Humans deeply yearn for security. Safety, in both its physical and economic forms, is solidly perched just above physical survival on Maslow’s famous hierarchy of needs. While increasingly frequent and deplorable acts of terrorism threaten physical security, the looming shadow of economic insecurity is a subtler yet still disturbingly powerful force driving revolutionary politics in the West.
Declines in personal savings and fertility rates in the West are stark indicators that may help explain how economic insecurity fosters phenomena like the rise of Trump and the decline of the EU through Brexit. Both movements are driven largely by the wills of older Americans and Brits facing increasingly uncertain futures—in large part because they had fewer babies and saved less than their forebears.
Where savings and fertility decline, immigration rises to plug the growth gap—a controversial flash-point and common proclamation by demagogues in these debates. But rising immigration—whether it concerns you or not—is just a visible sign of deeper issues.
According to influential economist Tyler Cowen, the real problem is “about the scarce virtues of temperament, patience, and discipline.” Older generations have been spending more and saving less. This is an issue because savings help to buffer families against future uncertainties and provide for retirement, and more broadly, flow into capital funds to promote growth and productivity. In what Cowen calls “the decline of American thrift,” household savings in the States have dwindled from a peak of around fifteen percent in the mid seventies to around five percent today. This explains why Trump supporters, for example, are relatively wealthy but still concerned about their future economic security. Impatience breeds insecurity.
Shrinking families are related to shrinking savings. Fertility rates across most Western countries have dropped below replacement rate in recent decades. Tweeting in response to Cowen’s piece, New York Times columnist Ross Douthat wrote that: “Children are costly to raise, but they provide various forms of security, tangible and intangible, to people entering retirement. Small family size makes mass immigration seem more economically necessary, but it also makes it more culturally revolutionary to natives.”
The consequences, according to Douthat, are that a “60-year Trumpista (or Brexiter) w/1.5 kids has fewer supports in old age and sees future slipping away from their tribe at faster clip. And since people experience/envision their societies through watching their descendants it makes psychological sense for older ppl whose family trees are thin to fear future, losing ‘their country,’ in a distinctive way.”
While New Zealand is on the other side of the globe, we are still bound by these cultural ties of insecurity. Our savings rates are declining. Our fertility rate is below replacement. Our productivity is woeful and our growth propped up by rising immigration and longer working hours.
This is a recipe for the politics of fear we are seeing overseas. To avoid this and to encourage economic security in the long-run, we need to promote a culture of patience, discipline, and sacrifice.