Effects of Demographic Shift and Baby Boomers

[Jim Nickerson]

Re: Effects of Demographic Shift and Baby Boomers

No. It's a pure entitlement problem. The retirement age has been frozen in time while people live longer. Only government works that way. The rest of the economy adapts with changing reality.

Full Retirement Age is Increasing.

http://www.ssa.gov/retirechartred.htm

I do not know how long these increased ages for full Social Security benefits has been in effect. From the chart I figure since 2002. For example, if one was born in 1957 and does not take early social security such a person would not be eligible until attaining the age of 66 and 6/12 years of age. For the moment anyone born after 1960 will be 67 before being eligible for full retirement.

So who said the government is not adapting with changing reality? Perhaps a day late and a bonar short, but things have changed.

[Finster]

Re: Effects of Demographic Shift and Baby Boomers

Full Retirement Age is Increasing.

http://www.ssa.gov/retirechartred.htm

I do not know how long these increased ages for full Social Security benefits has been in effect. From the chart I figure since 2002. For example, if one was born in 1957 and does not take early social security such a person would not be eligible until attaining the age of 66 and 6/12 years of age. For the moment anyone born after 1960 will be 67 before being eligible for full retirement.

So who said the government is not adapting with changing reality? Perhaps a day late and a bonar short, but things have changed.

A date late and a bonar short all right! The law reflected in the chart you cite dates to 1983. Since then, life expectancies have continued to advance, but the law has not. Moreover, the mere two years that were added in 1983 didn't even keep up with the change in life expectancies that had already gone under the bridge since SS was originally passed in 1935. At that time, there were only 7.5 million people aged 65 or older. Soon there will be more than ten times that number over age 65. Yet those two years added in 1983 were all that's been added in the past 71 years!

All it would take to solve the problem would be to pick up where that table leaves off. Depending on how it was done, you'd either have a temporary shortfall down the road which would be corrected later or you'd avoid it entirely.

The fact that people are living longer and enjoying better health in their golden years is wonderful! It is a testament to improved standards of living and gives our society the benefit of wisdom borne of experience. Yet we are wringing our hands about it instead of celebrating.

This is the basis of my point. The demographic change, if anything, is a positive development, not a crisis. The problem is solely that of the failure of our law and institutions to adapt accordingly.

[jk]

Re: Effects of Demographic Shift and Baby Boomers

But inflation is not a political issue once irresponsibility is built into the system - to even insinuate that just continues the very long term and completely false data that allows inflation and fractional reserve and all the other nasty and heinous little tricks that are the stock in trade of central bankers and other short sighted power freaks to exist. You need to do some major historical digging to put the inflation picture of today into proper and full perspective - you're making rash statements and conclusions based on, among other things, looking at the game much closer to its end than its beginning.

i would say that inflation becomes an ever more important political issue once irresponsibility is built into the system. more important and more dangerous. ultimately only a crisis will force the issues to be addressed.

debasement of the currency goes back at least to nero over 2000 years ago, so a fractional reserve system and statistical games are not necessary.

re demographics- i still take exception to the dismissal of the issue raised by 436, which i think is important. perhaps i mistook the tone of the dismissal, and if so i apologize for responding with ridicule.

[bart]

Re: Effects of Demographic Shift and Baby Boomers

i would say that inflation becomes an ever more important political issue once irresponsibility is built into the system. more important and more dangerous. ultimately only a crisis will force the issues to be addressed.

debasement of the currency goes back at least to nero over 2000 years ago, so a fractional reserve system and statistical games are not necessary.

re demographics- i still take exception to the dismissal of the issue raised by 436, which i think is important. perhaps i mistook the tone of the dismissal, and if so i apologize for responding with ridicule.

Cool - we're back to tracking reasonably well. I may have misunderstood your comments too.

I'll leave any comments on that apparent dismissal up to Finster, other than to say that it didn't come across to me as a dismissal.

[Finster]

Re: Effects of Demographic Shift and Baby Boomers

re demographics- i still take exception to the dismissal of the issue raised by 436, which i think is important. perhaps i mistook the tone of the dismissal, and if so i apologize for responding with ridicule.

None necessary, jk, least of all to someone who himself is not unknown to adopt a tone of ridicule with his fellow posters now and then;). And my initial reply to fourthirtysix may have had a tone of dismissal as well. My point, however, is not to suggest there is not an important issue being raised, merely that it is being misidentified.

It may sound like this point is semantic, but that misidentification is so common that it itself has become one of the chief obstacles to solution. As every astute student of political history and social dynamics knows, group-think is notoriously simple-minded and susceptible to manipulation with slogans. Perhaps I should be joining bart in donning a tin-foil-hat here, but the sheer persvasiveness of describing the entitlement program problem in terms that divert attention from its true nature as a made-in-Washington problem is disturbing.

The consequences of how we percieve the issue are massive. By its very nature, a "demographic crisis" invites no quest for accountability. The government and the politicians that inhabit it are not at fault for anything, but merely riders in white hats to the rescue of their subjects from this alien-like force that has emerged from nowhere. If they fail to defeat this natural force of "demographics", they can nevertheless claim they failed against a mysterious, all powerful enemy.

In contrast, an "entitlement program" problem, or perhaps better yet, a "welfare state" problem carries accountability right along with it. The enemy is not some abstract, metaphysical-like entity with a high-fallutin'-sounding name like "demographics", but - gasp - bad laws and the politicians who made them. What's more, as a concrete, down-to-earth problem with a federal program, it also is eminently solvable.

In the face of a "demographic crisis" we are helpless victims much like with Hurricane Katrina or any other natural disaster. But ill-conceived and badly executed government programs can be fixed. There are no excuses if politicians fail to do so. Our chances of solving the problem are a heck of a lot better if we first correctly identify it.

[Finster]

Effects of Demographic Shift and Baby Boomers: None

Another way to look at it:



Problem: Welfare state. Politicians using other people's money to buy votes by making promises they can't keep.

Solution: Throw the bums out.



Problem: Demographic. Fifty million excess baby boomers.

Solution: Kill fifty million people.



Finster reports, you decide.

[Jim Nickerson]

Re: Effects of Demographic Shift and Baby Boomers: None

Another way to look at it:



Problem: Welfare state. Politicians using other people's money to buy votes by making promises they can't keep.

Solution: Throw the bums out.



Problem: Demographic. Fifty million excess baby boomers.

Solution: Kill fifty million people.



Finster reports, you decide.

Throwing the bums out will only last until a new group of bums get into the Congress.

Killing 50 million people is more likely: California disappears during an earthquake, bird flu or some other disease or a massive terrorist attack takes out 50 or 60 million. Actually a hurricaine in Florida would likely take more pensioners off the rolls.

[jk]

Re: Effects of Demographic Shift and Baby Boomers: None

Another way to look at it:



Problem: Welfare state. Politicians using other people's money to buy votes by making promises they can't keep.

Solution: Throw the bums out.



Problem: Demographic. Fifty million excess baby boomers.

Solution: Kill fifty million people.



Finster reports, you decide.

finster, i'm surprised at you. clearly:
problem- either version.
solution- unacknowledged inflation.

[Finster]

Re: Effects of Demographic Shift and Baby Boomers: None

finster, i'm surprised at you. clearly:
problem- either version.
solution- unacknowledged inflation.

Interesting that you put that "unacknowledged" in there ... I hope anyone who doesn't know why asks!

[Finster]

Re: Effects of Demographic Shift and Baby Boomers

... to point at the real and basic causes is strong evidence of that favorite Schopenhauer quote of mine:

"All truth passes through three stages. First, it is ridiculed. Second, it is violently opposed. Third, it is accepted as being self-evident..."
-- Arthur Schopenhauer (1788-1860)

Great quote, Bart. It captures the essence of contrarianism. It reminds us that virtually all progress at some point involves questioning what everybody "knows".

And after all, we're supposed to be contrarians here - iTulip is subtitled "The Contrary Market View - It's Not What You Think™".

[bart]

Re: Effects of Demographic Shift and Baby Boomers

Great quote, Bart. It captures the essence of contrarianism. It reminds us that virtually all progress at some point involves questioning what everybody "knows".

And after all, we're supposed to be contrarians here - iTulip is subtitled "The Contrary Market View - It's Not What You Think™".

Thanks Fin - it really is a favorite of mine, since it stands a chance of actually having people stop and think a little... and not so much here as elsewhere with folk who are less aware of what's really going on.

I had lunch today with a lady friend with whom I used to work when I was consulting for a Fortune 100 insurance company many years ago. She was literally amazed at some of the basics I was talking about, and this is not a stupid person, and she's making over 18%/year on her 401k, etc... so much of the real data is just plain unavailable to folk due precisely to that "everybody knows" issue.

On a somewhat related issue to the thread topic and also a probable tinfoil hat view - I could make a case that both women's lib and so many more women being in the workforce today are one of the direct results of the Fed and dollar devaluation. Its sure not the only cause, but I also think its easily in the top five.

[Dan Amerman]

Re: Effects of Demographic Shift and Baby Boomers

so then too much retiree wealth chasing too few goods produced by a shrinking workforce would lead to inflation.

and then you have to fund all these new entitlements for the boomers, again through huge inflation i suppose, because even if you raise taxes there will be fewer people working.

that leads to higher interest rates, declining dollar and reduced purchasing power and standard of living for the united states, and a whole variety of outcomes depending on the economies of different countries..

perhaps im starting to understand this.. perhaps..

I think you are starting to get the picture quite well. Let me suggest, however, that the issues are as much motivation as they are capacity. The steady liquidation of paper wealth by ever increasing amounts of Boomers can of course be expected to change the market relationship between investments and goods and services. Let me suggest that it is when you give the next generations credit for the intelligence to see what is happening, both in the markets and with entitlements, and then add in their powerful desire to act in their self-interests in producing those goods and services in such manner that they get to keep as much as possible, that things start to get interesting...

Another way of phrasing this would be that changes in paradigms and perceptions will accompany the changes in relative supply and demand, and those may be some of the most powerful consequences of the Boomer Effect.

And hello everyone, and thanks for posting the link to my site, Cory! As you might expect given my signature line, I find this an interesting discussion, and hope that I am not too late!

[Finster]

Re: Effects of Demographic Shift and Baby Boomers

I think you are starting to get the picture quite well. Let me suggest, however, that the issues are as much motivation as they are capacity. The steady liquidation of paper wealth by ever increasing amounts of Boomers can of course be expected to change the market relationship between investments and goods and services. Let me suggest that it is when you give the next generations credit for the intelligence to see what is happening, both in the markets and with entitlements, and then add in their powerful desire to act in their self-interests in producing those goods and services in such manner that they get to keep as much as possible, that things start to get interesting...

Another way of phrasing this would be that changes in paradigms and perceptions will accompany the changes in relative supply and demand, and those may be some of the most powerful consequences of the Boomer Effect.

And hello everyone, and thanks for posting the link to my site, Cory! As you might expect given my signature line, I find this an interesting discussion, and hope that I am not too late!

What BS. All that matters is production versus consumption. The only problem is the unkeepable promises of politicians.

[Dan Amerman]

Re: Effects of Demographic Shift and Baby Boomers

What BS. All that matters is production versus consumption. The only problem is the unkeepable promises of politicians.

LOL, hello Finster. The change in perceptions and paradigms that took people from demanding stock dividend ratios twice as high as government bonds in the first half of the 20th Century, to less than half as high currently, as they changed their view of stocks from being highly risky to a free lunch that delivered high yields with low risk never happened, eh?

And it can't reverse?

And you call yourself a contrarian? ;)

[Finster]

Re: Effects of Demographic Shift and Baby Boomers

LOL, hello Finster. The change in perceptions and paradigms that took people from demanding stock dividend ratios twice as high as government bonds in the first half of the 20th Century, to less than half as high currently, as they changed their view of stocks from being highly risky to a free lunch that delivered high yields with low risk never happened, eh?

And it can't reverse?

And you call yourself a contrarian? ;)

It sure can reverse, Dan! ;) Now the question of when is another matter altogether. My take is that for the time being inflation is too high for that. People now demand bond 'dividend' yields twice as high as stocks as compensation for the risk that the future value of those yields will be eroded by inflation. There is always risk, the nature of that risk is at issue.