Sunday, November 6, 2011
Attack of the Killer Seniors
They are gathering in coffee shops, gyms and multiplexes, conspiring to wreak havoc on the US economy. You know who they are: the boomers and near-boomers, the demographic bulge that will rip a giant hole in fiscal budgets and push working-age taxpayers into martyrdom or worse.
Don’t take it from me. David Leonhardt, in today’s New York Times, talks about the impending collision of slow economic growth with “sharply increasing claims” that “come from the aging of the population”. He quotes Benjamin Friedman of Harvard: “These are very difficult moral issues. We are really talking about the level at which we support the elderly retired population.”
This is common wisdom, one I’ve heard more times than I care to remember. Does it matter that it’s wrong?
1. Aging, and increases in the proportion of the population no longer active in the labor force, is nothing new. The US and other industrialized countries have been adapting to this trend for generations. In fact, the increase in retirees we face in the future is not nearly as dramatic as those we’ve dealt with in the past.
2. The secret weapon against the attack of the seniors is not growth per se but productivity growth, output per worker. As long as this increases faster than the ratio of retirees to active workers—and it has ever since we started gathering statistics on it—we can afford to take of our elders and improve living standards for the young and spry simultaneously.
Demographics is a false issue. I’ll trust the motives of those who pound that drum when I start seeing articles about how the economic burden of the defense (i.e. war) budget poses a moral issue that demands courage and sacrifice, etc. The demographic bulge I worry about is predator drones.