of society to produce well-integrated and educated citizens out of the new immigrants, as well as the continent's inability to reform it's regulatory climate and entitlement programs, and decide that it is not safe to bank on the European continent for their future. So they leave the continent and expand in the United States.

Merkel has recommended that the youth move south to find work. Which is injurious to the local tax base of many northern economies, that simply won't have any youth to be the workforce of tomorrow, to fund the welfare demands of the elderly. And what happens if Rand Paul or another Leftist get's elected, and we cut back our military commitments to the EU? Will they make room in their limping economies to dedicate 3-5% of each of their GDP, to military buildup? Could the EU even afford a few aircraft carriers? A few nuclear submarines? A fleet of F-16's? No. It cannot.

Is it then fair to say that the American model, that promotes family-creation, is the only sustainable model? Other "work-cultures" as in Asia, or Secular cultures as in Europe, have a culture antithetical to the family, which is what survives a nation, a culture, and a people. Japan were so proud of their rise in the late 80's, not realizing that abandoning the youth to just be raised by society, and youth culture, would ensure an economically-docile, socially-primitive generation, who are locked in perpetual childhood. People like to divide social and economic policy, as if you can divvy up life so neatly, and as if they are two totally isolated arena's... Life is a web of relationships, everything is related to everything is related to everything... The Family is the crux of the issue. It is crucial for the survival of society, and the robustness of an economy. Germany and Singapore can do astronomically well over the course of 50 years, but it's long term viability is not sound, or sustainable. The Mormons, the Jews, the Catholics, and the Protestants have figured out a sustainable system. Maybe we should take note before we continue to tear down that which took so much hard work, and so much time to build up. You cannot build a family culture from scratch. It takes an enormous culture of trust, and so many reinforcing institutions, to make it workable, and healthy.


As always, great article Mr. Renn, thank you.

My explanation for the French Birthrates

France survives because it has a reason to. They have a nationalism, and it is built on their heritage, in the performing arts, in its ideological revolutions, in it's architecture, in its fashion, in its food-culture, in the philosophies of the great French masters, and a great many other things. All of which were fought over in the previous 4 republics that almost tore the country to pieces, and through the Nazi occupation that almost ended the French ethos entirely. These sacred inheritances are assumed birthrights, birthrights that frame what it means to be French. A frenchman, after all, is one who is born in the country of France, to French Parents, grows up in French culture, in schooled in French philosophy, enjoys French food(and wine!), listens to French music, speak the French language.

It is an entire way of life. And it cannot be survived by the newly settled immigrants, who could care less for reason or the abstract, the art of aging cheese, cured meats, or care for French values of Secularism, Multiculturalism, Tolerance, or Equality. Most of them don't even know (or care to know!) who Freud was... and when they return back to Algeria, they don't take France back with them, but when they come back to France, they bring Algeria with them. So... these birthrights have to be survived by the native french, and that is how I interpret the French commitment to procreation. Their education system and society are not making inheritors of the french tradition, out of these new immigrants... so society will have to create the future Frenchman who will carry on the French way.