Monday, February 7, 2011

Aging our way to misery, and financial collapse

We in the United States are not alone in our concerns of the impending finality of the current order: by diverse means.  In glancing over a financial piece, by Niel Howe, author of the Fourth Turning.  I noted that the Europeans were also concerned.

The impact of global aging on the collective temperament of the developed countries is more difficult to quantify than its impact on their economies, but the consequences could be just as important—or even more so. With the size of domestic markets fixed or shrinking in many countries, businesses and unions may lobby for anticompetitive changes in the economy. We may see growing cartel behavior to protect market share and more restrictive rules on hiring and firing to protect jobs.

In Europe, the demographic ebb tide may deepen the crisis of confidence that is reflected in such best-selling books as France Is Falling by Nicolas Baverez, Can Germany Be Saved? by Hans-Werner Sinn, and The Last Days of Europe by Walter Laqueur. The media in Europe are already rife with dolorous stories about the closing of schools and maternity wards, the abandonment of rural towns, and the lawlessness of immigrant youths in large cities. In Japan, the government has half-seriously projected the date at which only one Japanese citizen will be left alive.
The author goes on to note that the Chinese will be older than we are by the year 2030: which is true only in so far as we continue to allow people to immigrate to the United States.
But at the point he starts talking about China getting old before they get rich, you realize that what he is talking about is the eventual (theoretical) peak of world population at 10.5 billion people.  While a very large number, you would think that it was universal good news that world population is finally slowing its growth trend.
But alas, it is not so, as the world reaches its peak, stabilized and then slowly (hopefully) begins its downward trend, you will get a population bubble that will make our baby boom look small.  Sort of a world mass baby boom with its peak at (let’s say) 2040.
The western economies are at the very tip of this bulge and will go through the pain first, but the rest of the world eventually get there as well.
Of course this is obviously a world view that is not overly concerned with peak oil, and global warming.  But it is indicative that even if we somehow can find enough cow methane to run our automobiles, and the polar ice caps are covered with a new clear, uv resistant,  protective polymer  coating-sort of like they did to furniture back in the 1970s- we are still going to be miserable.
This will save us

Whew! What a relief! I won’t need to find a new blog subject!
O.K., I will be short about this.  Mr. Howe uses a lot of long fuzzy arguments that at least to me appear to fold back on themselves at times.  I will try to be a bit more straightforward.
Some of us have money.  Maybe not you, and maybe not me, but some us do.
One way to look at money is to say that it is an option on the future production of someone.  If you have U.S.$ dollars it is the productive value of somebody, or something within the U.S.  Most people worry about how much actual money there is relative to that production:  they worry about inflation.
But if everyone is getting old and less productive, you can get the other side of the equation shifting as well.  If we have the same amount of dollars floating around out there, but our output is halved, and your demand does not also halve, you get something that looks a lot like inflation.
And that is what the aging populations will face.  As they get older, their saved up money will be worth less, because relatively less will be produced.  All this talk of balancing the Social Security fund, Medicaid, etc. is all very fine, but somewhat beside the point.  If the western economies cannot produce a lot more, with a lot less people, they are going to be looking pretty poor, pretty quickly.
Throwing in your various peak oil, environmental degradation issues are simply a different flavor of the same problem:  productivity decline relative to population size = impoverishment.
I hope that makes it easier to understand.  I stole the concept from Jack Goldstone, but I cannot remember where, or I would site it.

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