Far too often in these degenerate days what passes for research is skewed because the research is biased towards the the outcome favored by entity funding the operation and the education given the researchers. As a result, non-logical answers are arrived at which fall apart under scrutiny. A paper released by Mark Watson and James Stock is fascinating as it explores old Liberal ideas centered around aging populations as a basis for future snapshots of America’s economy.(1)
Watson and Stock put forth a grim picture of a future with deeper recessions, weaker recoveries and consistently slower economic growth mostly because of population demographics. In essence the conclusion is: jobless recoveries will be the only type of recovery possible because employment is in decline.
The blame is placed squarely on a factor our politicians cannot alter: the Baby Boomers. The base contention of the Stock-Watson report is that without continuous growth in the work force or a sizable increase in population, employment and GDP America is facing a series of recessions with steeper declines, slower recoveries and a constant lowering of the standard of living.
One of the cornerstones of Obama’s Healthcare Bill was medical service provided on a priority of “community service” left in one’s life. That led to the alleged death panels through the bill’s “end of life discussion” provisions. Stock and Watson skirt this issue as Ivy League educators. Their only conclusion is that America’s 80 million (more 26% of the population from the 2010 census) Baby Boomers will require medical attention than the dwindling workforce will be able to sustain, even without another recession, unless we can return to the dynamic GDP growth of the 1950s. I agree with one caveat the illustrious authors missed because educational deficiencies: GDP growth needs to be measured in real terms not the phony dollar-to-dollar measure lazy economists use today.
But in the 1950s there were more Americans under age 25 than over age 45. In another three decades the number of seniors (over 65) is projected to triple while the number of people between 20-30 will decline by 20%. How will this shrinking workforce be able to support the demands of an aging population with vanishing payrolls and higher taxes? If it does find a way to support the aged, it will have to be at a much lower standard of living. What does America do when youth is a scarce, vital resource? The authors suggest loosening the immigration laws (which is impossible under the wide-open borders we now have) or forcing workers to cluster where industry is located.
Some of the forecasted consequences of Boomer retirement are predictable. Rising medical costs, current Social Security standards promised will have to be slashed deeply and government will have to reduce other areas of operation to make up the shortfall. Those fortunate workers will be asked to carry a heavier tax load to pay for the indigent, lazy and elderly.
But Boomer aging will also trim the amount of funds available for market investment. Many studies have shown the bull markets of the mid-1980s and 1990s were directly attributable to Boomers hitting prime earning territory and investing their financial gains. What then will be the effect when America’s economy gets blind-sided by an unfavorable worker-to-retiree ratio, slower economic growth and worse equity performances in the market?
Thomas Malthus, the first quasi-economist, worried two hundred years ago. He predicted growing populations would act as a brake on economic growth. His statements have always been interpreted a physical tax where wealth was paid to government by force but I’ve long felt he was referring to populations where the majority was trying to live off the sustenance of the few working–a kind of reversal of the babe suckling at mother’s breast to where the whole family joins in. Mom simply runs out of milk for the one who needs it most. A population growing in numbers only, without a shift in base demographic percentages, would not be a worry to Malthus. So the diagnosis on Malthus in the economy books college students are lugging around and endorsed by the two authors have to be fundamentally flawed. Malthus’ intention doesn’t jibe with what scholars have always contended he meant–just as what we witness in many written laws and regulations today.
An article in The Atlantic on the situation presented by Watson and Stock, concludes “demographics can be dangerous, but they aren’t destiny.”(2) That’s pure speculation based on a faulty education from progressive thinking that has given us bunglers like Tim Geithner and Ben Bernanke. The only way shifting demographics cannot be destiny is if somehow the population reverses the aging process in years not just in looks. What if Malthus was right? What if consistent demographics with an emphasis on the young and strongest are a vital point to any sustainable economy?
Then the “death panel” assertions against Obamacare become vitally important as they must be implemented. Societies used to cleanse themselves of that portion of it that endangered the well-being of the group as a whole. We still see that in nature where the albino that gives away his location or the weak or infirm are simply abandoned by the rest of the group by a survival instinct.
Developed society is facing an on-rushing internal struggle where the fight for survival will be based on fitness demographics alone. Those unable to contribute–no matter what they service or contribution made when younger–will be disposed of “for the common good ” because the economy will no longer be able to support their existence. We can hope that won’t be the case but it was the norm for the American Indian as recently as the 1800s.
To reverse the dying economy predicted by the widely revered Watson and Stock, Liberals openly want it to become the norm once again.
“I have sworn on the altar of God eternal hostility to every form of tyranny over the mind of man.”–Thomas Jefferson
(1)–”Disentangling the Channels of the 2007-2009 Recession”, for the Brookings Panel on Economic Activity March 23, 2012. James H. Stock-Department of Economics, Harvard, and the National Bureau of Economic Research and Mark. W Watson, Department of Economics and the Woodrow Wilson School, Princeton, and the NBER
(2)–”The Very Real Economic Dangers of an Aging America” by Derek Thompson, The Atlantic, March 26, 2012
Michael McCune spent 16 years as a government tax auditor and then operated a consulting/accounting business for 14 years. For 11 years he wrote a biweekly opinion column for the local paper (1981-1992).