Remarks prepared by John D. Mueller, EPPC Lehrman Institute Fellow in Economics, for an Interparliamentary Forum at the World Congress of Families VI in Madrid, Spain, on May 25, 2012.
I'm pleased to participate in this Interparliamentary Forum. At noon, I am scheduled to chair the plenary panel on "The Demographic Winter (How We Got to Where We Are)." Later I am to participate in the panel on "Family and Social Government Policies." Now I'd like to focus on "Practical Steps on Births, Benefits, Booms and Busts," using the USA and Spain as examples.
Let me start by summarizing the findings of a country-by-country model of fertility. Just four factors explain most variation in birth rates among the countries for which sufficient data are available (comprising about one-third of all countries, but more than three-quarters of world population.)
The birth rate is strongly and about equally inversely proportional to per capita social benefits and per capita national saving (both adjusted for national differences in purchasing power). Social benefits and national saving are inversely related to the birth rate because they represent provision by current adults for their own well-being.
When these factors are taken into account, a legacy of totalitarian government is also highly significant in reducing the birth rate (by about 0.6 children per couple).
Spain's housing boom was part of a world-wide real-estate boom and bust caused by the dollar's role as the world's chief official reserve currency. Commensurate expansions and contractions of high-powered dollars--the World Dollar Base--preceded the gyrations not only of the oil price but also housing prices from 2000 to 2009. Therefore, I repeat a proposal I made at last year's Moscow Demographic Summit: All countries seeking to end the boom-bust cycle should join in supporting a reform of the international monetary system, which would repay all outstanding dollar and other official reserve currencies and restore prompt settlement of payments in gold: a system that worked well for hundreds of years and can do so again.
John D. Mueller, Lehrman Institute Fellow in Economics at the Ethics and Public Policy Center, presented the following lecture at the Family Research Council in Washington, D.C., on April 11, 2012.
I'd like to thank the Family Research Council for its gracious invitation to deliver this lecture, and to Rob Schwarzwalder for both his generous introduction and his leadership. The topic I'd like to discuss this afternoon is "Redeeming Economics: How Federal Budgets Affect the American Family." ISI Books recently published my book, Redeeming Economics: Rediscovering the Missing Element. As I will explain, the original element missing from modern economics is the one that describes our interpersonal relations of love and hate. I should add that my relationship with FRC goes back a long time. In fact, the substance of several of the chapters originated in articles and research published in FRC's Family Policy journal. I see Bob Patterson in the audience, who developed it from a monthly newsletter into a first-rate journal. Though I've attended many events here at FRC, I think my last formal presentation was in 2008, when I presented a paper on "Causes and Cures of Demographic Winter" for a panel when the film "Demographic Winter" was screened here.
I'd like to accomplish three things today which might at first sight seem unrelated.
First, I'd like to offer "a brief, structural history of economics," in order to show that the most important element of the original scholastic economics has been missing since its deliberate omission by Adam Smith, and how its absence has caused several major problems with today's neoclassical economics, particularly its understanding of marriage and the family. I'll illustrate with two such problems: the first offered by Steven D. Levitt and John J. Donohue III's famous claim that legalizing abortion in the 1970s must have reduced crime rates starting in the 1990s, and the second explaining the failure of existing economic theory to explain the "demographic winter" which has already engulfed the rest of the developed world.
Second, I'd like to pose the question, not "WWJD?" but "WDJD: What Did Jack Do?" referring to Jack Kemp, for whom, as Rob mentioned, I worked for ten years before and during both Reagan administrations. I believe that posing this question will help us understand why the fiscal policy devised by Jack Kemp and implemented by Ronald Reagan was both politically and economically successful, and also why conservatives since abandoning it have so often seemed to snatch defeat from the jaws of victory.
The third and final part of my talk might be called "Benefits or Babies: The Obama and Ryan Budgets and the U.S. Birth Rate." I'll show that the choice our government is now making is whether the United States will join the rest of the developed world by sinking into "demographic winter" and steadily declining in relative size and importance, or else maintain the demographic component of American exceptionalism.
At the last two World Congresses of Families in Warsaw and Amsterdam, I presented a country-by-country model of fertility, which has since been published in my book Redeeming Economics. At this 2011 Moscow Demographic Summit, I'd like to update that analysis to discuss "Babies and Dollars: Implications for USA, Russia, and the World," drawing on a recent article in The Family in America. But since several Russian officeholders and experts are associated with this summit, I will close by suggesting briefly that it is in the interest of all major countries including Russia to co-operate in ending the dollar's role as chief official reserve currency.
As Touchstone Magazine's publisher Jim Kushiner noted yesterday, the Parable of the Good Samaritan epitomizes the Bible's Second Great Commandment to "love your neighbor as yourself." But its lesson transcends nationality and religion. The cover of my book features Gustave Dore's engraving, "Arrival of the Good Samaritan at the Inn" because the parable illustrates all the possible economic transactions we can have with our fellow man: the robbers beating a man and leaving him for dead illustrates crime; the priest and Levite who passed him by illustrate indifference; the innkeeper's bargain with the Samaritan illustrates justice in exchange; and finally, the Samaritan's devotion of time and money to restore the beaten man to life illustrates a gift. Crime, indifference, just exchange, and gift: this is the range of possible transactions.
Economic theory began in the natural law philosophy with elements from Aristotle and Augustine, first integrated by Thomas Aquinas, which were widely disseminated by "Protestant scholastics" like Samuel Pufendorf, and further developed by the American Founders.