Posts tagged with: The Group of Twenty (G-20)

The Detroit News published a new column today by Acton president and co-founder Rev. Robert A. Sirico:

Faith and Policy: Free markets, not aid, will help poor nations best

Rev. Robert Sirico

At the recent G8 and G20 meetings in Toronto, a hue and cry was raised by nongovernmental organizations and other activists about the failure of industrialized countries to make good on promises to raise aid to the developing world.

Instead, the activists should have called for a summit of African and Asian leaders and others who are calling for expanded trade, not more dependency in the form of foreign aid.

It has not been aid, after all, that has lifted hundreds of millions of people out of poverty in China and India but the move to market-oriented reforms, freer competition and the unleashing of the creative, entrepreneurial spark in the human person. In a recent book, one of India’s former finance ministers put it this way: “We got more done for the poor by pursuing the competition agenda for a few years than we got done by pursuing a poverty agenda for decades.”

The poverty agenda ignores, for the most part, market mechanisms in favors of huge grants to government leaders, who often pocket large chunks of the aid. The market makes room for the free interactions of people pursuing their own limited economic goals, in an almost infinite number of daily interactions. The market economy, despite the superficial appearance of chaos, ends up creating a larger social or common good for the largest number of people.

When we speak of the idea of the common good, we need to also be mindful of the political and juridical institutions that are most likely to bring it about. The answer is not to be found in the “commonality of goods” but in the very institutions that the socialists worked so hard to discredit. Let me list them: private property in the means of production, stable money to serve as a means of exchange, the freedom of enterprise that allows people to start businesses, the free association of workers, the enforcement of contracts, and a vibrant trade within and among nations (with benefits that would ultimately flow to Michigan) to permit the fullest possible flowering of the division of labor.

In an interview with Der Spiegel published this month, when Rwandan President Paul Kagame was asked a question about Africans complaining of exploitation, he responded that it was the wrong question: “Why don’t we talk about how we can get on our feet on our own? We do not always want to be the victims and to serve as a battleground for foreign interests.”

The market economy moves Africa and other developing nations away from dependency and offers the hope of real growth, a growth that provides vastly improved conditions for all.

Our gifts are to be put to work for the common good, and as such our talents and our wealth need to be put into action — not reduced to a line item in some aid bureaucrat’s master plan.

Also this week in Acton Commentary, Acton Research Director Samuel Gregg observes that “Europe’s declining birth-rate may also reflect a change in intellectual horizons.”

Europe’s Choice: Populate or Perish

If there is one thing the global economic crisis has highlighted, it’s the need to make choices—sometimes very difficult choices. At the June G-20 summit, for example, several European governments made it clear to the Obama Administration that they do not believe you can spend your way out of recessions. Unlike America, countries such as David Cameron’s Britain and Angela Merkel’s Germany have chosen the politically-risky but economically-brave path of austerity and public-sector spending cuts.

In some instances, these measures may not be enough to prevent countries such as Greece and Portugal from sovereign-debt defaults. Still, the alternatives are ever-rising government debt-to-GDP ratios (which invariably prolong stagnation as has occurred in Japan since the 1990s) or attempts to simply inflate the debt away (thereby risking the terrible experience of 1920s Germany or America’s 1970s economic malaise).

In the end, however, escaping the Great Recession’s effects is going to require more than spending cuts. The only long-term way out is economic growth. Here, however, much of Europe faces a problem that most non-European countries do not. The challenge is one of an overall population decline and an aging population. As stated in a 2006 IMF report, “The population of the 25-member European Union in coming decades is set to become slightly smaller—but much older—posing significant risks to potential economic growth and putting substantial upward pressure on public spending.”

However one examines the statistics, the demographic picture for Europe—including Eastern Europe and Russia—is bleak. Statistically-speaking, the numbers of births per woman required merely to maintain a population’s size is 2.1 children. Not a single European country meets that figure today. Germany’s birth-rate, for instance, is 1.38. Italy’s is 1.41. Spain’s is 1.39. France and Britain are doing comparatively well at 2.0 and 1.94 respectively, but—you guessed it—Greece is the lowest in the EU.

Nor is any consolation to be found in the aging statistics. In Belgium, the percentage of the population over 65 will increase from 16 percent to 25 percent by 2050. In 2007, a World Bank document stated that by 2050 approximately half of Spain’s population will be 55 or older.

The reasons for these trends are many. The twentieth century’s two world wars tore large generational holes in Europe’s demographic landscape. Women are also having children later in life. There also seems to be a broad correlation between increasing material prosperity and diminishing population growth. Then there is the greater access to contraception from the 1950s onwards.

But more subtle cultural factors may also be at work. For one thing, it’s striking how many Europeans are reluctant to discuss the subject of their population decline. This may owe something to an association of calls to have more children with the population policies of totalitarian regimes such as Hitler’s Germany, Stalin’s Russia, Mussolini’s Italy, and Ceauşescu’s Romania. Another factor may be many Europeans’ susceptibility to population-growth alarmism, as manifested in many European governments’ aggressive promotion of population-control in developing countries (which strikes some as verging on neocolonialism).

At a deeper level, however, Europe’s declining birth-rate may also reflect a change in intellectual horizons. A cultural outlook focused upon the present and disinterested in the future is more likely to view children as a burden rather than a gift to be cared for in quite un-self-interested ways. Individuals and societies that have lost a sense of connection to their past and have no particular interest in their long-term destiny aren’t likely to be worried about a dearth of children. Here Europe’s generation of 1968—which promoted a radical rupture with the past and is intensely suspicious of anything that might broaden people’s outlooks beyond the usual politically-correct causes—has much to answer for.

Immigration is one way for European countries to escape these conundrums. After all, it has proved to be one of America’s engines of economic growth and continues to help the United States avoid the population trap in which Europe now finds itself. For decades, Western Europe relied on immigration, especially from Islamic countries, for cheap labor, especially for those unpleasant jobs some Europeans prefer not to do.

For the moment, however, increased immigration doesn’t appear to be an option for Europe. The policies of multiculturalism have failed and produced such deep fractures in many European societies that most European governments are presently reducing immigration from non-European countries.

Is demography destiny? It need not be. Demography is only one variable among many. Moreover individuals and nations can make choices, and choices change our future. Sometimes circumstances, such as the global economy’s present problems, can provide the incentive and opportunity to break away from apparently unalterable paths.

The clock, however, is ticking. The longer Europeans fail to address their demographic difficulties, the smaller becomes their room for maneuver, and the more likely Europe will be reduced to being a bit-player on the world’s political and economic stage.

The loss would be not only Europe’s, but ours as well.

Dr. Samuel Gregg is Research Director at the Acton Institute. He has authored several books including On Ordered Liberty, his prize-winning The Commercial Society, and Wilhelm Röpke’s Political Economy.