Practical Steps on Births, Benefits, Booms and Busts

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.[1] 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.)

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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).

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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.

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Kathleen M. Packard, Publisher
Ralph J. Benko, Editor

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Professor Jacques Rueff
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