Bad Choices

Bruce Krasting's picture



If two people are dying from liver disease, one 25, the other 65, and there’s only one liver available for transplant, the old one dies.


There’s one economic variable that’s highly predictable; demographics. In all of the industrial countries the aging population is now weighing on the economic outcome. Japan was the first country to go down the tubes from this phenomenon. Europe is behind Japan, but rapidly catching up.


The US has a huge headache with an aging population. The number of oldsters is big, and rapidly rising. Add to the size of the aging US population the fact that the promises made to these people are enormous. Other countries, like Canada, Russia and even China are struggling with the problem.


The USA is in now in year three of what will prove to be a twenty-year mega-trend of an aging population. These facts have been know for a long time, I’m amazed that the US has been so slow to come to grips with the implications of what is clearly in our future. Thanks to the Fiscal Cliff debate, the financial implications of the graying of America are now being discussed, and Washington is talking about “solutions”.


So what are the solutions that the deciders are zeroing in on? Simple. The proposals (and what we will get) are extensions of the ages that benefits become available. Both sides have suggested that pushing out the age for Medicare and Social Security benefits for an additional two years is appropriate. The Administration has said it would be willing to do this; John Boehner (and other big Republicans) has flat-out insisted that it happen.


At some point in the next year (I don’t think this will be part of the fiscal cliff resolution) the eligibility changes will take place. The changes will be phased in over 10-15 years. When the ink is dry on the new laws, the bean counters in Washington will declare success. The end result will be a 3-4 year extension of the lives of both the Social Security and Medicare Trust Funds.


Where does this “fix” take the country? That’s easy to forecast. Older people will be forced to stay in the workforce for years longer. The retirement age will be pushed out, the benefit checks will also be smaller on a relative basis. (There will be cuts to inflation adjustments) Once again, the deep thinkers in D.C. are “okay” with making old folks wait for a few years for benefits; the thinking is that people live longer, so make them work longer.


My fear is that the solution to one problem is going to spill over and aggravate another problem. The fix on retirement benefits will cause a long-term erosion of youth unemployment. That outcome could prove more devastating than the aging problem.


Its not hard to find evidence that these big trends are already moving the needle. Last Friday’s NFP is a case in point. Zero Hedge has the details (Link) and (Link). This chart shows what happened in November. A disaster for those 22-54, the 55-69 group were the winners.



It wasn’t just November. Consider the changes since 2009.




What does a government do when it is faced with high youth unemployment? It sends them to school with borrowed money. This won’t work much longer:



This is the worst kind of whack-a-mole problem solving. Washington will take steps to address the fiscal consequences of the aging population, but those steps will create a multi-decade drag on what is already a serious problem.




We are far from the point where rules on transplants should apply to choices on economic policy, but we’re getting closer. The policy choices that are being made today are running counter to the rules on transplants. They favor old over young. We are a long way from being balanced on this issue; longer still toward policies that actually tip the scales to the next few generations.


If you asked the question, “How do we create opportunities for younger workers?” The answer would be to lower the retirement age. Create the opportunity for upward mobility. We are on a path 180 degrees in the opposite direction.


I don’t see a way around this. Demographic changes are powerful forces. The problem is we are on the third rung of a twenty-foot steep ladder, and we’re already making bad choices.


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FleaMarketPete's picture

I do think BK enjoys stirring the pot every now and then.  As a young person, I look at my own parents (baby boomers) with their typical "burn the neighborhood down on my way out" also known as "ME ME ME!" mentality and I often think about the inter-generational antagonism that is building.  

There are so many dynamics to this issue, but understand, Bruce is using the status quo as the base case.  Throw in a little hyper-inflation or natural resource crisis and we will quickly find ourselves looking at each other in terms of "productive lives" and "national survival".  And no, 99.9% of you oldies are not the neurosurgical rocket scientists that you think you are.  

Regretfully, we will need to expedite you to your reward, which is not early retirement.  Sorry mom.  Sorry BK.  J/k dark humor.  Sort of.

bilejones's picture

"If two people are dying from liver disease, one 25, the other 65, and there’s only one liver available for transplant, the old one dies."


Unless the old one is Steve Jobs.

Oldwood's picture

So what we need is less rich people paying their own way and more insurance and welfare patients to keep pushing up the cost of healtcare for everyone...or are transplants free now. I just can't keep up.

Tijuana Donkey Show's picture

So what we really need is more motorcycle riders, to keep the supply of livers coming. Everyone under the age of 30 needs to drive a motorcycle instead of a car, we can boost transplants, and Harley at the same time. There is a reason they call them donor-cycles, I'm waiting for my new liver.....

Fish Gone Bad's picture

Steve Jobs had pancreatic cancer.  So giving him the liver was the better choice - that way both people could die.

What if Teena Marie was on the list as well?

flattrader's picture

Bruce, you made a bad choice in setting up this little essay with a most simplistic, idiotic choice and then went on too choose for no good reason other than you have a youth bias.

If posters tear you a new one, you deserve it.


Yen Cross's picture

No worries/ Livers will be cloned in the near future.  (25 year olds are just entering their peak revenue years)

CPL's picture

Those services have been available in South Korea for a decade and a half.,8599,1878398,00.html


Sorry the article is a bit dated but it's about the highly competitive Pet cloning and organ growth market that the rest of the planet use because stem cell research isn't a religious debate in Korea.  They do however purchase all the ones we don't use...have for about a decade and a half by coincidence.

Or you can use the services in Germany.

Their price list is quite competitive with market.  You need a new heart, they grow your heart.  Zero chance of rejection and it's got another half century on it.  After heart replacement, the kidney's are swapped.  Two months later liver, then lungs.  Prostate.  Anything.  They have the technology to do it now in a cost effective manner for those with reasonable means.  Get the major four done though, add another century on your expiry date.


Whatever you've got the money for.  

disabledvet's picture

you don't need to believe in God to believe in ethics or morals. this is CRAZY SHIT. the irony of course is we have all these great minds in world...and i've never felt like i've lived in a more mindless age as this. the idea of cloning itself is SCARY...and yet...whoop! there it is! shall we have a discussion on consciousness? on what it means for your clone to become "self aware"? "no, we don't want to scare people." REALLY? Scary is NOT talking about it given the advances in science and technology in just the past few years...let alone the past decade or so. remember the stem cell debate? i mean a debate over whether life begins at conception when mankind can now create life at will? i don't even know where to begin...

Yen Cross's picture

 You Guys/Gals will laugh over this one/ The French Chef - Video Dailymotion  

  70's humor. Dan Aykroyd

are we there yet's picture

A variant from Margret Thatchers is, ' the problem with socialism is eventually you tax the productive citizens out of having kids that are future taxpayers'.

kaiserhoff's picture

Thanks for tackling the tough issues, Bruce.  I don't always agree with you, but you have guts, and a nose for the real problems.

What if the 65 year old is a cancer researcher and doing the most important work of his life?

What if the 25 year old is a crack whore with two illegitimate veggie babies, who wants to have four more?

No one wants to deal with responsibility, ethics, and consequences, but demographics is the least of our problems.

Bruce Krasting's picture

People addicted to crack, or alcoholics for that matter, don't get on the list.

Now the question of the 25 with four kids, versus a cancer researcher that might make a difference?

Let's hope it does not come down to that.

the grateful unemployed's picture


Dr. Sandi's picture

Maybe the liver goes to the winner of a set of skill testing questions.

kaiserhoff's picture

Unless everyone gets a liver and money is unlimited, doesn't it always come down to that?

kaiserhoff's picture

net is gimpy today, or maybe creeping senility, or galloping...

Hobbleknee's picture

"...and there’s only one liver available for transplant, the old one dies."


Unless your name is Steve Jobs.  Then the old one gets the liver and they both die.

WTFx10's picture

Or if you need a heart and you happen to be Dick"head" Cheney. Funny how the leaders and the exploiters always get what they need.

Tijuana Donkey Show's picture

Lay off man. that's the first real human heart he ever had!

akak's picture

Now, if he only had a brain ...

Fish Gone Bad's picture

I for one admire Dick Cheney.  He certainly spoke his mind with that, "Go Fuck Yourself" comment he made.  I really should send him a Christmas card.

Pemaquid's picture

There's a group of under-the-table and partial under-the-table workers I have occasional contact with. Most bad mouth the government and justify their screwing of the tax man, saying the government would just waste the money anyway, so why be on the up and up. But when the time comes to sign up for Medicare and Social Security, they are at the front of the line. Unfortunately, Medicare benefits are disbursed regardless of how much you have paid in.

Getting Old Sucks's picture

Gen X is just as big as the Boomers.  If you think the Boomers are the problem now, just wait till Gen X start's joining them.  Yes they will when they come of age.   

steve from virginia's picture


Thanks Bruce Krasting for absorbing my argument and calling it yr own:


Note the date. @Bruce:


Social Security a Ponzi? – I think so


Rick Perry teed this up. I’m amazed at how much traction this has gotten. Clearly both sides of this issue are stirring the pot.


I’ve looked up a few definitions of what a Ponzi scheme is. This one is from an excellent source. The Securities and Exchange Commission defines a Ponzi as:


A Ponzi scheme is an investment fraud that involves the payment of purported returns to existing investors from funds contributed by new investors.

Does Social Security constitute a Ponzi based on that definition? I think it does.


Steve From Virginia in the same post:


Ponzi schemes are hard to describe in a few words: Bruce trips over an inadequate SEC definition which doesn’t mention the role of the shill. If Social is a Ponzi, it is one that works in reverse: not only are there beneficiaries, these outnumber the contributors!

Social is only partly a retirement plan. It is impossible to know exactly what future Social benefits might be because nobody can tell what the future itself is going to be. Best to look at Social is as a jobs exchange.


The government- plus younger workers ‘buy’ job openings by offering modest payments to aged and disabled workers so that they might retire. Social is the jobs-purchase plan that college lending is supposed to be!

The ingenious promotion of Social as a pension for the elderly has given it an enduring constituency.


Krasting has endlessly painted Social Security as some sort of scam instead of describing it for what is: an employment exchange. Believe it or not, it is capitalism in action: oldsters are paid to give up their jobs by those seeking them. The government is a facilitator or intermediary, any shortfalls are made up by Treasury borrowing.


Those having problems with govt. borrowing should look toward the Defense Department and the subsidies for the auto- and related FIRE (Finance, Insurance and Real Estate) industries.


Krasting's motive is unclear but the likely to be political: to destroy Social Security has been the aim of the Wall Street White Shoe boys since the early 1930s. I have a better idea: how about bringing back the guillotine and putting the white shoe boys though it as a first step to generalized economic reform?


The country is broke not because of Social Security. It transfers funds from one group to others without destroying anything.

The problem is at the end of your driveway(s): America's automobiles destroy 18 million barrels of irreplaceable capital every single day without pause for the benefit of a handful of tycoons. Absolutely nothing in return is gained for this waste: nada-zero-zilch! Unless you make a living driving a cab or a delivery truck your daily driving is a dead-loss! The autos and everything that goes along with them must be subsidized with credit, as a consequence ... the world is inundated with unpayable -- and soon to be unserviceable -- debt.


Stop blaming Granny and get rid of the goddamned car!



disabledvet's picture

an aging population affects HOUSING...quite dramatically actually...but insofar as it affects Social Security...i'm sorry but the jury is still out on this. obviously they're going to start collecting benefits...but they still pay taxes on said benefit...and they can still go out and get work...or just keep working should they desire. (many are being forced to because of Chairman Bernanke-son.) Sorry but this strikes me as right wing fear mongering designed to get that retirement age raised. YIKES!

10mm's picture

Fear not.Nothing a few nukes cannot take care of.Sprinkle in a few organized pestilance,whamo,instant depopulation.

laomei's picture

Steve Jobs gets the liver and wastes it with his horrid body of course.  Imagine the guy who didn't get it and died because Steve needed to slack around dying for a few more days.

Dr. Sandi's picture

A lot of people made a lot of money from the last year or two of Steve Jobs hanging around Apple. Maybe the guy who didn't get that liver didn't have enough Apple stock to afford the surgery.

Miffed Microbiologist's picture

You beat me to it. I watched many times a young person get turned down for a liver because they were alcoholics. Then, magically, Larry Hagman got one. Kinda rocked my faith in the system.


Oldwood's picture

How much did Hagman pay? Did those hospitals provide any free care to patients that had no money to pay. Did you see on Drudge the illegal that got the free transplant? Nothing is fair yet it all seems to work out. Would we have transplants if somebody had not put a ton of money and work into the technology? You want the whole world run as a lottery, where someone gets the mansion and the other a hut based on fair daily drawings? I'm sick of fairness because everyone judges it differently and when we can't agree we have to pay someone else to decide for us. Courts, arbitrators and unaccountable government employees. No thanks, I'll take my chances.

Miffed Microbiologist's picture

You may have missed my point. I was on a transplant team in the 1990s and had done many harvests. Ok I may not be up to date on protocols now but then there were strict rules how livers were allocated. Alcoholics were not allowed to be on lists. Perhaps if they quit drinking for a set amount of time they could reapply... I'm not sure. The liver functions remarkably well until it's down to about 10% then the horrible effects of liver failure are seen. So, generally, when you need a liver you need it fairly quickly, not a lot of time for some life changes. My issue with Hagman has nothing to do with fairness. It's about the lying that these rules were absolute. At least Hagman utilized his liver well. Funny thing is the need for liver transplants will skyrocket in a few years in the Boomer population due to hep c from blood transfusion and IV drug use. They estimate millions of Boomers are unaware they even they have hep c. Every week I diagnose at least 10 new patients with hep C. 99% of them are between 50 and 65. I know what's on the horizon especially in this population which is used to getting what they want.


Fish Gone Bad's picture

I did not know that hepatitis C was that common.  Apparently I learned something today.  Thanks.

catacl1sm's picture

In a free market, whoever was willing to pay more for the liver would get it.

lyras's picture

People talk as if Obama is just some well-meaning bumbling fool who needs the consequnces of his actions pointed out to him so he can adjust accordingly and all will be well. Au contraire, he is steering right on intended course for a crisis that will not be let go to waste, so buckle up. 

 Here in Oz we have universal health care and treat 90 year olds with hideously expensive cytotoxics (the true beneficiaries of universal health care are pharmacuetical and medical supply companies) and no questions asked.  As long as O wants the US brought to its knees (in order to normalise rule by Exec Order) there will be no limits and cost no issue at all. So unplug and buckle up.


Parrotile's picture

Here in Melbourne we NEED to have Private Insurance. The Public system is swamped 24/7 by demand, and the "customers" we treat are getting sicker, and YOUNGER too - as well as the "We've got RIGHTS, Mate!" elderlies who commandeer the ED Waiting rooms!

Eventually the system will experience a catastrophic failure (along the lines of catastrophe theory - ) and I hope neither of us are doing a shift when this happens!

kaiserhoff's picture

Yes.  Obama is destroying wealth for the sake of destroying wealth, productivity, and decency.


blunderdog's picture

So you're saying Obama is intentionally destroying the country so he can rule by decree like a king?

Jeez.  I didn't think they grew 'em that crazy in Australia, but I guess a population descended from prisoners and crazies would end up with a healthy share...

viator's picture

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Parrotile's picture

That would be the same India that managed to breed NDM-1 E.coli? The same India where carbapenemase producing Klebsiellas seem pretty rampant too? The same India where antibiotic supply is non-prescription (and counterfeit / substandard antibiotics are hardly uncommon )

Thanks, but "No Thanks".

hooligan2009's picture

the same india that exports doctors to the US?

q99x2's picture

A friend of a friend of mine was a liver vulture. He says you get 6 transplant slices with every stiff worthing chopping on. And you can buy a liver for 1/4 to 1/2 million so the 65 year old always gets the liver if they cough up the money. 

smiler03's picture

Your friend sounds even more stupid than you.

GubbermintWorker's picture

Hell, I'd be more than happy to give up my SS if you quit taxing me, and my employer, for it right now. And I'll be 60 next month.  It'll be just that much more gold and silver I buy monthly.

knukles's picture

The only thing important as to who gets the liver is that if I need it, it's me.

I cannot deal with anymore of this government here, government there, nice people doing everything for everybody and fucking it all up, anymore.

Y'all want self centered boomers, Mr Big Gubamnint is driving us right back from whence we'd wished to escape.

Dr. Sandi's picture

What's the big fuss? I HATE liver anyway.

SKY85hawk's picture

You all are losing sight of the real problem!

The corporation, UNITED STATES OF AMERICA, has exempted itself from all GAAP rules of fiscal management.  Proper accruals and timely reporting of the true condition of our country's finances would have woken people up many years ago.

America's politicians are just like Europe's

"We all know what to do, we just don't know how to get re-elected after we have done it."
                  -Jean-Claude Junker

 Finally, I wish Bruce would remind his readers that Obama signed the 2011 Budget Deal after Congress DID THEIR JOB, for once. 

If Barry was true to his campaign promises, he would have vetoed the expiration of Bush tax cuts for the NON-wealthy.


knukles's picture

"If Barry was true to his campaign promises"

Hah ha ha ha ha ha ha

Dr. Gonzo's picture

A promise made with a clownbuck and a handshake by these honest politicians is good enough for me to plan my old age. I trust them and believe every word they say.