Our labour force is shrinking!  Well… it isn’t shrinking exactly, but it’s swelling more slowly than it was in the past!

Some or most readers shouldn’t see a problem in this, but the economic lookouts who have been speaking doom for several years now have a point that merits consideration: unless the population continues to expand, we’ll be consumed by our own system of entitlements.  However, the economic lookouts who look for nothing better than a continually-swelling workforce are not looking far enough ahead.

What’s a Ponzi scheme?

Named for Charles Ponzi, an Italian immigrant of the early 20^th century, a Ponzi scheme is an investment operation that relies on continuous, ever-enlarging enrollment of new investors in order to make due payments to existing investors.

Social Security has been labelled (accurately) a Ponzi scheme: it does not generate enough wealth on its own to pay out the benefits it promises; rather, it relies upon ever-increasing participation to meet its obligations.  Social Security isn’t the only problem, though; as a whole, Medicare, disability plans, retirement plans (which are notoriously exorbitant for government employees) and our entire culture of entitlements operate similarly to Ponzi’s swindles.

With a large enough work force (i.e. taxable population), a population produces enough wealth that retirees, invalids, etc. don’t create such a drain on resources as to cultivate resentment.  But a decreasing workforce or even one that just isn’t growing quickly enough spells economic destruction.

Is growth really slowing?

You’ve probably heard reports that in ‘07, our birth rate hit its highest mark since the very peak of the baby boom (1957).  Couple that with lower infant mortality, and it can’t be that our population growth is dropping, can it?

Birth rate means babies born per year, not babies born per adult.  We may be having more babies as a population, but we’re having fewer babies proportional to the existing population. That means that when they’re adults, there should be fewer workers per senior citizen.  That’s a problem because the workers of tomorrow are expected to pay for Social Security, Medicare, and whatever else we install in the next thirty-or-so years.  The problem is exacerbated by an increasing life expectancy, which so far has increased the length of retirements more than it has increased the careers of Americans.

Thank goodness for the influx of immigrants, right?  I haven’t verified the following claim for myself, but the recent LIMRA report “Guaranteed Uncertainty” says that current legal immigration alone exceeds either of the European immigration waves of the 20^th century (that’s 1900’s, Nick).

Replacing our population with immigrants

True, some writers talk about the expanding immigrant population as a scare tactic: oh no, in 20 years your neighbours, bosses, and juries will have a different language, skin colour, religion, etc.!  There’s nothing to be said to people who are emotionally moved by that “horror”; there is something to be said to people who are under the illusion that the new Americans (naturalized immigrants) are going to stand for the system of entitlements that current Americans uphold.

Replacing our workforce with immigrants will drum up some more taxable commerce, but our political centre is going to change dramatically as our population does the same.  Nobody has to teach voters to vote their own interests; they just do it.  So after recent generations of Americans (Baby Boomers and Gen X, potentially Gen Y) shrugged off much of the financial and emotional burden of raising their own families, shrugged them off in order to be liberated and pursue careers and independence, let’s don’t expect other nations to stand in as our dutiful offspring to nurse us in our old age.

Tomorrow, we’ll look further into the transition between the inheritance of the Baby Boomers and the ascendancy of new Americans (immigrants and 2^nd generation Americans).

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