Skip to main content

Does Greece Really Need More Greeks?

It is commonly accepted among most economists that what ails the developed world today is too little procreation.  The thinking goes that in order for a generation to retire it must create at least as many offspring who would support them in their retirement.  Those who adhere to this belief point to the very low reproductive rates in places like Japan and Western Europe and foresee a long and slippery slide to economic disaster, where there won’t be enough in taxes paid by a shrinking population to support the retiring generation.

I’ve always been very confused by this line of thinking inasmuch as it seems to be overly simplistic – placing an emphasis on sheer numbers without any regard for the issue of productivity.  To me, the math around this has everything to do with productivity and very little to do with absolute population count.  That is to say, what the world needs now is more productive people, not more unproductive ones.  In point of fact, the unproductive ones actually compete with, and drain from the pool of resources otherwise available to retirees.  So, just looking at sheer numbers is dumb.  In fact, I would say that in today’s Information/Technology Era healthier societies will be characterized by smaller populations, and possibly shrinking ones, but filled with educated and productive people.  Greece doesn’t really need more Greeks, per se, but instead more productive Greeks.  Japan doesn’t need more Japanese, Germany doesn’t need more Germans, and the U.S. doesn’t need more Americans, just more productive citizens, and arguably fewer in absolute numbers.  I’d bet that the world would do just fine with a 50% population shrinkage, but with all of them producing at a higher level.

Popular posts from this blog

Greed & Laziness

In this most contentious and fascinating of election cycles, when nearly each conversation leads to politics, and when polarization runs so high, I ask myself - what is the essence of the debate between left and right?  What does it really mean to be a Conservative or a Liberal?

Why Rates Must Remain Low

There is an old bond trader joke that I first heard in the 1980’s when I traded mortgage-backed securities at Drexel Burnham Lambert.  It went like this:  “Upon dying, Albert Einstein finds himself in what he is told is heaven.  He encounters another individual there and asks him what his IQ is.  When he is told that it is 175 he is overjoyed, knowing that he’s found an intellectual peer with whom he can share much.  Upon meeting another, he discovers that person’s IQ is 140 and is pleased to have met another highly intelligent person with whom he can enjoy chess and other pursuits.  He is feeling pretty good about heaven, when he comes across a person who tells him that his IQ is a mere 90, and he is flummoxed.  What, he wonders, is this guy doing in my heaven and what can I even say to this person?  Then it comes to him.  ‘Where,’ he asks, ‘do you think interest rates are heading?’”

CMBS In Flux

The CMBS market has been in a period of upheaval, with dramatic spread widening on bonds and a resulting much more expensive cost of capital for real estate borrowers who depend upon this channel for their debt financing.Market participants today wonder whether we’ve entered a period like the summer of 2011, when spreads on bonds last widened this dramatically and then snapped back within a year to provide tremendous returns for those who were courageous enough to purchase bonds at the time when there was panic selling.Or, people wonder, is this recent downturn a prelude to a structural or systemic problem, like what was experienced in 2007, when spreads widened and sucked investors in, only to punish those early responders with a much more dramatic price collapse in the next 24 months.