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Commentary

What's Really Behind the Entitlement Crisis

Wall Street Journal

Demography is not a popular subject, nor is it discussed much in the public square. But it casts a long shadow over the entitlement crises in nations everywhere, including our own.

Consider what a nation's population would have been if birth and fertility rates had not fallen so dramatically in recent decades. Let's call these missing people "never-born babies" and ponder what they mean.

Never-born babies are the root cause of the "social deficit" that plagues nations across the world and threatens to break the bank in many. When a very large cohort of population (a "baby boom") is followed by a very small cohort (a "birth dearth"), there will be relatively few working-age people to underwrite the benefits of the many seniors who have paid into national retirement systems, such as Social Security and Medicare.

On the surface there are two unappetizing ways to deal with this: a sharp cut in benefits or massive deficits. But at the heart of the problem are birth rates (the number of births per 1,000 people per year) and total fertility rates (the average number of children born to a woman over her lifetime) that have fallen sharply all over the world.

The causes are many. Taken together, they add up to a modern lifestyle that may be individually attractive but collectively catastrophic. Here are some of the factors:

For one thing, young people are delaying marriage and, with it, children. The demographic adage here is: "Fertility delayed is fertility denied." Women are pursuing education to an extent never seen before, and women with advanced education have fewer children than women with less schooling. Meanwhile, cohabitation has become commonplace. Until and unless the relationship results in marriage, the numbers of children are fewer in such settings.

Wealth is another important factor. As incomes go up—and they have gone way up over recent decades—fertility tends to decline, and this is especially true as more women enter the workforce. The additional family income is important. But pregnancies and child-rearing interfere with that, and so are sometimes viewed as unacceptable sacrifices to the good life.

Finally, divorce, legalized abortion and easy-to-use contraceptives have all contributed to the numbers of "never-born babies."

Most every nation faced with declining birth and fertility rates has tried one or more programs to make it easier for couples to have children. These include tax breaks, children's allowances, baby bonuses, extended leave for pregnancies and time off for both parents after the birth of a child. These "pro-natal" programs are most prevalent in Europe, where they primarily arose after World War I. Many Asian nations have emulated them, and so has the U.S.

Do they work? Hard to quantify, but easy to say "not well enough." European and Asian fertility rates are typically below replacement levels (an average of 2.1 children per woman). The fertility rates in Italy, Spain, Greece, the nations of Eastern Europe, Russia, the former Soviet republics and South Korea are all below 1.5. In Japan the rate is a treacherously low 1.2. The U.S. rate is much higher, at about 2.0, yet we are still troubled by the lack of young workers to support retiring baby boomers.

As my old boss Lyndon Johnson used to say, "Therefore what?" Unfortunately, there is no easy answer. But surely the place to begin is by recognizing the problem, publicizing it, and trusting that humanity has been around for a long time and is not about to under-breed itself out of existence.

In theory, pro-natal programs are the best bet. They may well be good in their own right. But they have no track record of dramatically reflating fertility.

There is another model that may work. The heated rhetoric of the 1960s and 70s warning of an impending "population explosion" did contribute to declining birth and fertility rates. Young people everywhere heard this message over and over and wondered whether they should bring another hungry mouth into a world of runaway population and declining resources. Of course, resources weren't declining and population growth was not out of control.

Today, potential parents should hear a new message—which can and should be delivered widely, and by celebrities as well as politicians: The real danger for the future is too few births.