Economics

Fear of a Gray Planet

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Megan McArdle has a perspicacious piece in the new Atlantic on the likely economic and cultural effects of the aging of America's population. You ought to read it in full, but for a potted summary: likely slowdown in macro economic growth statistics as more Americans' needs shift from goods (where productivity growth is strong) to services (where it isn't).

She gently debunks the somewhat common fear of a huge stock market crash as the aging Boomers start selling off the stocks they've socked their savings in for decades. But she does think that double digit yearly stock market index growth is very unlikely down the line.

The implicit advice to the young? Go into geriatric medicine. Implicit advice to America? We'll need more immigrant service workers. (Paging Kerry Howley.) Implicit rebuke to aging Americans? You maybe shoulda thought about having more kids. (Paging Bryan Caplan.) And expect to see more graying heads in service occupations, as many Boomers didn't save enough to sustain them through their increasing golden years, and they'll have to keep working past standard "retirement" age, and Social Security won't sustain them. Nor will it bankrupt the Republic, in her reading–though Medicare just might.

Read the whole thing. It ends with a pleasing "life will go on, and still be sweet" tone, despite the possibly scary-sounding economic and cultural shifts she discusses.

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  1. I read today where the US fertility rate has risen to 2.4, which is above replacement. If that is the case, doesn’t that mean the US is going to age a lot less than predicted? Also, I think some of the birth dearth is due to a lag that resulted in this generation waiting longer to have children. The normal birthrates expected when people hit their 20s aren’t happening now until people hit their 30s creating an apparent birth dearth when those people are in their 20s. Some of the growth in fertility is due to high fertility Hispanic immigrants, but not all. Even non-Hispanic whites now have a fertility rate slightly above two. The fertility rate in this country seems to be rising, which I think puts a lot of those “old America” predictions in jeopardy.

  2. Can we stop calling them “boomers” and start calling them “narcissistic parasitic assholes”, which is much more accurate?

  3. If America becomes like that small town she described, you are going to see a lot of young people move out (just like that small town she described).

    Because fuck serving statist narcissistic geriatric assholes for a living.

  4. We’re the most fertile country in the developed world and you’re worried about aging?

  5. It should be added (as John has noted above) even if you included only non-hispanic whites, we’d still the most fertile in the developed world.

    I don’t know whats slowing Europe’s growth, but it doesn’t seem to effect us here.

  6. If America becomes like that small town she described, you are going to see a lot of young people move out (just like that small town she described).

    Given that this phenomena occurring throughout the western world, where are they gonna move?

    The places where fertility is increasing don’t exactly have the allure of the Big City. Sub-Sahara Africa, anyone?

  7. Make that “is occurring” – damn! I can’t seem to make a post anymore without dropping at least one word…

  8. Can we stop calling them “boomers” and start calling them “narcissistic parasitic assholes”, which is much more accurate?

    I’ve been called worse.

  9. I forsee the loosening of chicken restrictions setting us up for a world saving bout with the bird flu.

  10. I don’t know whats slowing Europe’s growth, but it doesn’t seem to effect us here.

    You’re not going to like this much, but I suspect religious participation and values plays a bit a role here. The groups in this country that are growing tend to be the ones that are most religiously active.

    Europe, being largely secular, doesn’t have those incentives.

    From a purely materialistic viewpoint, reproduction doesn’t make a lot of sense…

  11. goddammit….

  12. You’re not going to like this much, but I suspect religious participation and values plays a bit a role here. The groups in this country that are growing tend to be the ones that are most religiously active.

    Maybe, but I think lower population density plays a role. You can’t have a lot of kids unless you have a big house, and if you live in a place like Amsterdam were a shoebox can go for $200,000 you won’t have many kids.

    This seems to hold up because Scandinavia, believe it or not, has higher fertility–along with lower population density–than the rest of Europe. This despite record low church attendance.

  13. Pig, I’m an athiest but I had four kids in the hopes that I could maintain my materialistic ways into my old age.

  14. Not to mention the greatist engine of our materialistic culture is the rugrat.

  15. Let me be clear that I’m not saying explosive fertility is a good thing. But going below replacement rate isn’t, either, unless you’re China or India.

    Slightly above replacement rate–slow, steady growth–seems about right.

  16. maybe a geriatric merkin store…

  17. MR. MCQUIRE
    Ben – I just want to say two words to you – just two words

    BEN
    Yes, sir.

    MR. MCQUIRE
    Are you listening?

    BEN
    Yes I am.

    MR. MCQUIRE
    (gravely)
    Old Hippies

    They look at each other for a moment.

    BEN
    Exactly how do you mean?

    MR. MCQUIRE
    There is a great future in old hippies.

    Think about it. Will you think
    about it?

    BEN
    Yes, I will.

    MR. MCQUIRE
    Okay. Enough said. That’s a deal.

  18. It takes a nation of whippersnappers to hold us back.

  19. I don’t see why having more kids is good for your finances per se. Sure, they might support you in your old age, but that’s far from guaranteed, and if you saved the money that you would have spent raising them, you could support yourself. There are plenty of reasons to have kids, but economically speaking they’re a poor investment.

  20. Is it too late to implement Carousel?

  21. You’re not going to like this much, but I suspect religious participation and values plays a bit a role here. The groups in this country that are growing tend to be the ones that are most religiously active.

    This is admittedly a pretty cracky, Anton Wilson-esque speculation, but I wonder sometimes if this feat isn’t something secular culture could learn to emulate in time.

    Part of the root of humanist fear of religion in the modern, Western world is, I suspect, based on a misunderstanding of religious attitudes toward sexuality. There are doubtless religious theorists who actually are anti-sex, but for the most part, religious sexual morality is simply rooted in a societal structure that is alien to the urban secular humanist – the social structure of the agrarian town, which was for most of history the basic substructure of civilization itself.

    Agrarian mores aren’t actually anti-sex (as any medieval scholar could explain at length), they just connect sex with reproduction in a way that’s weird to someone raised in contemporary society – particularly in Anglophone countries, where the world of children and family are widely understood to be irreconcilable at a fundamental moral level with the existence of adult sexuality.

    A lot of adults today profess not to want kids because they’re an economic burden (which they are), or because they “don’t like kids”; I suspect that in many cases, the root of the very emotional objection to the raising of offspring is the notion that childbirth represents the boundary between youth and individuality and bland, sexless seniority.

    Whereas I don’t think there is necessarily a fundamental conflict between family and what urban, secular adults want out of life, only between broad modes of living based on value-sets taken for granted in American society. I would be happy to explain how I believe this shortchanges children as well, but that issue falls outside the scope of this particular speculation, so: another time.

  22. The Medicare bomb is the scary one, because it coincides with other ticking bombs:

    1. Massive numbers of doctors and RN’s are themselves baby boomers, and will begin to retire.

    2. We haven’t been producing medical professionals domestically at replacement rates, but have plugged the gap by importing medical professionals from east Asia and the subcontinent. That flow will slow to a trickle and then stop as those societies grow wealthy enough to pay their doctors to stay put.

    3. One way that the Medicare crisis will be dealt with is by stiffing providers by slashing reimbursement rates.

    The combination of 1-3 has the potential to turn our hospitals into medical ghost towns that will look like the last chapters of a medical Atlas Shrugged. The steps our government is likely to take in response to such a crisis are not pleasant to think about.

  23. Brian, on an individual basis kids probably are a poor investment. But overall, the economy and thus individuals benefits from the stimulus of diaper, food, toy and electronic manufacturing. Our standard of living as compared to the lower fertility nations shows as much.

  24. Making a distinction between manfacturing and service sectors is a mistake. This is a relic of the bad economics of the 1930’s. Goods are not superior to services.

    Do we want our economy devoted to producing cheap plastic doodads, or engaged in software engineering, genetic research, and cutting edge medicine? The former are goods, the latter are services. I don’t know about you, but the latter sounds like a more vibrant economy.

  25. Brandybuck, Until you have to fight a war. Anyway your economy would result in the boomers living forever, which can’t help the situation.

  26. I commented on Megan’s blog that she shouldn’t be looking at Italy for the future but Japan.

    In 15-20 years we will have personal care robots that can bathe, feed and otherwise care for seniors. Combine that with cars that drive themselves allowing for automatic deliveries from Wal-mart and Food Lion and the productivity increases we will be seeing in these sectors will be staggering.

  27. What do the Ron Paul newsletters say about this topic?
    ———-
    Matt Welch is a vile racist.

  28. Can we stop calling them “boomers” and start calling them “narcissistic parasitic assholes”, which is much more accurate?

    You rule, es.

    ———-

    Matt Welch is a vile racist.

  29. I’m sorry Dave, I can’t change your adult diaper.

  30. Episiarch – I already do, sir – I already do.

    Hale: that’s very interesting and I think you’re on to something.

  31. I think you are right James B. Also, I think information technology will be better adapted to the medical profession allowing doctors to be more productive. All of course assuming some well meaning do gooder doesn’t come and enforce socialism on the medical sector and freeze technology at current levels in the name of fairness.

  32. I don’t see why having more kids is good for your finances per se. Sure, they might support you in your old age, but that’s far from guaranteed, and if you saved the money that you would have spent raising them, you could support yourself. There are plenty of reasons to have kids, but economically speaking they’re a poor investment.

    Only on a micro level. You personally will be better off financially if you hoard the resources you would have spent raising children. But on a macro level, if too many people copy you you’ll end up in a society where there aren’t enough workers to produce what you hope your savings will purchase.

    Besides, no kids>>no grandkids. You have to spend your golden years playing with dogs and cats.

  33. Sorry if this is a repeat, but I haven’t had a chance to read all of the comments yet.

    Couldn’t we just send all the old people to India to be taken care of?

  34. But what about the robots?

  35. I think anyone who wants to outsource their old people to India should be allowed to. We are keeping our old people, and caring for them, because they help us take care of the kids and we can’t afford nannies.

  36. Aren’t we going to turn all the drudge work over to robots?

    Aren’t we going to fix the aging problem medically?

    Hey! Where’s the future?

  37. Sam Grove,

    I don’t think the idea of a robot-driven economy is remotely a ludicrous fantasy. I think it’s both a plausible and desirable outcome, and one that would improve society in a number of immediate ways.

    Having said that, I’d still argue that the earliest point at which it should be permissible to count on a particular outcome for policy purposes is when it is some working model has been constructed. So far, neither the wholesale divestment of human labor to technology nor a cure for aging have been demonstrated in any tangible way.

    Oh well. The future is apparently later.

  38. hale: i think you’re onto something as well.

  39. Hale,

    I am all for it as well. Where the hell is my robot prostitute?

  40. John,

    Here you go.

    (Note: sexual use may result in chafing)

  41. “””I am all for it as well. Where the hell is my robot prostitute?”””

    Irobot is currently working on an attachment for its roomba vacumn cleaners for just that purpose. They also have a version for their military bots that can kill level an enemy compound and satisfy a company of Marines on a single charge.

  42. Strike the word kill.

  43. i have some comments on the Boomer piece in the atlantic (having done lots of forecasting on the economic impact of future demographic changes)… but they’re not all that big a deal. The short of it is that we need immigrants. They make babies. We need their babies.

    ..to make rejuvination medicine from… bwooo ha ha haha ha ha!!

    ahem. Kidding.

    Anyhoos, the more interesting libertarian red meat in the Atlantic this month was the article “First, Kill All the School Boards”… about public education failures in America.

    Sounds good from the title, but if you read it, it boils into an argument for getting rid of all localized variance, and having one big ol federal mass-education program like the Germans and the Japs.

    The boomer thing is kinda a mixed bag, and doesnt have a whole lot of obvious take aways. Other than our healthcare system is going to get even more expensive. Most of which will come out of young, healthy people’s paychecks.

    “Welcome to the Monkey House” is a really good book. It almost makes you think of Vonnegut as sorta libertarianish.

  44. Jake,

    I was thinking more along the lines of a young Melanie Griffith in Blade Runner.

  45. Countdown to November 2019 and the arrival of my standard pleasure model.

  46. I was thinking more along the lines of a young Melanie Griffith in Blade Runner.

    Or Daryl Hannah in Cherry 2000 ;-}

  47. What is the immigration debate but a bunch of old people yelling “Get the hell off my lawn!”?

  48. “The implicit advice to the young? Go into geriatric medicine.”

    Don’t do it!

    With government interference, a large and growing market does not guarantee high wages.

    As a doctor, you can only fix one arthritic knee at a time.

    Who pays for this when you’re retired? Some government health plan.

    What’s their number one goal going to be? Offer services while keeping down costs.

    How much are they going to pay you?
    As little as possible.

    Go into plastic surgery instead.

  49. “Making a distinction between manfacturing and service sectors is a mistake. This is a relic of the bad economics of the 1930’s. Goods are not superior to services.”

    Megan McArdle was not making a value judgment, Brandybuck, and the distinction she made is valid — it’s easier to increase productivity in manufacturing goods than in providing services.

    As for robot servants and cars that drive themselves — people have been predicting these things for over 50 years. Don’t hold your breath.

  50. Do we want our economy devoted to producing cheap plastic doodads, or engaged in software engineering, genetic research, and cutting edge medicine? The former are goods, the latter are services.

    Really? Software is a product. It comes on CDs in boxes, or computer downloads. Genetic research leads to GM products. Cutting edge medicine produces procedures like in-vitro fertilization and products like artificial skin.

    “Services” includes everything from the clerk who sells you the software to the physician who places the artificial skin.

  51. “Can we stop calling them “boomers” and start calling them “narcissistic parasitic assholes…”

    Jeez, if I’d have known what was going to happen, I’d have asked my parents to have me at a different time. Oh, wait.

    Good thing no one had to take care of you when you were a helpless child, ’cause that would have been “for the children”.

    Self-centered buttplug.

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