"The Next America" - Two Dramas In Slow Motion

Tyler Durden's picture

That America has - or perhaps more accurately that the administration is desperate to create - a wealth divide, gender divide, and certainly ethnic divide, is hardly a secret. Yet all of those may pale in comparison to the transformation that the US is undergoing currently, according to the most recent Pew research study, one which finds that the world's one time superpower, is in the midst of two slow-motion dramas right now.

"Our population is becoming majority non-white at the same time a record share is going gray. Each of these shifts would by itself be the defining demographic story of its era. The fact that both are unfolding simultaneously has generated big generation gaps that will put stress on our politics, families, pocketbooks, entitlement programs and social cohesion.

Let’s start with what demographers call an “age pyramid.” Each bar represents a five year age cohort; with those ages 0-4 on the bottom and those ages 85 and older on the top. In every society since the start of history, whenever you broke down any population this way, you’d always get a pyramid.

But from 1960 to 2060, our pyramid will turn into a rectangle. We'll have almost as many Americans over age 85 as under age 5. This is the result of longer life spans and lower birthrates. It’s uncharted territory, not just for us, but for all of humanity. And while it’s certainly good news over the long haul for the sustainability of the earth’s resources, it will create political and economic stress in the shorter term, as smaller cohorts of working age adults will be hard-pressed to finance the retirements of larger cohorts of older ones."

 

But it is not just young vs old: it is the dramatically shifting ethnic composition of America that may have an even greater role in shaping social, immigration and economic policies in the decades ahead. In fact, as the Pew projection below shows, some time around 2040, whites will become a minority to all other ethnic groups residing in the US:

From Pew:

At the same time our population is going gray, we’re also becoming multi-colored. In 1960, the population of the United States was 85% white; by 2060, it will be only 43% white. We were once a black and white country. Now, we’re a rainbow.

 

Our intricate new racial tapestry is being woven by the more than 40 million immigrants who have arrived since 1965, about half of them Hispanics and nearly three-in-ten Asians.

 

Because these tranformations happen tick by tock, without anyone announcing them with a drum roll or press conference, they are sometimes hard to perceive.

 

But every so often societies experience “aha” moments, when the change is right there in plain sight. We had several such moments in early 2014, as three iconic American brands, Coke, Chevy and Cheerios, rolled out ads during the Super Bowl and Olympics that were aimed at what one voice-over called "the new us."

 

Product advertisers aren’t in the business of making political statements. They’re certainly not in the business of making enemies. They must have known some of their images – interracial families, same-sex parents, “America the Beautiful” sung in several languages – would disturb some of their customers. But they also do their market research and look at their numbers. They know how fast the country is changing.

Where is the bulk of the shifting ethnic landscape coming from? Not surprisingly, from what is a very hot political topic these days: immigration.

Our modern immigrants are different from the big waves of newcomers who came in the late 19th and early 20th centuries. Back then, about nine-in-ten immigrants were from Europe. Today only about 12% are from Europe.

 

But some things don't change. No matter where they come from, immigrants are strivers. They’re optimists. And they tend to have a lot of kids. Our immigrant stock – that’s immigrants and their children – is projected to make up about 37% of our population by mid-century, the highest share in our history.

 

But understand: this isn’t new. We’ve always been a nation of settlers and immigrants. In this regard, the middle of the 20th century wasn’t the norm, it was the outlier.

Nowhere is the culmination of these two tectonic slow-motion "dramas" more evident than in the choice of America's president.

In the past few elections, the young/old partisan voting gap has been the biggest since the voting age was lowered to 18 in 1972. As recently as the year 2000, there had been no difference in the way young and old in America voted. Now, there's a chasm.

 

Six-in-ten young voters supported Barack Obama in his re-election bid in 2012, compared with just 47% of those in the age ranges of their parents (45 to 64) and 44% of their grandparents (65 and older). By race, six-in-ten white voters supported Republican candidate Mitt Romney, whereas more than nine-in-ten black voters supported Obama. Obama also captured more than 70% of the Asian-American and Hispanic vote.

When it comes to the age divide, the political split is clear: the youth are liberal, the elders conservative.

Millennials have voted more Democratic than older voters in the past five national elections. They came of age in the Bush and Obama eras and hold liberal attitudes on most social and governmental issues, as well as America’s approach to foreign policy.

 

Just as members of the Silent Generation are long-term backers of smaller government, Millennials, at least so far, are strong supporters of a more activist government.

 

In some social issues, such as legalizing marijuana and same-sex marriage, Millennials particularly stand out for their favorable views compared with other generations. Nearly seven-in-ten (68%) Millennials favor allowing gays and lesbians to marry, compared with just 48% of Baby Boomers and just 38% of the Silent Generation.

Yet while the youth may like its pot and gay marriage, the one place where it is most likely to opine on these topics is FaceBook.

Then there’s the technology revolution. Today’s young are history’s first generation of digital natives. The online world isn’t something they’ve had to adapt to — it’s all they’ve ever known, and it’s their indispensable platform for social interactions and information acquisition.

 

Today’s old have been playing catch-up online, some more enthusiastically than others, but they have a long way to go. The typical Millennial who uses social media has 250 Facebook friends — making them five times “friendlier” than the smaller number of Silents who use social media.

But the most concerning aspect in the age divide is the number of working individuals required to support every safety net beneficiary: from 16 workers supporting every retirees in 1950, this number is now down to just 3.

But the status quo is unsustainable. Some 10,000 Baby Boomers will be going on Social Security and Medicare every single day between now and 2030. By the time everyone in this big pig-in-the-python generation is drawing benefits, we’ll have just two workers per beneficiary – down from three-to-one now, five-to-one in 1960 and more than forty-to-one in 1945, shortly after Social Security first started supporting beneficiaries.

 

The math of the 20th century simply won’t work in the 21st. Today's young are paying taxes to support a level of benefits for today's old that they have no realistic chance of receiving when they become old. And they know it – just 6% of Millennials say they expect to receive full benefits from Social Security when they retire. Fully half believe they’ll get nothing.

In light of all this "math", is it any wonder there is an increasing gap in the perceptions of not only the young versus old, but of America's diverse ethnic groups - each with their specific needs, and wants - all thrown into a boiling cauldron of record debt insolvency, in which the economic growth of the 20th century - that one distraction that masked the social unsustainability of social trends in the US for decades - is simply no longer possible?

There is much more in the full Pew study, however perhaps the one party whose input would be most germane here is the group of economist central planners who believe they know how to do everything to fix this country. We are talking of course about the largely cluless economists and other people who have never encountered the real world, who inhabit the Federal Reserve's Marriner Eccles building. Because if they too are as confused about how this all play out as the rest of us, then a crashing stock market is the least of our worries.