Asymmetrical Information

I expect that from around 2010, when the huge bulk of the Baby Boomers retire, we will see a period of economic decline (not a "Depression" or anything so grave, mind you!). However, over time the Boomers will die off... so the problem more or less takes care of itself.

Now for the tricky part: making the aging Boomers realize they are not going to live forever... ;-)

-A.R.Yngve
http://yngve.bravehost.com

For an interesting look at an age-heavy Gerontocracy, take a look at Bruce Sterling's "Holy Fire."

"...the dependancy ratio isn't changing that much..."
~~~

The 1994 Social Security Advisory Commission exploded this argument way back when, documenting that the government spends more on seniors than on minors by like a 9-1 ratio, IIRC, that rising over time as Medicare costs rise per participant.

Anybody who trots this argument out today isn't serious, but is just repeating talking points that should've been updated ten years ago.

Demographic change is relevant whether or not SSI is privitized. By definition an economy with more non-workers (retirees) means the workers have a bigger burden to bear. I also tend to agree with Jane that this is a problem the market can correct. If the working population falls faster than their productivity increases then the reward for increasing the working population goes up (in other words, if the young can't pick up the slack for grandpa retiring early then money grandpa can earn by delaying retirement increases).

Jane's attempt to hint that Bush's 'private accounts' will somehow increase productivity by increasing 'private ownership' has been destroyed more times than Jason in the 'Friday the 13th' movies. Giving everyone a 'private account' paid for by either public borrowing or increased taxes does nothing to increase net private ownership. What might do the trick is putting Bush's '2%' on top of Social Security (or increase gov't savings by adding 2% to the SS tax/surplus). But free market types like Jane should tell us why itis necessary for the gov't to promote savings? Why is the market unable to generate rewards sufficient to motivate the necessary savings to increase productivity?

Okay, everyone, go forth and make babies. It's your duty to the country.

Hey Jane,

Wondered over to your site via a weblink concerning albuterol. I suffer from asthma like you, and I've had problems obtaining prescriptions, because as student from overseas studying in the US, I don't have a regular doctor, I usually have to go into a clinic at my own expense. Going to see a doctor is very expensive for me. I agree with you that Albuterol Inhalers should be available over the counter. I mean, yeah, there are lots of great medicines out there that give you freedom to do what you want with your body, but we need these things to LIVE dammit.

I've asked around a bit myself, and one doctor told me that a major obstacle in the way of making albuterol over the counter is that its abused by people who smoke crack, who take albuterol in order to get a bigger high. I really can't say anything about this, but to me it sucks that just because people who do drugs abuse the medicines we need, we must be denied them. What does the government want us to do, go out and stop drug addicts from smoking crack?

- Hamilton

Not every problem requires a comission of earnest worriers to find a solution.

Indeed, problems will generally find their own solutions. However, it is quite possible that the solutions found by professional worriers (read: economists, engineers, scientists, planners) are preferable to those that would be found if the problems were left alone.

Consider that the fact that the reason we don't worry about many of the problems people predicted in the 1950's may be precisely because people worried about them then and found solutions in advance.

Another demographic solution is to open the limits on immigration to people in the 20-35 range. When our labor force starts dropping with the retirement of the boomers, we won't be complaining so much about immigrants taking away "our" jobs.

"Read science fiction of the middle of the 20th century and you'll find that a lot of it is filled with dire descriptions of overpopulation...The current demographic trends might continue indefinitely, or they might reverse themselves for some currently undreamt-of reason, leaving us to worry once again about overpopulation rather than Centrum Silver shortages."

Well, some folks (I am especially thinking of Ben Wattenberg) have been warning about the population implosion (Wattenberg notably wrote an entire book on the subject, "The Birth Dearth" , whose original version appeared in *1971*: a revised edition came out in 1989, and it has recently been republished in yet another edition as "Fewer") for a long time.

Yes, anything can happen. Yes, trees don't grow to the sky. Yes, if something can't go on forever, it will stop. But to assume that this will be the case for the changing demographics of the world population--and, let's be clear, these demographic trends affect *everyone*, not just the developed world--is to engage in whistling past the graveyard.

Markets exist in such unusual places. There's a market even for having children. If the rewards of having children drop then people will have fewer kids, however if the market gets 'oversold' people will rediscover the joy of more kids just as an oversold stock will eventually increase in price.

And if some of the wackier types (such as I) are correct, and the biosciences start making serious inroads into greatly extending healthy lifespan, that'll put a whole 'nother wildcard into the equation. If great-grandpa is still smacking sizzling aces on the tennis court at 125, does it matter as much if there are fewer young 'uns under foot? Hmmmmmm?

IdahoEv,

I agree that solutions found by *certain* professional worriers (read: engineers, scientists) are preferable to those that would be found if the problems were left alone. However, "solutions" found by other professional worriers (read: economists, planners) often end up worsening the situation -- or even turn out to be much, much worse than the original problem altogether.

FWIW, "Stand On Zanzibar" and "Soylent Green" are big favorites of mine.

Sure, Enphilistor, just as long as Grandpa Agassi is willing to not receive Social Security until he's 95.

What is it about conservatives that they apparently refuse to acknowledge that the boomers are a temporary population bulge that will have a start and an end? By some definitions I represent the last year of the boomer generation. The number of people born in that year was smaller than those who came before so it represents a trailing off of the population bulge represented by the boomers. When we're gone then what is the justification for their "fixes"? Ooops. None. Maybe that's why they never honestly address it. They also are dishonest enough to pretend that they aren't really interested in eliminating the program, thoug Arnold Kling at TechCentral Station pretty much fesses up to it. Of course he does it in an article in which he claims that a one decade long experiment would prove the validity of private accounts.

Most people writing science fiction did indeed presume that population growth would continue unchecked, with the result that not only would the environment be devastated but that everyone would be limited to a strictly rationed group of resources. What mostly didn't consider was that even if increased modernization caused birthrates to drop, the demand for resources caused by that modernization would expand even more.

Without truly startling breakthroughs in energy production and material science, I don't think it's possible for most of the world to reach the standard of living that North America and Western Europe have enjoyed for decades. I do think the rest of the world is going to try to approach that standard.

Maybe it's time for us to stop worrying that explosive population growth will deny people a modest standard of living, and start worrying about the consequences of smaller numbers of people who demand a standard of living that can't be supported.

In the past, after the children left home and a couple's living expenses dropped, they had the retirement planning session. They usually had largely paid off their houses and had little personal debt, leaving them free to take their now excess income and plow it into retirement vehicles. When they saved enough, they retired.

Baby Boomers as a group have high amounts of personal debt thanks to credit cards. They also typically have 20-30 years left on their recently refinanced mortgages when they took out their principle to spend. When many of them sit down to decide when to retire, the results will be ugly for them. They will first need to pay off their credit cards then pay off their house (or move downscale) before they can begin to save for retirement.

Some will be paying for care for their elderly parents.

Some will think "I don't feel old so I shouldn't retire." In fact, they will be more capable of working longer than earlier generations.

These forces and others will cause many Baby Boomers to continue to work past the "normal" retirement age. This will help reduce the impact of the aging population on available workforce.

I see the remaining impact being absorbed by increased immigration, outsourcing, and automation. This shift won't be a huge cultural problem in the US. Europe is another story, these three remedies are not consistent with their socialist, status-quo cultures. Watch for lots of European unrest as governments are forced into solutions their citizens disagree with.

Jim S:

I can only speak for myself. I see the baby boom and the mini-boom as temporary phenomena, sure. I also acknowledge the need for a "safety net" for elders whose luck has gone bad or who otherwise are not able to support themselves in retirement (and the smaller number of people who start collecting benefits much earlier because they're unable to be self-supporting). But as a conservative, my beef with Social Security is that it's an entitlement, not that it's potentially approaching a crisis. The impending insolvency impacts the timing of proposing a change, that's all. I think Bush is being fairly up-front, for a pol, when he names his goal the "ownership society."

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