Like Europe and Japan, the American fertility rate is in a nosedive. That is disastrous.
Forget the debt ceiling. Forget the fiscal cliff, the sequestration cliff and the entitlement cliff. Those are all just symptoms. What America really faces is a demographic cliff: The root cause of most of our problems is our declining fertility rate.
The fertility rate is the number of children an average woman bears over the course of her life. The replacement rate is 2.1. If the average woman has more children than that, population grows. Fewer, and it contracts. Today, America’s total fertility rate is 1.93, according to the latest figures from the Centers for Disease Control and Prevention; it hasn’t been above the replacement rate in a sustained way since the early 1970s.
Low-fertility societies don’t innovate because their incentives for consumption tilt overwhelmingly toward health care. They don’t invest aggressively because, with the average age skewing higher, capital shifts to preserving and extending life and then begins drawing down. They cannot sustain social-security programs because they don’t have enough workers to pay for the retirees. They cannot project power because they lack the money to pay for defense and the military-age manpower to serve in their armed forces.
How is the Obama Administration dealing with this problem? First, by assuring that abortion on demand remains legal and easy. Second, by – for the first time – passing a law that provides absolutely free birth control to every American. Third by causing the labor force to shrink so that fewer of the young who manage to be born work and, therefore, are no different economically than the elderly.
America, like much of the West, is becoming a economy where fewer and fewer young people support more and more elderly and others not in the labor force. It isn’t sustainable.