The Slow Death of Western Civilization

Massive economic change is sweeping the world. But, like the movement of glaciers, the change is slow, subtle and almost imperceptible. Few people are even aware of the change, no less its implications.

In earlier writing I recommended that those under fifty explore alternatives to the US for living and working.  Western democracies are self-destructing under the weight of their self-chosen welfare states. No society in the world has prospered for long under such a model.

The level of benefits available to non-workers has reached the point where many consider them more attractive than toil. Once work becomes an option rather than a necessity the economy is doomed. Confiscatory taxation and the regulatory are imposed to support the unsupportable. Talent and employment begin to leave the country. A death spiral ensues.

In the following article, Simon Black sheds light on the unfortunate decline of the West. Oblivious to their decreasing role, Americans and Europeans continue to live at levels which they believe they deserve and are accustomed. But incomes have declined and no longer support the lifestyle. To maintain this lifestyle, Westerners now spend more than they earn. Living beyond what you produce can only be accomplished in two ways:

• Consuming the capital built up by previous generations (“eating the seed corn”).
• Stealing from the future via borrowing.

Neither method is sustainable. Both impoverish the future and both are at work in declining Western economies.

Here are Mr. Black’s observations:

Presenting the decline of the West in two easy infographics

by SIMON BLACK on DECEMBER 27, 2012

Two interesting infographics were published recently that make it so easy to see the decline of the West, even a caveman can do it.

The first is from the Brookings Institute, which has released an interactive map showing economic growth data for the largest 300 metropolitan areas in the world– from New York and London to Okayama, Japan and Wulumuqi, China.

The Brookings map ranks each of these cities based on economic performance over three distinct periods, measuring both GDP growth and employment trends.

The first time period is the last full year of data, 2011-2012. The second time period is that particular city’s economic low point since the global recession began in 2007. And the third period of time is a long-term view between 1993-2007.

The map then color codes each city by quintile. Dark blue represents the strongest economic growth over the three periods, orange and red represents the weakest.

Guess where most of the orange and red is? You got it. Europe, Japan, and North America.

Guess where most of the dark blue is? You got it. Asia, the Middle East, Eastern Europe… and right here in good ole’ Santiago, Chile.

If it weren’t already obvious at this point, I’d like to show you a second infographic, this one by Toshl Finance.

Toshl develops software to help people track and manage their finances, so the company has direct access to their customers’ earning and spending habits.

According to Toshl’s data, users in Western Europe earn an average of $2,062 per month, but spend $2,396. This is an average monthly deficit of $334 per person, or roughly 16% of income.

Toshl users in the United States are in even worse shape, earning on average $1,871 per month. But they spend $2,290 per month, an average monthly deficit of $419, or 22% of income.

So who in the world is living within their means? Australian, Brazilian, Russian, Canadian, Filipino, and Indian users all show positive surpluses each month. Chinese and Singaporeans are essentially at breakeven levels.

Both of these infographics point to the same conclusion: the west is living far beyond its means and is struggling with pitifully anemic growth. This is a long-term trend, and one that is only going to accelerate.

The shift of wealth and power from West to East is going to be one of the biggest stories of our lifetimes, just as the decline of Rome was the biggest story of the day over a thousand years ago. Future historians will look back on our time and say “duh, the warning signs were there…” just as we do today when we study Rome, the Ottoman Empire, the Bourbon monarchy, etc.

Yet as obvious as the indicators may be, few people will actually do anything about it. A lifetime of propaganda will plant many heads in the sand, ignoring the dangers and opportunities all around. Only a handful will see the writing on the wall and take sensible, rational steps to set up their lives and families for generations of success and freedom.

Which will you choose to be?

Monty Pelerin's World