The prestigious Financial Times offers an explanation for the West’s pessimism. It blames aging.
It does not blame Keynesianism. It does not blame a loss of faith in the idea of progress, a factor that Robert Nisbet warned against in the Epilogue to his great book, History of the Idea of Progress (1980). It does not blame the tax-funded public schools and the Keynesian textbooks. It does not even blame legalized abortion, which is a major cause of the West’s demographic aging.
It does mention the welfare state, especially tax-funded old age retirement programs and old age medical care. But it does not call for the abolition of both.
It is easy to blame aging. It lets Keynesian politicians off the hook. Nothing politically can be done about aging in the near term, other than forced euthanasia. This policy has limited appeal. So, we are asked to believe this:
Among the many surveys of global attitudes, it is striking how consistently more optimistic Asians, Latin Americans and Africans feel than people in the west. It makes sense that people in China, India and elsewhere feel rosier about their children’s future. How could it be otherwise? Most people in the developing world start from such a low base that only catastrophe could prevent the rise of living standards. But it would be a stretch to blame western pessimism on that. A more global economy ought to be a net benefit to everyone. It should also be flattering. Today’s world is rising very much in the west’s image. Russian President Vladimir Putin and China’s communists notwithstanding, there is no ideological rival to democratic capitalism. Even Cuba is belatedly tiptoeing in from the cold.
What then, is the matter with the west? The answer is beguilingly simple. We are growing older. In economic terms that means secular stagnation. Japan is greying faster than the rest — its economic growth has also been slower for longer than that of any other wealthy country. But it is a matter of degree. The greyer we become, the less we save. The less we save, the less we invest. The less we invest the slower we grow. Modern technology ought to provide the answer, we are living longer so we should be working longer. However, politics stands in the way.
The less we grow, the more we squabble over budgets. From Spain to Canada, the old keep getting the better of the fiscal wars. France has a higher birth rate than most other European countries. But it devotes more than average of its resources to the old. One of the reasons François Hollande was elected president was that he pledged to restore the French retirement age to 60 from 62. In the UK George Osborne, chancellor of the exchequer, has exempted state pensions altogether from the spending cap on welfare. In the US, Medicare and Social Security gobble up a larger share of the federal budget each year. No party dares touch the retirement age — which is set to rise only at a glacial rate from the current level of 65.
One aspect of the problem — but only one — is the welfare state for oldsters. But if the geezers are better at the politics of plunder than workers are, then blame the politics of plunder in general. There will always be winners and losers in the politics of plunder. The losers today are the majority. Why? Because politics is all about voting blocs and rhetoric. The geezers have the advantage in both these days. They have learned to manipulate the majority by, what R. J. Rushdoony in 1970 called, the politics of guilt and pity.
If you want to restore economic growth, start with the de-funding of the welfare state, including the public schools. Then abandon Keynesianism. Then get rid of the graduated income tax. Preach the connection between morality and progress. Abandon the social gospel: “Thou shalt not steal, except by majority vote.”
Shrink the state. End the Fed. Balance the budget. Watch optimism reappear. Watch the savings rate rise.