Monday, June 1, 2015

Germany has eaten its seed corn.

When I speak with my Lefty friends about the fundamental unworkability of European social welfare policies, my friends scoff at my skepticism. If these policies are so unworkable, my friends say, how have European countries been making them work for so long?

That's pretty easy: they've been eating their seed corn. Originally, their policies ate up their economic dynamism. Now they have eaten up the next generation of workers.

Put Germany on the ballooning list of European countries without a rising generation of workers large enough to pay for their cradle-to-grave welfare state. In the next 10 years, Germany's workforce is going to begin dwindling. By mid-century, it will have collapsed.

I've said it before: the fatal paradox of the European welfare state is that, while it requires societies to have 3 or 4 children per couple in order to maintain itself, the benefits it provides encourage couples to have fewer than 2 children apiece. When they fail -- as virtually all European welfare states are in the process of doing -- they discourage people from having kids even more.

Maybe there's a generous welfare state system that provides ample benefits without requiring people to have lots of kids to make it work. If so, however, it doesn't look like anyone's figured it out yet. We certainly haven't. Neither has Germany.

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