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Wednesday, September 03, 2003

The Immigration 'Palliative'

In the mailbox, Hans is puzzled:

if I understand what I read these days the following is happening: in the U.S. insider stock sales are at a historical high, the Asian stock boom is largely due to foreign investors and Asian central banks buy treasuries to prop up the dollar.

I think he's got the picture just about straight. Confusing isn't it. So much for perfect information. Maybe it is more a case of 'the grass is always greener'.....BTW: the Chinese are going to offer to buy more US treasuries to try and keep Snow happy.

Hans also sent me this point when I was away on holiday:

Have you ever checked the Swiss picture ? I remember (maybe falsely) that the first immigrant generation already adapts perfectly to the native birth rate.

I don't know too much about Swiss demographics, but it is on my hitlist of countries who could suffer deflation in the not too distant future. The point about changing migrant fertility seems in harmony with other data I have. In the final analysis fertility is dropping across the whole planet (although, there are of course some extreme outliers). The rapid rise in population has more to do with declining mortality these days. So logically the 'spread' will reduce.

On the other hand Hans may be saying that since immigrants in Switzerland adapt their fertility rapidly to the 'domestic' model, immigration won't work as a 'solution' to ageing and deflation. Long run I'm sure he is right, but in the short run we have two problems to contend with, the ageing process itself, and the 'generational gift' made when setting up the modern pension funds. This gift assumed permanent population growth. Now we have to adapt to an ageing society, to get the young people to start setting funds aside for paying their own pensions, and find a way to give pensions to those - over 50 say - who have already paid for the pensions of others.

It is as a 'paliative', to help sustain growth and buy time to make the generational transition that I am proposing systematic immigration for Europe. It is only a way of postponing the inevitable, but this postponement might make the process less painful. I certainly hope so, and I don't see any other realistic proposals on the table.

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