Amidst news that Japan experienced a record population drop in 2010, today, the New York Times reports on Southern Europe where there is a lack of jobs for the young even as a growing elderly population requires support and how this has led to a “pervasive malaise among young people”:

Indeed, experts warn of a looming demographic disaster in Southern Europe, which has among the lowest birth rates in the Western world. With pensioners living longer and young people entering the work force later — and paying less in taxes because their salaries are so low — it is only a matter of time before state coffers run dry.

“What we have is a Ponzi scheme,” said Laurence J. Kotlikoff, an economist at Boston University and an expert in fiscal policy.

He said that pay-as-you-go social security and health care were a looming fiscal disaster in Southern Europe and beyond. “If these fertility rates continue through time, you won’t have Italians, Spanish, Greeks, Portuguese or Russians,” he said. “I imagine the Chinese will just move into Southern Europe.”

The problem goes far beyond youth unemployment, which is at 40 percent in Spain and 28 percent in Italy. It is also about underemployment. Today, young people in Southern Europe are effectively exploited by the very mechanisms created a decade ago to help make the labor market more flexible, like temporary contracts.

Whoever is going to tackle these issues is going to have be very brave or thick-skinned.

While the consequences of long-term low birth rates are becoming more clear, why is there not more discussion about boosting these birth rates? How exactly did the birth rate drop so much? How did it become so desirable for nations and individuals to have so few children? Could governments provide incentives to families so that they would have more children?

It will also be interesting to track how this “malaise” works its way through the younger generation. Could this be the first generation in a while that has a tougher life than their parents in terms of having to work longer and harder just to keep society afloat? What are the social consequences of this malaise: less productivity, less interest in civil society, general unrest?