As even many on the left have conceded, Washington policy makers contributed to the financial crisis by shielding too-big-to-fail mortgage companies from the consequences of reckless behavior. The companies, not surprisingly, responded by behaving recklessly.
Less well understood is the role an earlier government action—Social Security—played in the economic crisis.
In the 20th century, a wide range of developments made childlessness an increasingly attractive option for many Americans. Social Security was one of them. Previously for those who were not well off, children raised well were a couple's social security plan; but under the Social Security system that began during the Great Depression and gradually expanded in the ensuing decades, this began to change.
The federal program had a worthy goal—to care for our nation's elderly during an economic crisis. At the same time, however, the program allowed many more people than before simply to skip the hard work of raising responsible children who would look after them in their declining years. Cashing a check is easier than rearing children; to believe that Social Security had no effect on the fertility rate is to believe that humans are not affected by incentives.
What does all this have to do with the economic crisis? While the causes of the crisis are complex, at its foundation is a supply/demand problem brought on partially by a demographic shift. As David Goldman explains in First Things, “The collapse of home prices and the knock-on effects on the banking system stem from the shrinking count of families that require houses. We are now a mélange of alternative arrangements in which the nuclear family is merely a niche phenomenon.”
This demographic trend undermined the housing market. It undermined the financial system that came to depend on the housing market. And in the wider picture, it undermines the long-term solvency of Corporation USA, beginning with its pension plan.
Waving a stimulus bill at the problem won’t make it go away. The problem is fundamental. It’s no mere accounting blunder that Social Security cannot fund the long retirements of the baby boom generation. It’s no mere regulatory glitch that these same retiring boomers will not be able to sell their homes at a delicious premium. The boomers didn’t raise enough customers for all of those homes, didn’t raise enough workers to fund, build and service the retirement lifestyles many came to expect.
America has been cashing checks on the promise of future Social Security checks, and on the promise of an endlessly robust housing market. But somewhere along the way, too many of us stopped funding the checking account with its principal asset: young adults who work hard, pay into the Social Security system, and buy homes for the families they themselves intend to raise.
I am not suggesting that Social Security was the sole or even chief cause of the demographic shift away from the traditional family; nor that the government is incapable of encouraging care for the old and the destitute; nor that everyone has a moral obligation to marry and raise a large family. The point, rather, is this: There is no ultimate security in a system that systematically weakens the natural incentives to productive behavior—and raising up the next generation of responsible, productive citizens is a crucial form of productivity our culture is in danger of pushing to the margins.
Fortunately, the situation isn’t hopeless. Economist John Maynard Keynes once quipped, “In the long run, we’re all dead.” Actually, in the long run, our grandchildren and their grandchildren are alive, assuming we bother to continue in the indispensible civilizational work of raising families. Keynes was almost right: In the long run, sterile cultures are dead. But as a republic of free citizens, we needn’t choose to be that culture.
Share your thoughts on this commentary  by visiting the comments area at the Acton Institute PowerBlog.