Eurabia

Europe or Eurabia 2050? part 1

Written by Sandra Carney
Saturday, March 04, 2006

Like a mellowing parent, America in the 21st century needs to plan for the best possible future for its children and grandchildren. Common to human nature, as our years advance, we begin to search out our roots and pass on hereditary information to our descendants. In this great melting pot of a nation, there are few of us who don’t have links to Europe and we look back at the “old country” with the greatest of affection.

But do we want as an ally an aging Europe, with mounting debt and a population that is declining to grow by the tens of millions, if not hundreds of millions, with angry Muslim immigrants from North Africa and Middle East countries?

Historically, up to the beginning of last century, elderly people aged 65 years or older made up approximately 2% to 3% of the population.

In 1980 the median age for Europeans was 32 years. For U.S. citizens, it was 30 years.

By 2050, the median age projection for the European Union is 52 years. For U.S. citizens, it is 39 years.

So between 1980 and 2050, Europeans have aged 20 years, but U.S. citizens have aged 9 years.

There are two primary reasons for this age span between the average European and American. A declining birth rate in Europe has become trendy, which is coupled with rising longevity. Though Americans are also enjoying longevity, our birth rate is at about replacement level.

This forecast is dire for the continent of Europe and may bring several economic and geopolitical difficulties.

The disadvantages include slower economic growth and a higher cost per person to subsidize the public debt and provide public service such as national defense. Combine this with the funding of pensions and healthcare for the elderly and a gloomy picture rears it’s head for the future of Europe’s economic state.

The Europeans own figures project that the EU’s share of the world’s GDP will shrink substantially over the next two generations, from 18% in 2000 to 10% in 2050.

In the same period the EU projects that the U.S. share will go from 23% to 26%.

According to the European Commission 2002, the largest economies in the world will be that of the USA, China, and India.

“European Commission, The EU Economy: 2002 Review, ELFIN/475/02-EN:
December 11, 2002.”

In the EU report of 2005, the commission forecast that from the year 2015 a shrinking workforce, will act as a brake on potential growth of the EU, reducing it from 2.5% today to 1.25%

Another disaster that looms in the future of Europe is the shrinking pool of people available to pay for government health and pension plans.

These systems are un-funded. The governments hold few assets, and benefits must therefore be paid directly from incoming taxes.

With the shrinkage of working people, the revenues from taxation will decrease, while the number of people on pensions will increase.

The demand for government health care will increase substantially, as seniors consume most of the health care cost.

According to the “UN Population Division in 1980,” there were 22 people aged 65+ for every 100 workers.

In 2005 that number increased to 25 people aged 65+ for every 100 workers and by 2050, there will be 56 people aged 65+ for every 100 workers.

One does not have to be a rocket scientist to figure out that this is less than two workers per retiree!

In a report published in 2005, Laurence Kotlikoff, et al., have calculated that:
• Europe, where the total tax on wages is already above 40 percent, the tax burden will rise to 60 percent by 2030 and approach a staggering 70 percent by mid-century.
• Combining these tax rates with an 8 percent simulated fall in real wages, the expected reduction in take-home pay of European workers will be one quarter by 2030.
• By mid-century, the relative fall in after tax wages will exceed 40 percent relative to what it would have been without the growing burden of elderly entitlements.

“Aging, the World Economy and the Coming General Storm”
(NCPA Policy Report No 273)

Here comes the hard bite for the Europeans:

Tax rates have to be raised on a public that is already overburdened with taxation.

The other critical solution would be to raise the immigration barriers and take in more young people to pay the taxes to fund the pensions promised.

Of course, there are other solutions that might resolve the problems of Europe’s emptying coffers.

1. This could be achieved by reversing the trend of the lower birth rate by psychological means and/or monetary rewards.

2. Reducing pensions by up to 41% and cutting back on health care benefits, which would lead to a desperate state for the seniors.

3. Liberalizing immigration laws.

4. A combination of all of the above options.

Here-in lies a conundrum for the Europeans: Is there a chance that the birth rates will reach replacement levels very soon? Not very likely!

Neither the “U.N. Population Division,” nor the “German Federal Statistical Office” see this happening by 2050.

Fertility rates change slowly over time and to get the fertility rate from 1.5 per woman (i.e.15 live births for every 10 women during their child bearing years) to 2.1 per woman (which is the requirement for a society to replace itself) is a 50% increase.

Even with incentives by the government, if it can possibly happen, it will take a generation for the population to replenish itself. which is too late to impact the year 2050.

And to make matters worse, since the pool of women in their childbearing years is small, a 2.1 fertility rate will replace a smaller society.

Let’s take a look at immigration. Could this be the solution to Europe’s shrinking population? Perhaps, but Europeans may want to learn Arabic, look in the direction of Mecca, and learn the ways of the benevolent Sharia!

The grave dangers of the “immigration” solution to Europe’s glaring geopolitical and economic problems is the subject of Part Two, which will appear next week.
About the Writer: Sandra Carney, born in India, is Anglo-Burmese, of British birth. She became an American Citizen in 1972 and has enjoyed living in the U.S.A. since 1967. She inherited her interest in politics from a family heavily inculcated in the politics of their times. Because of her mixed heritage, she is keenly interested in all that goes on around the world and is fiercely protective of her adopted country, the U.S.A.

posted by Gurdjieff @ 3:55 PM