The paradox is, of course, that families take a long time to grow and that growth takes place in an unpredictable future. So the incentives and disincentives are in one sense irrelevant, because they address asynchronous time cycles.

Drastic depopulation due to pandemic disease is a real and continuous threat as a result of globalization. The only answer that I can see is the decentralization of family growth decisions based on the universal availability of education.

You can't be me, I'm taken

But on a second examination, there is something else potentially amiss here. Children and the old have one thing in common. They are not economically productive, and they require resources for their survival. Yet, somehow, the old are in this type of article considered only a burden, and the young, only a benefit in terms of future workers.

Ha! This is an idea I tried to communicate in my very first diary on ET, An Amateur Economist's Quibbles, returned to in 2006, and again in a comment thread debating one of our past trolls. To recap and emphasize again:

1. Relative numbers matter more than absolute numbers.
   
   Where do you want to live: a country whose population grew 50% while its GDP grew 25%, or a country whose population shrunk by 50% while its GDP shrunk by 25%?

2. For the pupose of social budgets, when considering the entire economy, the only thing that matters is the ratio of wage-earners and supported persons.
   
   What proportion of the latter receive pensions, jobless benefits, incapacity and social benefits, charity support, beggars' money, support from family members (be them housewifes, grannies, children), childcare benefits and education funds, is - detail.

3. The first-order effect of demographic changes (as well as policy and rule changes) is only to shift population percentages between different categories of suported people. The improvement of the budget in one narrow social area goes with the worsening in another.
   
   This diary considers one shift: aging; reduced ratio of supported children while there are more retired people. But, you can shift from jobless to retired (by changing the retirement age), from jobless to incapacity benefit (done in Britain, as we discussed often), from the previous to family support and beggars (by cutting state social benefits).

Here, retirees who continue to work while drawing social security and benefiting from medicare continue to pay in to these same funds via payroll taxes or self-employment taxes at an effective rate of about 15%, even if half is paid by an employer.  And their labor contributes to the GDP.  

You could model that by assuming half of the population over 65 works half time, at, say, $10/hr until they are 75.  Might not be totally accurate, but it would be better than completely neglecting this demographic.

"It is not necessary to have hope in order to persevere."

My initial reaction:  Who gives a damn what an idiot like Zakaria has to say.  Fareed Zakaria needs to be shipped back to Mumbai on a raft.  Another armchair general among the Very Serious People who gets a raging hard-on over the idea of using our military anywhere and everywhere to promote his bullshit agenda.

Proof, I guess, that you can stick any imperialist asshole with a foreign accent in front of a camera and get the hamsters to run on their wheels.

Be nice to America. Or we'll bring democracy to your country.

Later I got a second reference on pensions funds sustainability,  from wsws.org (world socialist web site, a place where interesting things are found, still I rarely go there, because i think is biased from the start - yet I read often the Financial Times!? ). Follows an excerpt of the article "Britain: Truth suppressed about pensions crisis", by Jean Shaoul (17 March 2004).

The Office of National Statistics (ONS) postponed the launch of Social Trends No. 34 while it reprinted a version that was more to its liking.

Academics Sara Arber and Jay Ginn, from the University of Surrey's Centre for Research on Ageing and Gender, introduced the 2004 edition of Social Trends with an article entitled Ageing and Gender: Diversity and Change.

It made clear that the government's abandonment of one of the central pillars of the welfare state--universal pension provision through the redistribution of income by the state--would have disastrous consequences for the elderly.

Arber and Ginn then exposed the fact that the funds existed to prevent such a situation from occurring. The National Insurance Fund--made up of workers' contributions and used to pay pensions, sick pay, unemployment benefits, etc.--was in fact in surplus.

More recently a honest and concern senior politician, just before leaving my country, called attention discretely to the IMF Working paper WP/05/71 - "Aging - some pleasant fiscal arithmetic" -, from David Hauner.
I could not understand it, though. Can any of you?

[For] the first time on record, birthrates in southern and Eastern Europe had dropped below 1.3. For the demographers, this number had a special mathematical portent. At that rate, a country's population would be cut in half in 45 years, creating a falling-off-a-cliff effect from which it would be nearly impossible to recover. Kohler and his colleagues invented an ominous new term for the phenomenon: "lowest-low fertility."

[The] main threats to Europe are economic. Alongside birthrate, the other operative factor in the economic equation is lifespan. People everywhere are living longer than ever, and lifespan is continuing to increase beyond what was once considered a natural limit. Policy makers fear that, taken together, these trends forecast a perfect demographic storm. [The crisis] will come from a "triple whammy of increasing demand on the welfare state and health-care systems, with a decline in tax contributions from an ever-smaller work force." That is to say, there won't be enough workers to pay for the pensions of all those long-living retirees. What's more, there will be a smaller working-age population compared with other parts of the world...

"[There] are really four different population changes happening in Europe." One concerns Eastern Europe, where trends date from the Communist period and portend a special, and especially virulent, class of social problems. Bulgaria's birthrate is 1.37, and life expectancy for males is seven years less than in Belgium or Germany; the E.U. estimates that Bulgaria's population will drop from 8 million today to 5 million in 2050. Since 1989, Latvia's population has dropped 13 percent; its fertility rate is one of the lowest in the world, and its divorce rate is among the highest in Europe...

Was communism better for family building than modern capitalism?!

Germany and Austria are in something of a category of their own. They share many of the same characteristics of other Western European countries with regard to forces affecting family life, but in addition childlessness is peculiarly high in these countries, and has been for some time. A 2002 study found that 27.8 percent of German women born in 1960 were childless, a rate far higher than in any other European country. (The rate in France, for example, was 10.7.) When European women age 18 to 34 were asked in another study to state their ideal number of children, 16.6 percent of those in Germany and 12.6 percent in Austria answered "none." (In Italy, by comparison, this figure was 3.8 percent.)

[But] the true fertility fault line in Europe [runs] between the north and the south. Setting aside the special case of countries in the east, the lowest rates in Europe -- some of the lowest fertility rates in the world -- are to be found in the seemingly family-friendly countries of Italy, Spain and Greece (all currently hover around 1.3). "[We] see that Italy has two records that are maybe world records," he said. "One, young people in Italy stay with their parents longer than maybe anywhere else. No. 2 is the percentage of children born after the parents turn 40..." [The] deeper problem may lie precisely in the family-friendly ethos of these countries. This part of the self-definition of southern European culture -- the "My Big Fat Greek Wedding" ideal -- has a flip side. "In all of these countries," Billari said, "it's very difficult to combine work and family. And that is partly because, within couples, we have evidence that in these countries the gender relationships are very asymmetric."

[The] accepted demographic wisdom had been that as women enter the job market, a society's fertility rate drops. [But] more recently, and especially in Europe, the numbers don't bear it out. In fact, something like the opposite has been the case. [Analysis] of recent studies showed that "high fertility was associated with high female labor-force participation . . . and the lowest fertility levels in Europe since the mid-1990s are often found in countries with the lowest female labor-force participation." In other words, working mothers are having more babies than stay-at-home moms.

[The] hypothesis the sociologists set out to test was borne out by the data: women who do more than 75 percent of the housework and child care are less likely to want to have another child than women whose husbands or partners share the load. [As] Mencarini said, "It's about how much the man participates in child care."

[In] Europe, many countries with greater gender equality have a greater social commitment to day care and other institutional support for working women, which gives those women the possibility of having second or third children. [The] Scandinavian countries have both the most vigorous social-welfare systems in Europe and -- at 1.8 -- among the highest fertility rates. [Norway] guarantees about 54 weeks of maternity leave, as well as 6 weeks of paternity leave. With the birth of a child comes a government payment of about 4,000 euros. State-subsidized day care is standard. The cost of living is high, but then again it's assumed that both parents will work; indeed, during maternity leave a woman is paid 80 percent of her salary.

[While] Italian women tend to be as highly educated as Scandinavian women,[just] about 50 percent of Italian women work, compared with between 75 percent and 80 percent of women in Scandinavian countries. Despite its veneer of modernity, Italian society prefers women to stay at home after they become mothers, and the government reinforces this. There is little state-financed child care, especially for new mothers, and most newlyweds still find homes close to one or both sets of parents, the assumption being that the extended family will help raise the children. But this no longer works as it once did. [The] same economic forces are at work in both northern and southern Europe -- it's just as hard to make ends meet in Madrid or Milan or Athens as in Oslo or Stockholm -- which gives the predominantly two-income families in the northern countries an edge. [In] Scandinavia, thanks in part to state support, the more children a family has, the wealthier it is likely to be, whereas in southern Europe having children is a financial sinkhole, which drags a family toward poverty.

How were "the same" economic forces working before? Some forces and counter-forces must be shifting really unpredictably. Or is there some global development pattern that says there is not much point to bring a child into this world?

. . . Why should we fear being able to go to beach and not fighting for a place to put a blanket? Will the world collapse if we go to work and there are no traffic jams? And, should we be upset that it will be easier to reduce greenhouse gas emissions if there are fewer of us emitting?

The article seems to rely on some loon tune economics to make the prospect of declining populations seem like a serious problem. For example, it warns about rising rates of retirees to workers. Guess what, we have had rising rates of retirees to workers for the last century. Why on earth would anyone think that this is some sort of crisis?

. . . The implication that we will have no workers to care for our elderly, or alternatively that future generations of workers would face some crushing tax burden can be seen to be ridiculous with the most basic economic analysis. As one commentator quoted in the piece notes, there is a large amount of unemployed and underemployed labor in Europe. This could be put to work in the event that there was a labor shortage.

. . . Yes, but their taxes will rise. Excuse me, but this sort of argument is tripe and it has no place in a serious newspaper. Standard projections for the growth rate of wages show that the rise in before tax wages should easily outpace the impact of any tax increases necessitated by a higher ratio of retirees to workers. There is no plausible story in which demographic pressures will cause future generations of workers to have lower standards of living than we do today.

Emphasis added.

The New York Times Magazine this past Sunday joined the chorus of alarm over the declining birth rates of Europe.  The implicit message: we Americans will be left alone in a world overrun by the brown hordes because the wimmens of Europe will not breed for the Fatherland.  

I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.