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Milton J. Madison - An American Refugee Now Living in China, Where Liberty is Ascending

Federalism, Free Markets and the Liberty To Let One's Mind Wander. I Am Very Worried About the Fate of Liberty in the USA, Where Government is Taking people's Lives ____________________________________________________________________________________________ "Extremism in defense of liberty is no vice. Tolerance in the face of tyranny is no virtue." -Barry Goldwater-

Saturday, May 08, 2010

The Greek Crisis Is A Demographics Wake-Up Call

As I have argued for quite sometime, 20th century European style socialism was a demographic indulgence as illustrated by the graphs in the article linked below. This person also states what I have been concerned about (the bold is mine).....
The Greek crisis and the populist backlash are a wake-up call, not just for Greece and Europe but also for the US and most other developed nations. The current government budget deficits and the overall debt burden may be frightening but they pale in comparison to the scale of unfunded liabilities for pensions and healthcare. Temporary measures for bailouts and economic stimulus packages are one thing but without drastic measures, ongoing government deficits are simply not sustainable for the simple fact that people live longer and there are not nearly enough young people joining the work force to generate sufficient government revenues and to support the growing unfunded liabilities.
The current problems in Europe is just the tip of the iceberg. There will be more and more troubles with government transfer payments and the paygo nature of these payments. Paygo being that the promises are unfunded and are met by paying as we go along. This was a demographic indulgence where small populations were supported by large populations of working folks. This will no longer be the case as the baby boomers reach ages where they become entitled to these payments and benefits.

Governments will be unable to pay for these obligations given current taxes and promises of confiscatory taxes in the future will suppress both economic vitality and reduce investment in innovation as investment and work will be taxed at increasing rates.

The Greek Crisis Is A Demographics Wake-Up Call

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