What’s Really Not Behind The Entitlement Crisis

What Is This About?

On the Opinion page of the US Edition of The Wall Street Journal was an article published on 7/15/12 headlined “What’s Really Behind theEntitlement Crisis” (subscription required) by Ben J. Wattenberg with the American Enterprise Institute.

All Alarm Bells Started Ringing

“Entitlement Crisis” made me curious. However, if someone claims to tell you “What’s Really Behind” something then my alarm bells start ringing immediately. What is the author selling, e.g., snake oil, cheap analysis etc.?

Abstract Of Article

Wattenberg bases his explanation on demography. “[The] heart of the problem are birth rates … total fertility rates … that have fallen sharply all over the world”. Thus, “there will be relatively few working age people to underwrite the benefits of the many seniors who have paid into national retirement systems such as Social Security and Medicare”. Nothing new here. This has been well known for decades.

However, then the author discusses so called “pro-natal” (According to Wikipedia also known as Natalism or a belief that promotes human reproduction) programs that were in particular employed in Western Europe to increase total fertility rates. Wikipedia again: “It [pro-natal] typically advocates policies such as limiting access to abortion and contraception, as well as creating financial and social incentives for the population to reproduce.”. He admits that the actual effects of such programs are hard to quantify.

Further, the author argues that “[i]n theory, pro-natal programs are the best bet”. As he hopes it would perhaps be “reflating fertility”.

Another Look At The Entitlement Crisis

First, I think, the author is quite wrong to believe that promoting the total fertility rate to go up again is a solution. The worldwide, decades long trend for TFR is downward towards 2 or below for good and well understood reasons. Thus, pro-natal policies are an exercise in futility. These demographic trends probably have to be accepted. In the following decades, the human approach to procreation may dramatically change anyway thanks to advances in medicine and genetics etc.

Second, the author implicitly presumes that big government pay as you go entitlement programs like Social Security are a given and are desirable. He is wrong on this too. It is high time to get big government out of the way to provide one size fits all retirement benefits for the whole population. Pay as you go national retirement systems are akin to Ponzi schemes. Such systems are but huge power grabs by big government. In recognizing this lies a much better solution to the entitlement crisis: individual self reliance in form of personal retirement savings. The earlier we get young people to accept this form of responsibility, the better. Once implemented, total fertility rates become much less relevant.