“Look around you. From now on, it gets worse. In ten years’ time, there will be no American Dream, any more than there’s a Greek or Portuguese Dream. In twenty, you’ll be living the American Nightmare, with large tracts of the country reduced to the favelas of Latin America, the rich fleeing for Bermuda….

“For a while, there may still be an entity called the ‘United States,’ but it will have fewer stars in the flag, there will be nothing to ‘unite’ it, and it will bear no relation to the republic of limited government the first generation of Americans fought for. And life, liberty, and the pursuit of happiness will be conspicuous by their absence.”

—Mark Steyn, from After America

In his last book, America Alone: The End of the World as We Know It, Canadian political writer came out guns blazing.  Due to aging demographics and low birthrates, the Western world would be crushed under the weight of an unsustainable welfare and pension system.  Only America, with its comparatively high birthrates and more open economy, would be left to carry the torch of Western Civilization.

In his 2011 After America: Get Ready for Armageddon, however, Steyn appears to be having second thoughts.  In the introduction to the book he writes, “The good news is that the end of the rest of the West is still on schedule. The bad news is that America shows alarming signs of embracing the same fate, and then some… My warning proved so influential that America decided to sign up for the same program but supersized.”

Normally, I might dismiss Steyn as just another publicity-hungry political shock jock.  We have enough of those already, thank you very much.  Politics are heated enough already, and political rants give me a headache.

But what separates Steyn from, say, an Ann Coulter or a Sean Hannity, is that behind the brash, inflammatory bravado is a surprisingly sharp mind  with an understanding of the single most important macro trend of the next century: changing global demographics.

I disagree with Steyn on many policy points (we’ll get to some of those), and I find his attitude and approach to life to be unnecessarily caustic.  (It’s ok to smile, Mark.  Don’t worry; your face won’t fall off.)  But while his delivery may be somewhat crass and obnoxious, his understanding of demographic trends is spot on.   This book review will primarily be an explanation of Steyn’s views on demographic trends and a comparison of his views with some of our own.

On Europe’s Demographic Destiny

Steyn, echoing the work of demographer Philip Longman in The Empty Cradle, writes that the European downturn has “brought forward by a couple decades the West’s date with demographic destiny,” and that destiny is not pretty.

The average American women will have 2.1 kids during her lifetime.  But in Greece, the fertility rate is just 1.3 children per woman.   That’s significantly below the replacement rate; soon, more Greeks will be dying of old age than are being born.  “You can’t borrow against the future,” Steyn writes, “because, in the crudest sense, you don’t have one… Welcome to My Big Fat Greek Funeral.”

Steyn asks a question that we have asked repeatedly: “How do you grow your economy in an ever shrinking market?”

The answer is that you don’t.   There is no growing out of the ongoing Greek debt crisis.  It’s simply not going to happen.  As Steyn continues,

Greece is broke, and has run out of Greeks. So it’s getting bailed out by Germany. But Germany also has deathbed demographics: as Angela Merkel, the Chancellor, pointed out in 2009, for Germany an Obama-sized stimulus was out of the question simply because its foreign creditors know there are not enough young Germans around ever to repay it.  Germany has the highest proportion of childless women in Europe: one in three fräulein have checked out of the motherhood business entirely.

There are real economic implications here, most obviously for consumer spending and housing.   A dearth of young people means a permanent oversupply of housing, all else equal, unless existing supply is torn down.   As Steyn explains it, “An asset is only an asset as long as there’s a buyer willing to buy it. If you’ve got 50 houses and 100 would-be homeowners, that’s good for property prices. If you’ve got 100 houses and 50 would-be homeowners, that’s not so rosy.”

The same is true of manufactured products and services.  While declining populations are actually good in pre-industrial, agrarian-based societies (fewer people means that a given amount of food is divided fewer ways), the economic system that was born in the Industrial Revolution depends on ever-increasing populations and economies of scale.

What do you do when your domestic population is aging and actually declining, as it is in Japan, Germany and Russia?  Well, export, of course.  As Steyn notes, “for Germany, Italy, and Japan, their only viable sales territory is the world. When your median age is forty-three and rising, any economic growth is down to exports.”

This is why the calls for Germany to boost its imports and domestic consumer spending as a means of alleviating the Euro crisis are absurd.  Over the long haul, it’s simply not a viable option.

In an interesting analogy that I had never before considered, Steyn describes the credit markets as a “demographic exchange.”  Banks are a conduit whereby the older generation with accumulated assets lends money to the capital-poor younger generation with “ambition and ideas.”  The lack of such ambition and ideas—or perhaps more accurately the lack of young people—goes a long way to explaining the low yields  on offer.  There is a surplus of capital and a shortage of money-making ventures in which to invest it!

Changing Socials Mores

The demographic changes underway in the West are a case study in the Fallacy of Composition; what is “good” for the individual pieces is not good for the whole.   Moral or religious preferences for large families aside, having few (or no) kids is “good” for a single household.  Kids, as every parent knows, are expensive.  Fewer children means more money to be spent on the existing children or on the parents themselves.

But while the lifestyle choice for smaller families (or the decision to eschew parenting at all) is good for the immediate material comfort of the people involved, it is a disaster for society as a whole.  Yes, your family can now afford a bigger house.  But who are you going to eventually sell it to?

Steyn throws out the statistic that, in 1970, 69 percent of 25-year-old white men were married. By 2000, the number had fallen to just 33 percent.  Steyn insists that this is due to an abandonment of responsibility by young and youngish men—“they lead teenage lives on an adult salary.”  This would seem to be a little unfair.  The average age of marriage has trended upward with education and—critically—female education.  The pool of women available to be married is smaller because so many are furthering their educations and want to have at least a few years of independent work experience before marriage and motherhood.  This is not a bad thing.  And Steyn’s statistics also do not account for changing social mores; a decent percentage of men this age would probably be considered “married” in the common-law sense of sharing a home with a woman.

Still, Steyn notes a Nielson survey that found that males aged 18 to 34 now play more video games on average than teenagers (two hours and forty-three minutes per day), so maybe he has a point.  In comparison, Al Bundy, the “Everyman” of a different era, would seem downright respectable sitting on the couch watching football with his hand down his pants.

Steyn cites a 1996 piece written by the historian Samuel Huntington in which Huntington identified ten world civilizations, including three major ones—Western, Muslim, and Sinic.  Steyn comments,

A decade and a half on, China—the Sinic power—is on the rise economically but is demographically weak, while Islam is surging demographically but is economically irrelevant, except for that portion of the Muslim world that sits on oil it needs foreigners to extract. Meanwhile, the West is in steep decline both economically and demographically. And as western civilization was the indispensable component in the construction of the modern world, that raises a question: What comes next?

“As I wrote in America Alone, the People’s Republic has a crude structural flaw: thanks to its disastrous one-child policy, it will get old before it gets rich, and, unless it’s planning on becoming the first gay superpower since Sparta, the millions of surplus young men whom the government’s One-Child Policy has deprived of female companionship is a recipe either for wrenching social convulsions at home—or for war abroad, the traditional surplus inventory-clearance method of great powers.”

Again, crude, but largely right.   We’ve written volumes about China’s bleak future and has even joked about the economics of Chinese gay bars.  China has a surplus male population of roughly 30 million.  Even if you ignore cultural and linguistic compatibility and import brides from other parts of the world (parts of the Middle East have surplus women), the numbers don’t add up.  Thirty million is a large number.  It’s roughly the entire female population of the United Kingdom.

Some sinophiles, including the legendary Investment Biker Jim Rogers,  believe that the shortage of women in China (and Korea too, for that matter) will lead to an Asian feminist revolution.   Precisely because of their scarcity, women will get the recognition and respect that has so long eluded them in patriarchal Asian societies.

Fat chance.  The reality is that the “value” of Asian women has increased, but not in the way that Rogers envisioned.  Human trafficking , forced marriage, and forced prostitution are all on the rise in large parts of Asia.

Rather than raise the status of Asian women, changing demographics appear instead to have created a boom for pimps.

Returning to After America, Steyn shifts his arguments to areas he really should have avoided—globalization and immigration.  When Steyn—or any other author for that matter—issues the tired Luddite rants about globalization and illegal immigration destroying the American middle class, I lose respect for his intellect and for his body of work.  It’s cheap, crass populism, and a writer with Steyn’s knowledge of the world ought to know better. Worse, it detracts from his insightful writings on the role of demographics.

Here are a few examples of Steyn’s intellectual “slumming”:

“As disastrous as the squandering of America’s money has been, the squandering of its human capital has been worse. While our overrefined Eloi pass the years until their mid-twenties in desultory sham education in hopes of securing a place in professions that are ever more removed from genuine wealth creation, too many of the rest, by the time they emerge from their own schooling, have learned nothing that will equip them for productive employment.”

Nearly anyone would agree that plenty of American youth waste their educational opportunities pursuing university majors of little practical value.  We have too many “soft” majors in things like sociology and not enough engineers and computer scientists.  But Steyn would appear to place no value at all on a liberal arts education.  Rather philistine of him and also a bit hypocritical given his continued lamentations over the decline of Western civilization.  And it gets worse:

“In the space of one generation, a nation of savers became the world’s largest debtors, and a nation of makers and doers became a cheap service economy. Everything that can be outsourced has been—manufacturing to by no means friendly nations overseas; and much of what’s left in agriculture and construction to the armies of the ‘undocumented.’

“Once upon a time, millions of Americans worked on farms. Then, as agriculture declined, they moved into the factories. When manufacturing was outsourced, they settled into low-paying service jobs or better-paying cubicle jobs—so-called ‘professional services’” often deriving from the ever swelling accounting and legal administration that now attends almost any activity in America. What comes next? Or, more to the point, what if there is no ‘next’?”

Again, most people would agree that this country has too many accountants and lawyers that have been made necessary by an ever-expanding government.  A lot of brain power gets wasted in gaming the tax code and in finding legal loopholes.  Imagine how much more productive this country would be if those same highly-intelligent, highly-educated professionals were freed up to do anything else.

But farming and manufacturing?  Seriously?

“At America’s founding, 90 percent of the labor force worked in agriculture. Today, fewer than 3 percent do. Food is more plentiful than ever, and American farms export some $75 billion worth of their produce. But they don’t need the manpower anymore.”

And this is a bad thing?  It’s called productivity, Steyn.  When any business—be it a farm, factory, or legal firm—produces more with less inputs, this is a good thing.  Without creative destruction, there can be no progress.

But beyond this, Steyn seems to misunderstand what “wealth creation” is.  Consider that modern consumer staple, the iPhone.  The wealth creation is in the intellectual property that devised the concept, designed the product, and wrote the software that makes it all go.   It was Steve Jobs and his engineers who created the wealth in Cupertino, California, and not the anonymous assembly line workers scattered throughout Asia.  Similarly, it was Henry Ford and his engineers who created the wealth when they designed the Model T and its assembly process, and not the interchangeable workers tightening the bolts.

This is not to diminish the role of labor in the economy, of course.  Without quality workers, neither Steve Jobs nor Henry Ford would have ever been able to implement their plans.  But workers do not “create” wealth.  Capitalists, large or small, create wealth by using labor as an input.  Steyn should know this.

At any rate, I should give credit where it is due.  Steyn “gets” demographics, and much of his writing that concerns demographics is spot on.  But his social commentary, even when it is insightful, tends to be extremely inflammatory.  And his economics leave quite a bit to be desired.  If you enjoy reading a good rant, pick up a copy of After America.  But for most readers, I would recommend instead Philip Longman’s The Empty Cradle.  Longman tells the same demographic story but without managing to anger half the civilized world.

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