If large portions of your population suddenly emigrate, or suicide rates markedly increase, it may be time for a policy rethink.
The West’s global financial crisis and the disastrous economic policies which have accompanied it have had a profound impact on Western populations. Indeed, financial crime and economic policy have been shown to be matters of life and death, literally.
A recent study published in the British Medical Journal claims that the recession in Britain and rising unemployment may have led more than 1,000 people in England to commit suicide. Suicide rates are reportedly on the rise across Europe, especially in the periphery (PIIGS: Portugal, Italy, Ireland, Greece, Spain), reversing a decade of steady decline. Greece has been particularly badly hit and has just moved from having the lowest suicide rate in Europe to the highest, the rate having doubled in 2011 alone.
Emigration has also increased dramatically. While comprehensive data for total emigration per se are not available for all the peripheral countries, the chart below illustrates the recent rise in emigration to Germany. As the chart shows, this trend has been especially dramatic in Greece, not least since youth unemployment has already surpassed 50% (and counting). The Greek population has begun to decline for the first time in at least fifty years. Total emigration from Ireland has reached its highest point since the Famine: a rate of 3,000 per month. Many Spanish and Portuguese are also reportedly fleeing what are increasingly viewed as their own ‘sinking ships’ for the growing prosperity of their former colonies.
This is not even to mention the far more severe effects of the crisis on the “developing world” itself, which the World Bank estimates include 1.4 to 2.8 million additional infant deaths between 2009 and 2015.
This picture highlights the importance of economic demography, a subject totally neglected in the abstract, utopian modelling which dominates mainstream economics. Eugenics and Malthusian bigotry aside, economic demography can offer a vivid illustration of the devastating effects of economic and financial turmoil. Its insights could be incorporated into a reformed, post-crisis economics, which should do its best to describe the real world. A general policy guide, utilising an economic demography approach, might be: if large portions of your population suddenly emigrate, or suicide rates markedly increase, it might be time for a Plan B.
Unfortunately, these analytical tools remain yet to enter the proverbial tool box.
In Britain, Chancellor George Osborne has stiffened his austerian resolve and, armed with his trusty printing press, is hell-bent in pursuit of a Japanese-style lost decade. The radical, redistributive policy of austerity combined with quantitative easing transfers wealth from the already de-industrialised real economy into the black hole of insolvent bank balance sheets, drastically increasing both overall debt levels and the eventual severity of the inevitable crash.
The eurozone has placed itself in the paradoxical predicament of being locked into a common currency arrangement which structurally produces budget deficits in the periphery and a Maastricht Treaty which limits them. By enforcing further wealth transfers from the periphery into the black hole of (mainly French and German) insolvent bank balance sheets in the center (euphemised as “bailouts”) instead of a structural solution to the crisis, the ruling Eurocrats appear determined to destroy the common currency at the cost of at least the entire Greek population.
As hinted, from the perspective of Europe as a whole this path is in fact suicidal. The austerity-induced weakening of demand in the periphery will increasingly reduce its capacity to absorb the center’s exports – indeed, German manufacturing is already in decline as a result – and this capacity cannot be propped up forever on the basis of exponentially increasing debt. In the end, as economist Michael Hudson always points out so simply, “debts that can’t be paid, won’t be.”
So there would be a lot to gain from an economic demography approach which takes heed of the effects of economics and finance on human populations, particularly as it should lead to policies which anyway make good economic sense (if consideration of such human effects can possibly be divorced from “economic sense”.) In this case, at the very least, debts would be written down to the ability to pay – a real “royal jubilee” – and populations would be freed from the prospect of a lifetime of debt serfdom. Such was routine practice in the Ancient Near East whenever a new ruler came to the throne, due to a widespread recognition of the crippling effects of unpayable debts – which robbed entire populations not only of their property but of their freedom.
In the meantime, however, Europe looks set to substitute its current status as the world’s largest economy for an express ticket back to the Dark Ages. It will be interesting to see how many stick around to go down with the ship, as well as whether or not the refugees will be welcomed with open arms by the former colonies.