If you don’t include the poor third world countries than the answer is much less clear but i think that this is the question Charlie is after.

“Edward – the reason piece is stupid, plain and simple.”

Well this is your choice, it is, after all, your future, and that of your children we are talking about here.

Personally, one of the reasons I walked away from “normal” economics as a young man is that I didn’t want religion, and never swallowed the idea that people was as rational as economists habitually assume them to be.

That is why I am a “macro” economist, I deal in aggregates, and properties of large systems. I say it again, there is no homeostasis here. The imbalances will simply reproduce themselves. If we get out of the current crisis without breaking our necks, the next one, around 2018 – 2020 should be definive from this point of view.

We all need to make changes.

Unfortunately, both gini and TFR correlate with all sorts of other things, from literacy to life expectancy. So while there may be something there, teasing it out wouldn’t be easy.

Doug M.

Economic incentives have something to do with birth rates at the margin, for instance whether you have a birthrate of 1.6 or 1.9 per woman. This is relevant in our European context, but the example used by the author is the difference with unfree, poor countries.

However, the much higher birth rates in many third world countries can mostly be reduced to a single factor and that is access to birth control (you will now please note the number of times contraception is mentioned in the reason piece).

Any economics article that says things like “William Easterly’s (2001) contention that economic development is the best contraceptive is consistent with the data above” but does not control for access to birth control (or indeed a dozen other plausible factors) should be laughed out as professional idiocy.

However, employers often like to hire younger people. On the whole, they’re cheaper, and this fact stands out more than harder to measure concepts such as efficiency and experience (i.e. the skill of mistake-avoidance). Hence the retirement age issue is connected with the broader notion of fair pay. Should pay be linked to senority? Is seniority really a matter of age? These are all very sensitive issues for an employer, since tackling them threatens to overturn various justifications for unfair wage differentials.

We’d also have to look at health policies: it’s no good having half your population clapped out because they’re obese, take no exercise, or have harmful dependencies of one kind or another. Again, all very difficult.

But on a positive note, it’s possible that we could substitute a cultural norm where certain employees are justified their higher wages because they have family of school age. I think such a norm is already partly in effect.

“It’s fairly well established (I think) that freedom is not something that necessarily flows from rule of law and enforcement of contract; it’s possible to have a society where many citizens have relatively little freedom yet all contracts are honoured;”

I think the thing is, it is not possible to have contract without having some form of society, however primitive, and it isn’t possible to have societies without having people. But modern societies have no inherent tendency to reproduce themselves, hence we are all free riding on the highway to (ultimate) nowhere, and producing a huge global roller coaster on the way. That’s my 2 cents worth.

Clearly, if you didn’t have market economies, and financial markets to worry about, then perhaps none of this would matter. But we do, and I think we have a consensus that there is some value in trying to hold them together.

Germany and Japan, as Claus is showing, seem to be on a path where ten years or so from now they will need exponential growth in exports simply to get basline economic growth and finance pension systems, and this is clearly impossible, so all of this is far from being a simple intellectual exercise.