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OPINION

Can a Geriatric Germany Save Europe?

The opinions expressed by columnists are their own and do not necessarily represent the views of Townhall.com.
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As Greece lurches on the precipice of default on its sovereign debt, a default that could bring down banks across Europe and precipitate a global financial panic, a consensus is building that there is but one way out.
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First, a structured default on the Greek debt, giving creditors a major haircut, but compensating them with eurobonds of half the face value of the Greek bonds, guaranteed by the European Central Bank.

Second, a huge new European Financial Stabilization Facility of trillions of euros to recapitalize stricken banks and buy up the sovereign debt of Portugal, Italy, Ireland and Spain, should private investors flee their bonds.

Such a solution, however, depends upon Germany, the richest nation in Europe and major contributor to the ECB.

Hard-money Germans, however, do not relish bailing out the deadbeat nations of Club Med who have more generous welfare states than their own.

Politically, it may not be possible to cajole or coerce the Germans, indefinitely, into saving the eurozone, the collapse of which could bring on a depression and bring down the European Union itself.

There is another reason the European Monetary Union and EU may be headed for the boneyard: demography.

Looking over the 2008 World Population Prospects from the United Nations' Department of Economic and Social Affairs, one finds that the nation which is to carry Europe back to solvency is aging, shrinking and dying.

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Every decade of this century, Germany will become less able to sustain its dynamism, let alone carry the continent.

Consider. In 2010, there were 82 million Germans. Fully 26 percent were 60 years of age or older; 20 percent were 65 or older; 5 percent were 80 or older.

Now, fast forward to 2050.

Between 2010 and mid-century, 12 million Germans will disappear. In 2050, Germany will be a nation of 70 million, whose median age will have risen from 44 today to 51. And the life expectancy of all Germans will rise from today's 80 years to 84.

The average German may enjoy four more years of life, but he or she will also require four more years of social security and health care provided by the taxpaying public. And that taxpaying public is also going to shrink.

By 2050, the percentage of Germans over 60 will have risen from 26 to nearly 40 percent. The percentage 65 and over will have risen from 20.5 to 32.5 percent, and the share over 80 will have tripled from the present 5 percent of the population to 14 percent.

By 2050, one in three Germans will be 65 or over, and one in seven will be 80 or over. That is a lot of old-timers for working Germans, whose numbers and share of the population will have been dramatically reduced, to support.

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Moreover, the percentage of German women in the childbearing ages of 15 to 49 will have fallen from today's 45 percent to 34 percent, guaranteeing a continuous decline in the German population for the rest of the century.

There is not a single year between 1970 and 2050 where Germany's birth rate even approaches the replacement level of 2.1 children per woman. By mid-century, Germany will have been below zero population growth for 80 years. This is a nation slowly taking its leave of this world.

For Club Med to be rescued, the shrinking German labor force will have to carry an ever-expanding cohort of German retirees and aged, as well as growing numbers of retired and aged of the debt-ridden south of Europe.

Consider the nation closet to default: Greece.

In 1950, nearly half of Greece's population was 24 or younger. In 2050, less than one-fourth of all Greeks will be 24 or younger.

Today, one-fourth of all Greeks are 60 or older. But in 2050, it will be nearly 38 percent. Less than 4 percent of Greeks are 80 or over today. By 2050, that will have tripled to almost 11 percent.

Italy, a country of 60 million, is on schedule to lose 3 million people by 2050. The share of Italy's population 65 or over will go from one-fifth today to one-third by mid-century.

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Italians over 80 will double from 6 percent today to 13 percent in 2050. Life expectancy will rise by four years to close to 86.

Across Europe, not one nation has a birth rate sufficient to replace its native-born population. The share that is of working age is shriveling, while the share that is eligible for state-funded pensions, social security and health care is growing.

And it is the Germans who are leading Europe into retirement centers, assisted living facilities and nursing homes.

Europe needs more young workers to maintain the dynamism of the continent and make good on all promises made to her people.

To the south, the exploding Muslim populations of the Maghreb and the Middle East appear ready to come and help out.

"This is the way the world ends/Not with a bang but a whimper."

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