Saturday, April 04, 2009
The rich countries so rapidly going into hock are going to need some more children in short order or the old folks will suck the life blood out of them.
I think that retirement as we know it will soon become a feature unique to the 20th century.
More alarming is the number of "extra" Chinese males projected in the future. Nothing like a couple hundred million unsexed men to make the world a malevolent place.
Interesting similarity. I just posted yesterday on the unconcern that progressives seem to have about the increase in federal debt, connecting it to the statistic that they have far fewer children.
Worldwide, people are saying "I want mine. Screw the future." These are the same people who claim that it is all those rich others who are materialistic and selfish.
That is certainly one of the big problems facing older workers. As boomers find themselves subjected to age discrimination, I think we'll see some changes in law and enforcement. Like all old farts, we'll vote and there are a lot of us. But how do you continue to do physical labor when arthritis hits? Soft hands workers have less of a problem. In principal....
I would like to see the government debt:GDP by country over time, combining the topic of the first graph with the presentation of the second graph. I believe it will show Japan with one of the highest ratios today and the US among the lowest, although set to grow rapidly in the short term. Tigerhawk, do you have data to generate that graph?
The most interesting aspect of this graph to me is a comparison of the first derivatives of the Chinese and US curves. Our curve is pretty much the flattest one on the chart. China looks to be on the cusp of an exponentially rising breakout.
This should surprise no one. The uptick in China's numbers from 2030 to 2040 represents the very first wave of retirees who were born under the one-child policy, which got its start only in 1979. Look for them to be tied with Spain in 2050, and the unquestioned world leader in elderly dependency from 2060 to the end of the century.
The Chinese are going to be very, very sorry they listened to the Malthusian hippy-dippies from the the Club of Rome.
Just keeping in mind that this is only a problem with UNFUNDED retirees, ie pensioners, ie the welfare state. This is a Ponzi scheme of vast proportions that is about to blow up because the number of new people entering at the bottom is reducing.
It didn't have to be this way. Fully funded private retirement schemes do not have a problem with demographic changes.
Watch for more health care rationing as a solution to this problem. The state will simply decide that fewer and fewer people are worth keeping alive and thus withhold medical care.
They won’t bother treating folks that might live just another 10-15 or so years when they can spend the same amount on an 20 year-old with a potential of 50 years. This will save on health care and well as general retirement service costs.
This is already happening.
Governments will not permit privately funded retirements because it cuts them out of the power loop. The dollar is a fungible unit of power.
Governments exist for themselves, and not the governed. You will never find a government which at bottom is truly concerned for the welfare of its citizens. Only its own survival. The greedy geezers (and I qualify for AARP) are grasping and greedy--their survival. And government wants its own survival.
Forget about wise action from government.
Everything comes down to your own actions for yourself. People traded in faith in a beneficent supreme being for beneficent benefits from a secular state, which require screwing other people.
If we are VERY lucky we may expect that most private contracts will be enforced at law. Other than that, it's every man for himself.
What Tom Brokaw called the Greatest Generation was actually the Greediest Generation. They voted themselves a mess o' benefits and refused to have enough children to support it. I've been aware of this for a long time and it's been a subject of conversation in my family.
Now, I didn't have kids, but I'm self-funded in this life. And, since my carbon footprint is net negative for being nulliparous, I should get lots of carbon credits to auction off and make a tidy profit. LOL
I had been saying for years that the China one child policy was going to be a disaster.
My thinking since I was like 16, now 41, was, that sooner or later there will not be enough women in China and just over the top of the mountain is a country with lots of people, and lots of women. Wars have always been about resources, and a lack of women is a lack of resources.
It is only a matter of time before China goes after India, it will just about half to, to keep power.
kentuchyliz -- actually, not true, the "greatest generation" was the WWII crowd and they had enough kids (remember the baby boom?). They are dying out (the last WWII vets are in their late 70's already) and being replaced by their kids. It's the baby boomers that are the problem.
and it was the baby boomer radicals that believed in zero population growth, or not be bothered to have children at all because it interfered with their lifestyle. Me, wish I could have kids, biology took that away and I never had the resources to adopt. I feel really sad about it, especially when I see my brothers with their kids, and wishing I had what they have.
Brett, you say:
"Just keeping in mind that this is only a problem with UNFUNDED retirees, ie pensioners, ie the welfare state."
Sorry, but you could not be more wrong. The problem exists regardless of the mechanism used to transfer money from working people to retirees.
You implicitly assume that "funded" retirement accounts have an immutable value. Have you been paying any attention in the last couple of years? Huge numbers of pension funds that were considered "fully funded" a year or two ago are now grossly underfunded. It is going to be very, very hard to get them back to "fully funded" status, even with a quick economic recovery.
By far the most important number for this issue is the "dependency ratio" that our host shows. Everything else is detail. It does not matter whether money is moved from working people to retirees through tax transfers, interest/dividend payments, or asset purchases. It all gets far harder when the dependency ratio goes up. Tax rates have to go up to support transfers, but interest rates go down due to changes in supply and demand.
Our present economic crisis is best understood in having its roots in too many lenders (older folks) chasing too few borrowers (younger folks). This has created strong downward pressure on interest rates for a good decade now. In a desperate quest to try to keep old return levels, more and more ridiculous and even illegal tactics have been tried, and last year it all blew up in our faces -- fundamentally there weren't enough younger people with the capability to pay the old levels of interest to all the older people expecting it.
Even if we can sort out the present mess, the old days are not going to return. If you had put aside a nest egg figuring you could live on 6-8% per year, you had better get ready to make that 3-4% instead