Hashem's Bounty; Human Folly
by Jonathan Rosenblum
January 4, 2013
Those intent on predicting the future tend to focus on two factors. The first such factor is a particular society's human capital; the second its natural resources. Interestingly, those on the Left often seem oblivious to declining human capital. Indeed they are eager to adopt policies that can only lower the human capital. At the same time, they are obsessed with the Malthusian notion that a growing human population will soon overrun the planet and suck up all natural resources.
It turns out that the latter fears are almost never realized. As Walter Russell Mead observes, "Mathusianism is a psychological disposition more than an intellectual conclusion." For that reason, Malthus's thesis that population grows faster than the supply of food has been disproven again every generation in the near two-and-a-half centuries since he first promulgated it.
Just consider some of the news items that have crossed my desk in the past month (most courtesy of Via Meadia). A U.N. report prepared by Jesse Ausubel, of Rockefeller University, predicts that by 2060, the amount of arable land under cultivation will decrease by 10% from the present – not because of desertification but because it will no longer be needed due to increased farmer productivity and slowing rates of population increase.
Or take this. A 27-year old Canadian inventor has created greenhouses in which the atmosphere is controlled by a process of focusing sunlight on desalinated salt water, and which produces fresh water as a by-product of the process. High-quality, pesticide-free vegetables are already being grown in commercial quantities in the greenhouses, without using any potable water.
Recently geologists have discovered huge water acquifiers, holding hundred times the freshwater found on the surface, deep beneath the surface in Africa. That water may one day soon turn deserts into fertile farmland. Something of the kind has already happened over a vast expanse of Brazil called the Cerrado, which was once considered useless scrubland. Brazil will soon be the world's largest producer of soybeans by virtue of those grown in the Cerrado. Scientists also developed a strain of soybeans that could be harvested in January, and thus enable the growing of another crop such as corn in the spring.
Until very recently, we were constantly reading of the coming depletion of non-renewable energy resources. But all that has changed in the last few years, with the discovery of vast reserves of recoverable oil shale deposits in the United States and Canada (among other countries so blessed), the discovery of huge quantities of oil and natural gas reserves offshore, and the increased ability to tap natural gas deposits through new techniques, such as fracking and horizontal drilling.
THOSE WHO DOUBT HASHEM'S ability to create a world capable of sustaining a growing human population have been consistently disproven. Not so those who worry about declining human capital. Human capacity to squander our bounty through disastrous social policies should not be underestimated.
Demography is not destiny – at least not always or inevitably. But once certain social processes – often expedited by conscious policy decisions – pick up a head of steam, they are hard to reverse. Take China's one-child policy. The Chinese government recently had to create a new cause of action: Parents may sue children for neglect. China cannot afford to care for its old, and the sole child has long ago moved from the countryside to a distant city, in search of work and a better life. No one is left back home to take care of the old folks.
Allowed only one child, most couples choose a boy – and with modern ultra-sound technology are able to act upon that choice. As a consequence, China today has tens of millions more marriageable age men than women – men of an age where they will wreak mayhem if denied the civilizing benefits of marriage. That too is causing havoc.
Above all the one-child policy guarantees over time, a rapidly aging population, and that there will not be enough younger workers to support all the oldsters. In Europe, the implications of low birthrates – in many countries little more than half the rate required to maintain the population at current levels – are being felt. Low birthrates ensure that there will not be enough workers to fill the jobs down the line. If recent history is any guide – and I have not seen any alternative scenarios – those missing workers will primarily be drawn from backward Muslim societies and join the rapidly growing numbers of unassimilated Moslems. Europe nations are in the process of losing both their cultures and a unifying ethnic identity.
On a lesser scale, something of the same is taking place in the United States. For some time, one-quarter of live births in the U.S. have been to mothers not born in the United States. While for some recent immigrants, such as the Vietnamese and Cuban Americans who escaped Castro's tyranny, the American dream of liberty and opportunity burns brightly, as it once did for children of Jewish immigrants, for most it does not.
A common culture based on reverence for a particular document – the Constitution – is largely a distant memory. Even in elite law schools – perhaps especially in the elite law schools – they study, as Walter Berns once remarked, not the Constitution but constitutional law. A Senator Sam Ervin or Justice Hugo Black walking around with a copy of the Constitution in his pocket is but a quaint memory from a long gone America.
Forty per cent of American children are born to single mothers. That status by itself is a good predictor of low educational and economic achievement over a lifetime. And children who grow up in single-parent homes are more likely to raise their own children in that fashion. We are thus watching the creation of a permanent and growing underclass under our noses. Does anyone have a clue how to reverse that trend? Has anyone on the Left even begun to consider the implications, or are they too gleeful thinking about this underclass as permanent Democratic voters.
Once, the United States was renowned for the work ethic of its citizens. But as the connection between work and income is severed more and more people will choose not to work. If a family whose breadwinner(s) earns $60,000 has no more disposable income than a similar family with $20,000 plus government transfer payments, many people will opt for the latter choice. And as more people make that choice, "welfare" loses its stigma.
Today 35% of U.S. households are beneficiaries of means-tested government transfer payments – twice the percentage in 1986 -- and a full half of American children are growing up in such households. Means-tested government spending has increased in inflation adjusted terms, over thirty-fold since 1960. And the expansion of entitlement spending for seniors – the most affluent group in America – has increased even more. Altogether government transfer payments have increased hundred times in current dollars since 1960. (These figures and those on labor force participation below are primarily drawn from demographer Nicholas Eberstadt's booklet "A Nation of Takers: America's Entitlement Epidemic.")
Over the last fifty years, government entitlement spending has jumped from less than a third (28%) of government expenditures to two-thirds (66%). In eleven American states, in which a third of Americans live, the number of people receiving money from the government as employees, pensioners, or welfare recipients is larger than the number employed in the private sector.
The correlation between the rapid expansion of government entitlement spending and the declining work ethic is uncontestable. Male labor force participation has dropped from 89% in 1948 to 73% today. The number of those claiming disabilities has multiplied over 19-fold, from 455,000 to 8.6 million, even though a far lower percentage of Americans are working in physically demanding factory and construction jobs. In 1960, there were 134 workers for every recipient of disability payments; today that ration is 16:1.
When close to a majority of Americans' primary stake in government is as recipients of government payments rather than as taxpayers, it is in their short-term interest to vote for politicians who promise to keep the entitlements coming and assure them that a trillion dollars in new debt a year is not a problem, at least not in the short-run.
The negotiations leading up to the fiscal cliff brought this point into stark relief in two ways. First, President Obama and his party steadfastly refused to consider any tampering with current entitlements, even ones like Social Security predicated upon vastly different actuarial assumptions, contrary to the recommendations of the President's own Budget Commission. Second, the Democrats stuck with increasing tax rates on the "rich" as the single method of increasing revenues, and refused to consider simplification of the tax code, through the closure of loopholes and limiting deductions, and a widening of the tax base to give more Americans a stake in the system as something other than recipients of government transfer payments.
As a political strategy, the success of this approach cannot be gainsaid. People like free lunches, or, as Milton Friedman might have qualified that rule, the appearance thereof. But as public policy it stinks for one simple reason: In the end the piper must be paid, and the laws of arithmetic obeyed. There is simply not enough money to make good on all the various promises of government largesse. Eventually governments at the state and municipal level have to renege on highly unrealistic pension promises made by politicians to keep public employee unions in their corner, in order to maintain even the most minimal government services – police, fire, and schools – on behalf of those yet unborn when the original promises were made.
As the government grows bigger and bigger, the private sector, which generates the funds to pay for the government largesse, stagnates. The more bureaucrats the more costly regulations with which businesses have to comply. The greater the government debt service the more credit is sucked out of the private economy. And the higher taxes, the more rich people flee to other tax domiciles, hide their money, or withdraw from productive activity. Every effort to reduce public debts exclusively through borrowing or higher taxes only kills off another of the golden geese that are supposed to pay for everything.
At some point it blows up. The once young who thought it "justice" not to increase the retirement age for Social Security or introduce means testing will find that there is nothing left for them as they reach retirement age. Governments must impose austerity budgets, including hefty tax hikes across the board, like the 30% tax rate increase imposed by Portugal this week, with an additional 3.5% "extraordinary" tax on everything about minimal wage earned for good measure. Highly regressive sales taxes go up or a VAT is imposed, as has happened throughout Europe.
From 1950 to 2011, the American economy averaged 3.3% growth per annum based on an annual increase in the labor force of 1.5% and productivity gains of 1.8%. But growth over the last four years is straining to reach 2%. Declining birthrates have resulted in labor force growth of only .5%. The result of economic stagnation, writes Washington Post economic columnist Robert Samuelson, is "the exhaustion of the modern social order. . . . Semi-stagnant societies can't meet all expectations for jobs, higher wages and government benefits. Political institutions then lose legitimacy. . . . Stalled economic growth is straining the political systems' ability to meet all expectations. People take to the streets; extremist parties expand."
The process will take longer in the United States. America's largely untapped energy reserves and the brown jobs they will generate help to ensure that. The entrepreneurial spirit still beats strongest in the United States, and the country remains a magnet for many of the world's most talented people, if we can just come up with an immigration system that lets them in.
But, Samuelson suggests, what is happening in America today is a difference in degree not in kind from what we are witnessing in almost every European country.
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