Thursday, February 18, 2010

The Unsustainable Truth-3

The population of Europe is shrinking every year. At the same time the people who are already there are aging faster and living longer. They will need to have more social services and health care, which will increase the budget of all the European countries. Either they will have to tax more (which they already do and nobody likes it) or they will have to curtail their social services (which nobody likes). But even if they do an either or scenario they will be short of money since whatever debt they acquire has to be paid back with interest.

This type of model according to me is unsustainable in the long run for many countries. Look at Japan for example, they have the fastest growing old population in the world and their government has borrowed more and more without caring about who is going to pay for all this. Even when they are issuing more debt, they will have to incur more interest on it or will have to pay higher interest in order to attract investors. Their population is shrinking too (with a combination of factors like stringent immigration policy, lack of child care and society averse to women working etc).

Many European countries are hesitant to open their countries to massive numbers of immigrants since their own population is averse to integration with “other people” no matter what they openly say otherwise. The idea of the government taking care of people from cradle to the grave which is still in vogue in many European countries (and supported by their population enthusiastically) will not last much longer and for the young people who are supporting these aging population are fearful of not being able to enjoy their fruits of labor when they become old.

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