December 28, 2011

RICHARD FERNANDEZ: Europe: If Tomorrow Comes.

The New York Times featured the town of Laviano in Italy. Only half its houses were occupied. But any closures of its churches were the least of its problems. It’s problem was even worse: it didn’t have enough kids to keep the schools open. The newly elected mayor “racked his brain and came up with a desperate idea: pay women to have babies.” . . . What happened? The problem as Steyn succinctly puts it, is that socialism not only “runs out of other people’s money”, as Margaret Thatcher once put it. It simply runs out of people. Future historians, if there are any left, will puzzle over how this came about. The economists will have an easier time explaining it. Through some process, socialism has apparently increased the discount rate to the point where the future is consumed for the sake of the present. Not only is investment taxed to feed consumption, tomorrow is hocked to pay for today.

If the fiscal deficit is the direct monetary expression of this high discount rate, the collapsing population is its equivalent demographic expression. Both are saying the same thing, in different terms. In incentives terms, the future is no longer real; so people don’t save up for it nor do they have any incentive to sacrifice for it.

Steyn points out that one feeds into the other. By failing to provide for the next generation to feed present consumption, the present West has also reduced its capacity to service the debt when tomorrow rolls around.

The future belongs to those who show up.

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