2003 September 29 Monday
Europeans Need To Work Longer And Have More Babies

The Economist says immigration will not solve the birth dearth problem in Europe.

If Europeans want to retain their public schemes—and most seem to want this—then it seems inevitable that they will have to work longer, probably at least five years, possibly as much as ten years longer.


Even with more immigration, increasing the domestic supply of younger workers—ie, having more babies—could also be desirable and, if current trends continue, probably necessary.

Imagine that. The Economist is coming out in favor of Europeans having more babies. The editors of The Economist still need to expand their analysis further to precisely pinpoint who should have babies. The problem is not just the lack of babies. What the Western countries really need is more people who are net surplus taxpayers. By "net surplus taxpayers" I mean people who pay more in taxes than they create in costs (if anyone has a more accurate phrasing for this term please post in the comments). People of different educational and occupational backgrounds are not equally likely to have net surplus taxpayer children. What we need is more children from people whose children are most likely to pay a lot of taxes and to generate fewer costs that governments end up paying for.

Someone who, for instance, commits a long string of destructive crimes at a fairly young age and then spends the rest of his life in jail generates enormous costs that the rest of us pay for. Someone who is lazy, never tries to develop any skills, lives in subsidized housing, makes very little money, and pays little in taxes is also effectively a net cost to society. It may sound harsh to describe people as net surplus or net deficit taxpayers. But we face real long term financial problems due to both an aging population and growing segments of populations that are not net surplus taxpayers even before they reach retirement. We need solutions for these problems.

Most analyses I see of immigration and the aging of Western countries do not try to factor in the net tax revenue effect of various kinds of immigrants. For example, most illiterate peasants from Mexico do not make enough money to pay the government of the United States as much in taxes as they cost in Medicaid, education for kids, welfare, housing subsidies, and other services. To put some statistical meat on this argument, Hispanics in the United States are two and a half times more likely to lack medical insurance than whites and hence do generate a lot of medical costs that "net surplus taxpayers" pay for. By contrast, a graduate of an IIT school in India who arrives to take a fairly high paying engineering job at Intel is probably going to pay much more in taxes and cost much less in government services. While individual exceptions can be found in any large group we can still find ways to classify potential imimgrants that will, on average, yield more net revenue taxpayers and fewer net deficit taxpayers than is now the case.

Someone who immigrates later in life and yet manages to naturalize and become a citizen eligible for government retirement benefits such as medical care is particularly unlikely to be a net surplus taxpayer. A person who immigrates at an earlier stage and who has a lot of skills is far more likely to be a net surplus taxpayer. Immigration policy should be changed with the goal in mind of choosing immigrants who are far more likely to become net surplus taxpayers.

Share |      By Randall Parker at 2003 September 29 02:51 PM  Immigration Demographics

Bob Badour said at September 29, 2003 5:09 PM:

I suggest "contributor" or "transfer payer" contrasted with "dependent" or "transfer recipient" or "transfer consumer".

John S Bolton said at June 11, 2004 8:03 PM:

Why not say 'net taxpayer'? For the opposite case, can't one say that they are 'on net public subsidy'? The simplest and most self-explanatory, or transparent term is likely to be the best. How is it that a possible field day for memes could open up around these concepts? Is it that scholars and officials in the alternative-welfare society have every reason to suppress such terms as net taxpayer and net public subsidy recipient? How is it possible that human beings have gone so far out of sympathy with the net-taxpayer that we don't even have a term to identify him?

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