The German population is projected to decline absolutely from 82 to 67 million between now and 2050. Falling populations will be a characteristic feature of the once globally dominant societies of Western Europe. An increase in retirement ages would help only slightly, but it is not an adequate answer to the problems that already beset the social security systems of Western Europe. The implicit liabilities of the German social security system at the moment are currently around about 270 percent of German GDP. There are problems with the social security and Medicare systems in this country--very serious problems indeed. But the problems in Europe are much worse, and they will bite politically much sooner.I've seen this same argument by a number of other economists and virtually no opposing views. Thus, we will have the opportunity to watch Europe try various solutions to their problems and can implement the ones that work the best ourselves. No reason to try to fix it now without the benefit of that extra information.
Wednesday, March 24, 2004
Europe Will Show Us the Way
Niall Ferguson of AEI argues that Europe will have even worse problems with unfunded liabilities and that these problems will occur sooner: