In responding to a letter critiquing her recent article detailing the impact of demographic decline on Europe’s economic growth rate, Megan McArdle of The Atlantic explains in the magazine’s latest print issue why growth is necessary:

Whether or not continuous economic growth is possible, or desirable, the fact remains that modern economies are predicated on the assumption that it will happen. Both individuals and governments have planned for a future in which incomes steadily rise, allowing people to enjoy lengthy retirements, advanced health care, independent living, and of course, repayment of the massive debts that almost everyone has accumulated over the past few decades.

If that growth doesn’t materialize, the shock will be enormous. Generational battles over things like pensions have occurred in the context of rising incomes; they will become bitter indeed if young and old are fighting over a shrinking economic pie. The most brutal shock will of course be over debt. If incomes fall, debt will become an ever larger burden. But if countries default, they will merely shift the shock to someone else — too often, to pensioners at home or abroad.

However laudable Europe’s demographic decline may be from an environmental point of view, it will be an economic disaster for many who expected a stable, prosperous future.