Refugees Won’t Fix Germany’s Demographic Problems
Germany’s population is declining, and this will likely pose economic problems, particularly when it comes to maintaining the nation’s lavish welfare state. What should be done?
According to Chancellor Angela Merkel—indeed liberals everywhere—the solution is immigration. Immigrants will replace the children Germans never had, and will pay for their healthcare and pensions as old age sets in. This is the logic, anyways.
There’s just one problem: it won’t work.
Contrary to what liberals say, immigration (and in Germany’s case, illegal migration) is not a viable solution to Germany’s demographic crunch. As it turns out, people aren’t fungible: uneducated and illiterate migrants from the Middle East make poor German engineers and industrial artisans. Go figure.
This article looks at the long term demographic and economic effect of recent immigration—and the migrant crisis—to Germany. In it, I’ll briefly discuss why immigration doesn’t necessarily cause economic growth, and then look at how migration to Germany is actually destroying the German welfare state.
This will likely come as no big shock to most of my readers. I’ve said it before, and I’ll say it again: you can have immigration or a welfare state, never both.
Immigration Does Not Always Lead To Economic Growth
The first distinction we need to make is between economic growth and prosperity. For now, I’ll just highlight the basic logic—for a fuller discussion please see my response to Ruchir Sharma’s New York Times piece immigration and economic growth.
It is true that increasing the number of people in a given economy will cause economic growth, by no reason other than more people means more workers, and therefore more production. However, it doesn’t follow that more people will increase economic productivity—the factor that determines prosperity.
Here’s an example: say a Pole immigrates to Germany. They add $20,000 in annual production to the economy. This increases GDP, and therefore causes economic growth.
Now let’s add some more information to the example. Pretend that the average German produces $40,000 worth of output in a year. In this case, the Polish immigrant didn’t make Germany more prosperous—he actually brought the average down. But at least he didn’t diminish anyone else’s share. In this case, although immigration caused economic growth, it was neutral with respect to prosperity.
Now let’s add the final condition: the welfare state. Pretend that Germany’s welfare state guarantees enough social benefits to have a standard of living which equates to $30,000 a year in output. In this case, German workers would actually end up having some of their wealth redistributed to the Pole, thus making the average German poorer. This is how immigration causes economic growth, but may nevertheless make people poorer.
Finally, if we flipped the numbers around, so that the Pole produced $40,000 and the average German produced $20,000, then immigration would both increase GDP and contribute to Germany’s prosperity.
The key takeaway: although immigration causes economic growth, this alone is not an adequate justification. A more nuanced analysis is needed. Unfortunately, this point is routinely lost on writers at The New York Times and The Economist.
With that in mind, let’s look at Germany specifically.
Immigration is Making Germany Bigger, But Not Richer
The welfare state works like a giant Ponzi Scheme: healthy young people pay in, sick old people draw out (for things like pensions, healthcare etc.). Of course, access to universal public education complicates matters, but the point remains that there aren’t enough makers to pay for all the takers. Why?
Because Germans didn’t have enough children to support the system.
To fix this “problem”, Germany’s opted to accept immigrants—most of whom come from other European countries, or the Islamic world. Islamic immigrants are particularly sought after, because they are generally younger and more fertile than Europeans—the’re the best candidates to maintain the welfare state, according to liberal economists anyways.
Importantly, Germans see immigration (including accepting refugees and illegal migrants) as managed population replacement—they’re importing children rather than breeding them. If it sounds icky, it’s because it is. It’s dehumanizing. It commodifies people. Sadly, this is reality.
Now for some hard data: there are roughly 81 million Germans. The median age is 46.1—among the oldest on earth. In fact, only 26.8 million Germans are aged 32 and under. Germany’s big now, but it has a tiny future.
That’s Germany as a whole. Let’s look more specifically at immigrants.
Most immigration to Germany is from other European Union countries. These immigrants have comparable levels of education and technical skills—more importantly, they have the soft skills to make it in Germany’s advanced labor market (things like language and cultural sensitivities that economists often ignore).
EU (and other Western) immigrants tend to grow Germany’s economy, but don’t strongly impact prosperity (since lower-skilled Romanian immigrants are balanced out by higher skilled British or American immigrants etc.). It’s a wash.
The other major immigrant group are those from the Muslim world: these are mostly first or second generation immigrants, and the large group of refugees and economic migrants that began arriving in 2014. What is the economic impact of these Islamic immigrants and refugees on Germany?
How Many Muslims Live in Germany?
Before we can calculate the economic impact of Islamic immigration to Germany, we have to figure out how many Muslims live in Germany.
I confess that when I started writing this article, I thought the number would be easy to find. It is, after all, a relatively straightforward demographic question. Apparently, it’s not. As it turns out, the German government is actively suppressing the number of Muslims immigrants and refugees in Germany, so as to maintain order—similar to what’s currently happening in Sweden.
For the sake of this article, I confine my calculations to the number of Muslim-Germans (because this is by far the largest group of non-Westerners immigrating to Germany, and the data is the most readily available). Furthermore, I believe this number serves as a reasonable proxy for all non-Western immigration into Germany (subject to a modifier of course).
Here are the facts.
Demographics is Destiny: Germany’s Future is Islamic
I specifically chose to find sources that pre-dated the refugee crisis, having a hunch that the numbers may be skewed for political purposes.
Jumping ahead to 2016: according to the CIA World Factbook, there are 2,986,743 in Germany at the end of 2016. I presume this number doesn’t include refugees, although it’s still disturbingly low. More troubling is the fact that when I looked at their archived page, I found that their website said in 2010 that there were 3,044,370 Muslims in Germany—the percentage of population (3.7 percent did not change), although the population estimates did.
Thus, according to this US government source, we are led to believe that there are fewer Muslims in Germany now than six years ago—despite the fact that roughly 200,000 immigrate to Germany (legally) per year.
My only guess is that the CIA bases their estimates on the German census and didn’t bother to update the percentage. But Germany had a census in 2011, so why wouldn’t it be updated to reflect that fact?
Even more troubling is that Germany’s Federal Office for Migration and Refugees stated that at the end of 2015 there were between 4.4 million and 4.7 Muslims in Germany—roughly the same number as in 2010 (again, before the migration crisis).
That’s what the sources say, but what’s the real number?
Let’s split the difference between Pew and the Guardian and assume there are 4.3 million Muslims in Germany in 2010. Add to that the natural increase in population of an estimated 77,000 per year and the roughly 200,000 legal immigrants per year and the number begins to take shape.
Finally, let’s add in the refugees. In 2014 The Telegraph said 173,000 Syrian refugees arrived in Germany. In October, 2015 The Telegraph wrote that Germany was on track to accept 1.5 million, while Bloomberg reported they took 1.1 million—I’ll split difference and say 1.3 million. Finally, 280,000 migrants arrived in 2016 according to the New York Times.
All totaled, the Muslim population in Germany is 7.89 million people, as of January, 2017. That’s almost twice what Germany’s government believes.
Just as a side-note: if Germany wanted to help refugees so badly, why did they only accept 150 Ukrainian refugees during the same period, when there were 2.6 million Ukrainian refugees?
What is the Economic Impact of Islamic Immigration to Germany?
This article isn’t interested in positing a hard number, what I’m interested in is the impact of this revised demography on the German welfare state in the future.
Let’s break it down.
Given that the median age of Islamic immigrants in Germany is 32, this means that there are 3.95 million aged 32 or younger.
There are only 22.86 million Germans (of both native, and Western-immigrant background) in Germany in that age group. This means that 14.7 percent of Germany’s young population are newcomers from a different cultural, linguistic, ethnic, and religious background.
Given that 81 percent of these recent immigrants are unskilled by German standards, and that 80 percent of Germany’s Islamic population receives welfare payments from the government, I believe the question of whether or not this type of immigration will fix Germany’s demographic problem is an open and shut case.
Although there are a multitude of studies showing that immigration hurts the economy, I don’t have time to get into them now. Suffice it to say that Germany is making their economic and demographic problems many times worse by accepting immigrants who are net drains on their welfare system.
Wasn’t fixing the system the whole point?