By Lee Jamieson, on September 11th, 2008
There is a common misconception about Europe – that immigration is the single greatest threat to the economies of EU member states. However, evidence suggests that Europe is on the brink of a far greater crisis, for which immigration provides the only economically-effective solution.
As the world emerges from its blissfully long summer of global economic growth, seismic demographic shifts are underway, and few governments are prepared for the impending fallout. Anxiety about the world’s “mushrooming” population has been replaced by concerns about the sudden drop in global birthrates.
A population replaces itself at a rate of 2.1 births per couple, and any drops below that figure are watched closely by demographers. Considering that the United Nations has set a birthrate of 1.5 as their crisis point, the current figure of 1.3 in southern and eastern Europe spells disaster for the once thriving economies of these countries. The population of southern and eastern Europe is expected to half within 45 years if the birthrate of 1.3 continues, intensifying the pension crisis, making it harder for governments to meet the costs of basic healthcare and starving key industries of a diverse labor market.
Demographic Shifts
According to a new report by Eurostat, deaths will outnumber births in the EU by 2015. Germany will be particularly hard hit by this trend, losing 14% of its population by 2060. The affect on Germany’s economy has been on the political agenda for years as the country prepares to lose its title as the EU’s largest state within the next 50 years.
As Germany contracts, France is set to prosper but at great expense to its economy. The French government has introduced a series of incentives including generous social security payments, free state crèche facilities and subsidized travel.
Spain has taken an altogether different approach. The fact that only a miserly 0.7% of Spain’s GDP is allocated to helping families makes it unsurprising that the country sports one of Europe’s lowest birthrates. Yet, Spain’s population is flourishing, largely due to its newly introduced immigration policies. In 2005, the Spanish authorities gave work permits to around 700,000 illegal immigrants, and the economy has since enjoyed this new stream of taxation.
Finding a Solution
European countries with dwindling birthrates need to take action now – and in one way or another, it is going to cost them. Inaction could lead to an eventual economic collapse in the long-term where there are too few people to support the aging population. Eurostat predicts that the percentage of Europeans aged over 65 will rise sharply from 17% today to 30% in 2060.
Countries could follow the example set by France and introduce a whole raft of expensive incentives to encourage larger families. Protecting the economy against the looming population crunch today could offset tomorrow’s expenses, protect key industries in the long-term and reduce the impact of the pension crisis. France has certainly recognized the devastating potential of a population crunch and has made some bold moves to preempt it. Although expensive, France has retained its sovereignty.
The same cannot be said for Spain, however. The liberalization of its immigration laws has prompted concerns about both Spanish and EU sovereignty. How can Spanish culture survive if its borders are opened to immigration as the Spanish population dwindles? Perhaps Spain is more open to Europe’s new-found multiculturalism, promoted by the freedom of movement within the EU.
Offsetting the ever-widening hole in Europe’s dwindling workforce with a renewed enthusiasm for immigration may be the only way for some European countries to stave off the population crunch – and the resulting loss of sovereignty may be a necessary evil. Perhaps immigration is not the EU’s greatest economic threat but, rather, its savior.
By J.C., on September 11th, 2008
I’ve mentioned several times before that doctors are not good businesspeople and that the current state of the health reimbursement system is a mess. One reason it is so messy is that it is all about business and not about care. In this country, the basic teaching of medicine is that “continuous care” is the gold standard. This essentially means that when you see one doctor they are your doctor who knows you and they are the doctor that you will continue to see (if you are happy with your care). This patient-doctor relationship is the rewarding one that allows a physician to see you grow from a child into an adult into an elder. Similarly, it allows the patient to have that one person who they can trust to govern their health. The only thing that could end such a relationship was either the patient or the doctor ending it. Most typically, it lasts until the patient either passes away or the doctor retires and sells his practice to another doctor.
Enter the enemy – the insurance company. Nowadays, that type of relationship is almost non-existent. It is the insurance company who works on the patient’s behalf to enter into the patient-doctor relationship. If your doctor does not have a contract to provide care to that insurance company’s patients, then you cannot see that doctor unless you switch insurance companies. Thus in some respects the insurance company holds the patient hostage. The insurance company owns the patient, and the doctor can only see the patient if the insurance company allows this.
Recently, a doctor in the area was ill and needed to take 2 months off of work. He wanted other doctors to cover his patients and see them while he was gone. Unfortunately, all of those patients had one type of insurance that few doctors had a contract with. Thus those patients could not be cared for.
You don’t have to be a rocket scientist to see how messed up the whole thing is. Curiously, they are still teaching “continuity of care” in medical school. Soon they will be replacing that class with Economics 101 for dummies.
By Evelyn Black, on September 11th, 2008
After posting a 24.5% decline in August sales, GM announced on September 3 that it was encouraged by falling gas prices and signs that the market might finally be bottoming out. It takes a whale of a positive attitude to see a bright spot in a sales report like that, especially when the drop occurred during a much-hyped “Employee Discount Sales Event” designed to rid GM lots of a backlog of large to mid-sized trucks and SUVs. Ford reported a 26% drop in August sales, Chrysler a 35% drop.
Sales at Honda and Toyota also dropped but less than 10%, while Nissan actually saw a 15% increase in sales.
Gasoline prices have fallen 11% since mid-July when they hit their peak price ever, but customers remain skittish and for good reason. With three new Atlantic hurricanes currently stacked up like airplanes waiting for a runway and a near-miss from Gustav on gulf oil refineries, there is little cause for celebration. One major disaster could send oil skyrocketing all over again, and that’s not counting geopolitical problems, just hurricane risk.
GM, Ford, and Chrysler are all looking forward to 2010 when they plan to put all kinds of brand new fuel-efficient and alternatively fueled small cars on the U.S. market. Until then, the “bottoming out” of the U.S. auto market is likely to be a long bumpy bottom, made worse by tightening credit conditions and the  possibility of a new waive of unsecured credit and auto loan defaults. In other words, it’s going to be a long year before the U.S. auto industry can expect to see much relief, and what the country will look like at that point is almost anybody’s guess.
Both major presidential candidates are championing $25 billion in low-cost loans to help the U.S. auto industry build the fuel-efficient cars it needs to sell right here in the U.S. Recently, the auto industry requested another $25 billion in government loans to retool their assembly plants. It’s been almost 30 years since the U.S. bailed out Chrysler to give them a leg up against the Japanese, and now here come all three of the Big Three again, hats in hand, asking for rescue so they can “keep jobs in America.”
I confess, I have a chip on my shoulder when it comes the the Big Three. Why is it that lately, after hearing for 25 years about how free markets always regulate themselves when allowed to do so, the U.S. government is suddenly expected to bail out some of the largest corporations on earth? The airlines, the Big Three automakers, Bear Stearns, Faddie Mae and Freddie Mac, and what next?
GM built a successful and wildly popular electric car in 1996 – 12 years ago – to show the state of California that it couldn’t be done, and that people would hate it and refuse to buy it. They wanted to show that new fuel emissions standards enacted by the state would cripple the auto industry.
What happened?
People in California loved the GM electric car, which was dubbed the “EV1.” They loved the EV1 so much that nearly every single person who agreed to the trial lease of the vehicle (it was not for sale but only leased to select customers as a test) wanted to purchase and keep it. GM reacted in 2003 by recalling and destroying every single EV1 in the state. An excellent documentary on this bit of recent history can be purchased or rented almost anywhere; it’s called Who Killed the Electric Car?
It’s a little known fact that the very first car ever built was an electric car. William Morrison built the first model in 1890. It ran for 13 hours at a stretch and achieved an average speed of 14 mph. In 1900 Camille Jenatzy built an electric car that reached a maximum speed of 66 mph. In 1903 the first electric/gas hybrid car was manufactured by Krieger. Then, in 1930, with the invention of the internal combustion engine and the release of Ford’s famous Model-T, production of electric cars came to an abrupt halt until once again, in 1996, GM released one to prove a point and ended up making itself look ridiculous and corrupt.
Here’s a thought: maybe the Big Three are ridiculous and corrupt. They knew in 1996 that 1) they could build an efficient electric care at a reasonable price and 2) there was a market for this car. Why didn’t they keep building it? The documentary has some things to say about that, but I submit that one less conspiratorial reason is that they have rarely been much for innovation, preferring to stick to what (they think) works and ignore what is actually happening in the wider world. And electric cars aren’t even all that innovative: they’ve been around for 118 years!
Businesses that conduct themselves so pigheadedly often fail.
I want to see automobiles made in the U.S. as much as the next guy. More, actually. (I live in Michigan.) But why give $50 billion the U.S. doesn’t have to robber barons who squandered their inheritance by thinking short term, playing it safe, and shipping their factories overseas? Why not give someone else a chance? Why not subsidize start-ups with great automobile ideas in the area of alternative energy and fuel efficiency instead? Hand it off to the little guy, see if he can score a touchdown, because these three sure can’t.
It’s going to be a long, slow 2009 any way you cut it.
Am I worried about how the Fords are doing this winter?
Not on your life.
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