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America's Demographic Cliff: The Real Issue In The Coming, And All Future Presidential Elections

Tyler Durden's picture





 

In four months the debate over America's Fiscal cliff will come to a crescendo, and if Goldman is correct (and in this case it likely is), it will probably be resolved in some sort of compromise, but not before the market swoons in a replica of the August 2011 pre- and post-debt ceiling fiasco: after all politicians only act when they (and their more influential, read richer, voters and lobbyists) see one or two 0's in their 401(k)s get chopped off. But while the Fiscal cliff is unlikely to be a key point of contention far past December, another cliff is only starting to be appreciated, let alone priced in: America's Demographic cliff, which in a decade or two will put Japan's ongoing demographic crunch to shame, and with barely 2 US workers for every retired person in 2035, we can see why both presidential candidates are doing their darnedest to skirt around the key issue that is at stake not only now, be every day hence.

Sadly, the market which due to central-planner meddling, has long lost its discounting capabilities, and is now merely a reactive mechanism, will ignore this biggest threat to the US financial system until it is far too late. After all it is the unsustainability of America's $100+ trillion in underfunded welfare liabilities that is the biggest danger to preserving the American way of life, and will be the sticking point in the presidential election in 80 days. However, don't expect either candidate to have a resolution to the demographic catastrophe into which America is headed for one simple reason. There is none. 

The problem in a nutshell: the first wave of Baby Boomers, born between the years of 1946 and 1964, officially reached retirement age in 2011. There are a whole lot of Baby Boomers - just under 76 million, to be exact - that will depend on new money flowing into the system to help keep the entitlements coming. According to the latest Social Security and Medicare Board of Trustees 2012 Annual Reports Social Security now pays out more than it takes in, and is expected to do so for the next 75 years. 

And while the market, and its "discounting" may now be largely irrelevant, those who care to be educated about the facts behind America's Demographic Cliff, here is ConvergEx and "Talkin' 'bout your generation"

According to the Census Bureau’s Current Population Survey, about 40.2 million people – 13% of the entire US population – are 65 years or older and eligible to receive government entitlements such as Medicare and Social Security. At current levels, spending on these entitlements make up about 8.7% of GDP – about $1.3 trillion. While this may sound sustainable over the short term, in coming years the amount of entitlement outlays necessary to keep up with retiring Baby Boomers is going to send spending through the roof. By 2030, for example, a full 19.3% of the population will be claiming SSI and Medicare benefits, based on the Census Bureau’s population projections (the CB uses an adjustment factor for the age cohorts based on mortality rates, foreign-born immigration, and life expectancy). For simplicity’s sake, here’s a decade-by-decade look at where the aging population – and expenditures – will be in the years to come, courtesy of the Census Bureau and the Congressional Budget Office (CBO):

  • In 1900, 4.1% of the US population was 65+. By 1950, this number had almost doubled to 8.1%. As the chart following the text shows, the Baby Boomers (now ages 48-66) represent the most significant population wave in US history. According to the CBO, the population aged 65 and over will increase by 87% over the next 25 years as Baby Boomers enter retirement, compared to an increase of only 12% in those aged 20-64.
  • This year, 13% of the US population is 65+ and entitlement spending accounts for 8.7% of GDP. And that number only includes SSI and Medicare, not Medicaid and future Obamacare subsidies which add to these outlays.
  • In 10 years (2022): 16.1% of the population will be 65+, entitlement spending estimated at 9.6% ($1.5 trillion, based on 2011 US GDP)
  • 2037 (25 years on): 20 % of the US population will be 65+, entitlement spending estimated at 12.2% of GDP ($2.0 trillion)
  • Not surprisingly, there will be far more women than men in the 65+ population. Women currently live about five years longer than their male peers, on average. Accordingly, the Census Bureau estimates that in 2030, there will be about 8 million more women than men that are 65 and older by 2030: 27.8 million versus 35.7 million.

It’s a pretty tough picture, to say the least; as the population ages, we’re looking at more and more money dedicated to retirement benefits with a smaller workforce to fund the spending. We’re not the only ones, either: Japan is in worse shape than the US, with 23.1% of the population already over 65. In 2050, government statistics forecast that number to be 39.6%. Europe’s in the same boat: 17.4% of the population in EU countries was 65+ in 2010, and it’s expected to be about 30% by 2060. The developed world, essentially, is facing a demographic “Fiscal cliff” with no clear-cut strategies for how to fund the liabilities inherent in an entirely predictably aging population

Are there any social positives that might mitigate this plethora of indisputable financial concerns?  The math is the math, as quants are fond of saying, so I don’t expect that there are overwhelming offsets to the problem of an aging population.  But there are some notable “Positives” which don’t get the attention they deserve because they offer such a lightweight counterbalance to the challenges I outlined above.  Still, here are a few thoughts:

  1. Stronger voter turnout/greater engagement in the political process. The 65+ age group has beaten out every other age cohort in voter turnout in every Presidential and Congressional election since 1980. In the latest presidential election, 68.1% of those aged 65+ went to the polls, versus and average of 51.2% for the rest of the voting-age population. The reason for this differential is straightforward: it easier for retired persons to vote given fewer time restrictions, allowing the higher turnout rate. But given an average turnout of 58.2% overall in 2008 for Obama’s election, compared to an average of 70-80% in other developed countries (Japan, Germany, Canada, Spain), the growing 65+ population will certainly help the U.S. come closer to its developed country peers on this metric.

    The stronger turnout of these voters, and their sheer numbers, are also likely to have an important impact on US political races in the years to come. They’re going to be the biggest voting bloc in American history, if patterns hold: 68% of them is almost 52 million, larger than the entire Black/African American voter population, for example. And like other older generations, according to a study by the Pew Research Center done in late 2011, Boomers have become slightly more conservative as they’ve aged, and slightly more of them (45% vs. 51%) intend to vote for Governor Romney in the upcoming election. However, given that one of their main concerns is the maintenance of entitlement spending, it seems unlikely that Boomers will continue to support a party that recommends reducing the deficit by cutting entitlements. All candidates, then, and especially the GOP, will need to take a hard look at the wants and needs of the Boomers. The 2012 Presidential election – and many others afterwards - will quite literally depend on their votes. 

  2. Lower crime rates. The younger population is by far the more crime-prone age cohort, according to the Department of Justice and the FBI Uniform Crime report. The DOJ publishes an annual report on arrests by age, the first occurring in 1980 and the latest in 2009. Over these years, the number of total arrests has increased by 30.9% for the entire population; for the 65+ population, it’s gone up 0.3%. Moreover, the Baby Boomer generation (in 2009, ages 45-53) accounted for only about 7% of all crimes. What were their most “Popular” crimes? Drunkeness and DUI. Violent crimes are almost exclusively the MO of the 18-29 cohort, who account for almost half (44%) of all arrests. It’s not too far of a stretch, then, to think that as our population ages, we can expect less and less violent crime across the country – though you may want to be careful on the roads.
  3. Lower resource consumption. The older population tends to cut down on resource consumption after retirement, particularly in the case of gasoline. Once they no longer need to commute to work and move into smaller, more affordable houses, the amount of fuel needed for transportation and heating/cooling should drop, perhaps significantly.

    Take motor gasoline usage as a benchmark. Just under 60 million Baby Boomers consider themselves a part of the labor force, according to BLS data. 85% of all Americans drive to work, according to a late 2010 Gallup poll, with an average commute of 30 miles round-trip – about 45 minutes – and an average of 20mpg (courtesy of the Bureau of Transportation Statistics). Using these estimates, we can calculate that the average Baby Boomer commuter uses about 33 gallons of gas each month; assuming that 85% of them drive every day, that’s about 1.7 billion gallons of gas being used per month.  As they retire, there are actually fewer new entrants into the workforce to replace them, meaning fewer drivers and less fuel consumption.

  4. Growing domestic service economy. An older population becomes more and more dependent on services as they age, particularly in the realms of healthcare and transportation. More and more people will be needed to fill the void in these service areas as the Boomers retire. Luckily for the US workforce, these are jobs that can’t be outsourced: healthcare especially depends on on-site care and personal service.

    In fact, as the population has begun to age, the US has already seen some steady growth in service-related positions. The BLS’s Occupational Employment data logs the number of occupations across the US in major industry sectors as well as almost 800 detailed occupations. According to the survey, the US has seen a -3.3% drop in job growth overall. Healthcare and “Personal Care”, however, have grown 13% and 11% each since that year. Occupations such as physician’s assistants, pharmacy technicians, and home health aides are in high demand, and will most likely continue to be so as the population ages and begins to rely more heavily on these services.

  5. Declining unemployment and increased labor force participation for this segment of the workforce. One of the most unique aspects of today’s aging population is their continued presence in the workforce. According to the BLS, 23.4% of Americans age 65+ were in the labor force as of June 2012, making up a full 4.5% of the total civilian labor force. They also had a below-average unemployment rate of 6.9%. If this trend continues, we’re likely to see more productivity from the upper end of the age spectrum in years to come as Boomers delay retirement in favor of working.

    On the flip side, as more of the aging population retires and leaves the workforce, more job opportunities will open up for those who are currently unemployed. The youngest members of the workforce, ages 18-24, will be the biggest beneficiaries of this shift, as they typically seek the same kind of jobs that the older population currently occupies. When these positions are vacated by the older group, then, and refilled by the younger groups, we may see a decline in youth unemployment rates.

    The older workforce also opens an interesting opportunity for some employers. The younger half of the Baby Boomer generation is tech-savvy, experienced, and definitely needs the money. This set of skills won’t go unnoticed in the labor market.

Unfortunately, these societal “benefits” are only a thin silver lining on a very, very dark cloud. Social Security and Medicare spending are projected to grow exponentially as healthcare costs explode and the biggest population wave in the history of the US starts to enter retirement. The Congressional Budget Office expects spending to increase by 150% over the next 25 years, which is hardly sustainable with barely 2 workers for every retired person in 2035... there’s a storm a comin’

Sources here:

http://www.cbo.gov/sites/default/files/cbofiles/attachments/06-05-Long-Term_Budget_Outlook.pdf
http://www.census.gov/prod/2010pubs/p25-1138.pdf
http://www.census.gov/compendia/statab/cats/elections/voting-age_population_and_voter_participation.html
http://www.eia.gov/dnav/pet/pet_cons_wpsup_k_w.htm
http://www.bls.gov/emp/ep_table_304.htm
http://www.bts.gov/publications/national_transportation_statistics/html/table_04_23.html
http://www.openleft.com/diary/13242/the-future-of-the-electorate-age-and-party-id
http://www.people-press.org/files/legacy-pdf/11-3-11%20Generations%20Release.pdf
http://www.bjs.gov/index.cfm?ty=datool&surl=/arrests/index.cfm#

 


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Sat, 08/18/2012 - 18:27 | Link to Comment Hannibal
Hannibal's picture

WHo cares?...In the end we all end up on the same heap.

Sun, 08/19/2012 - 00:44 | Link to Comment dark_matter
dark_matter's picture

It's not the destination, it's the journey that counts.

Sun, 08/19/2012 - 10:00 | Link to Comment Offthebeach
Offthebeach's picture

Coyotes are everywhere now. The chase and pull down deer. Especially deep into the winter. When my mind goes. Just drop me off at the powerline after midnight and I think I'm meeting old long dead pet dogs.

Sun, 08/19/2012 - 19:35 | Link to Comment kekekekekekeke
kekekekekekeke's picture

I can't stop loling at this

Sat, 08/18/2012 - 18:34 | Link to Comment Anglo Hondo
Sat, 08/18/2012 - 19:44 | Link to Comment dark pools of soros
dark pools of soros's picture

McFadden said some things that are still worth listening to. In his June 10, 1932, address on the House floor, he declared, as reported in the Congressional Record:

“Mr. Chairman, we have in this country one of the most corrupt institutions the world has ever known. I refer to the Federal Reserve Board and the Federal Reserve banks. The Federal Reserve Board, a Government board, has cheated the Government of the United States out of enough money to pay the national debt. The depredations and the iniquities of the Federal Reserve Board and the Federal Reserve banks acting together have cost this country enough money to pay the national debt several times over. This evil institution has impoverished and ruined the people of the United States, has bankrupted itself, and has practically bankrupted our Government. It has done this through defects of the law under which it operates, through the maladministration of that law by the Federal Reserve Board, and through the corrupt practices of the moneyed vultures who control it.”

Sun, 08/19/2012 - 01:56 | Link to Comment Dr. Sandi
Dr. Sandi's picture

Heck, that's only 80 years ago. Congress just needs a little time and I'm certain they'll do the right thing.

Sat, 08/18/2012 - 20:11 | Link to Comment Ted Baker
Ted Baker's picture

Nice - 40% in Gold also

Sat, 08/18/2012 - 18:44 | Link to Comment sardonical1
sardonical1's picture

I strongly support cutting spending and dramatically lowering taxes by 65%.  I would abolish the Departments of Commerce, Agrilcuture, Education, EPA, Health and Human Services, etc, etc.  I would, however, substantially increase military spending.  As for equity markets, I think too many on this forum tend to believe that markets care about your fundamental analysis.  Markets can be irrational or ineffecient--and one can propertly time the markets and profit from it.  Many have done it.

Sat, 08/18/2012 - 19:57 | Link to Comment Seer
Seer's picture

"I would, however, substantially increase military spending."

Obviously you failed history 101... (not to mention economics)

Sun, 08/19/2012 - 10:34 | Link to Comment Kalevi
Kalevi's picture

SARC?

Sat, 08/18/2012 - 18:59 | Link to Comment Meesohaawnee
Meesohaawnee's picture

dr mr president. after the election may we please have our market back?

Sat, 08/18/2012 - 19:34 | Link to Comment Hobbleknee
Hobbleknee's picture

So what's the problem?  It's not like social security is a ponzi scheme or anything.

Sat, 08/18/2012 - 19:43 | Link to Comment dolph9
dolph9's picture

I'm an internal medicine physician.  It's my job to keep old and fat people alive for as long as I can.  If I don't keep old and fat people alive forever, a bureaucrat or lawyer tells me I've failed to do my job.

Needless to say, I'm going Galt.

Sat, 08/18/2012 - 20:11 | Link to Comment FeralSerf
FeralSerf's picture

Do you ever tell them that they're prohibited, on penalty of death, from eating another pizza and drinking another Pepsi or their equivalent poison foods?

If not, why not?

Sat, 08/18/2012 - 22:48 | Link to Comment Dr. Sandi
Dr. Sandi's picture

I call bullshit on either your comment or your self worth.

Sat, 08/18/2012 - 22:58 | Link to Comment dolph9
dolph9's picture

I call bullshit on your ability to contribute anything meaningful to this discussion.

Sat, 08/18/2012 - 23:13 | Link to Comment Dr. Sandi
Dr. Sandi's picture

You lose. I already gave at the office.

Sat, 08/18/2012 - 23:57 | Link to Comment Isotope
Isotope's picture

I'm in exactly the same boat.

Lemme know the details when you find that Galt path. I'll be right behind you. Seriously.

Sat, 08/18/2012 - 19:54 | Link to Comment Dead Canary
Dead Canary's picture

"Federal Appeals Court Rules Brokerages Can Use Segregated Client Funds to Pay Creditors"

HEY TYLERS! WHAT'S THE 411 ON THIS!

Sat, 08/18/2012 - 19:58 | Link to Comment mumbo_jumbo
mumbo_jumbo's picture

how the hell is social security an entitlement?  I've been paying into that for 20 years and last count that cash out of my pocket is nearing $200K........so i'm NOT entitled to MY money back?

 

really dude?   REALLY?

Sat, 08/18/2012 - 20:20 | Link to Comment FeralSerf
FeralSerf's picture

Social Security is an insurance plan.  The "I" in OASDI is for "insurance".  You and I paid into the plan.  We were guaranteed by the government of the United States of America subject to the full faith and credit of the American people benefits due to our contributions.   We are therefor entitled to receive those benefits.  That is why it is an "entitlement".

Sat, 08/18/2012 - 22:12 | Link to Comment i-dog
i-dog's picture

 

"subject to the full faith and credit"

Spot the tiny flaw in that plan?

Lots of faith...no credit....

Sun, 08/19/2012 - 08:13 | Link to Comment Mike in GA
Mike in GA's picture

Umm...isn't that backwards, lil doggie?  Fact is there's a lot of CREDIT and rapidly declining FAITH. 

A flaw yes, tiny, no. 

Sat, 08/18/2012 - 22:50 | Link to Comment Dr. Sandi
Dr. Sandi's picture

Kind of like when you're Boeing and entitled to receive those benefits that come from being a major defense contractor.

Sun, 08/19/2012 - 13:54 | Link to Comment FeralSerf
FeralSerf's picture

More like when you're Boeing and have delivered the ordered aircraft as specified and are entitled to be paid for it.

Sat, 08/18/2012 - 21:33 | Link to Comment Lednbrass
Lednbrass's picture

It is a tax like any other that was spent on other things. It would have been one thing if the surplus had been accumulated instead of being spent, but it was not. SS exists on nothing but direct transfer payments by those still working.

Do you really think that there are enough people behind you to pay for you? REALLY? How can you look at the numbers and think that is even remotely possible?

Sun, 08/19/2012 - 00:08 | Link to Comment Isotope
Isotope's picture

No, you are not entitled to any SS benefits, no matter how much you paid in.

See Flemming v. Nestor.

Bottom line, "In its ruling, the Court rejected this argument and established the principle that entitlement to Social Security benefits is (sic) not contractual right."

Sun, 08/19/2012 - 12:18 | Link to Comment JR
JR's picture

“You’re casting pearls without getting even a pork chop in return.” – Frank O’Connor.

You paid your money into a SS “trust” by force, the government spent it, devalued its return value by inflation, and now that’s it’s time for SS pay back, these fat grublike socialist oppressors don’t have it, using the excuse : You didn’t built that.

So they’re demonizing you with false statistics and lack of logic (as in the above article’s non-mention of adding non-contributing welfare immigrants onto "entitlements"), arousing and loosing the “good-for-nothings” with hints they’ll get your lunch for free. Never mind that these wannabe communist appeasers already have spent your money and are accusing you of what they do by using Jamie Dimon’s old blame-the-victim routine.

That’s exactly how Stalin whipped the madding crowd into a frenzied strife to annihilate Russia’s hardworking peasants, transferring the meaning of kulak to those who had worked and accumulated a bit of sustenance. In Russia at the time a kulak was “a miserly, dishonest rural trader who grew rich not by his own labor but through someone else’s, through usury and operating as a middleman.”

“The scathing term proceeded relentlessly, and by 1930, all strong peasants in general were being so called --all peasants strong in management, strong in work, or even strong merely in convictions. The term kulak was used to smash the strength of the peasantry…

“….these peasants, whose breadgrain had fed Russia in 1928, were hastily uprooted by local good-for-nothings and city people sent in from outside. Like raging beasts, abandoning every concept of ‘humanity,’ abandoning all humane principle which had evolved through the millennia, they began to round up the very best farmers and their families, and to drive them, stripped of their possessions, naked, into the northern, wastes, into the tundra and the taiga…"  --The Gulag Archipelago! Aleksandr I.Solzhenitsyn

Sat, 08/18/2012 - 20:14 | Link to Comment HurricaneSeason
HurricaneSeason's picture

A much bigger issue is an American worker working for $15 + another $15 an hour for benefits and everything else that adds to the cost of working, like EPA and insurance; vs the Chinese working for $2 an hour. The tax on the profit isn't very significant. The way to fix that is to double the price of everything in the store and let the hourly rate for a Chinese worker rise while a few factories come back to the U.S.  Rinse and repeat. Demographics of age will have a bigger impact than tax on profit. Inflation and interest rate changes will kill it long before boomer retirement rates.

Sun, 08/19/2012 - 01:58 | Link to Comment Dr. Sandi
Dr. Sandi's picture

Thanks to the Laws of Thermodynamics, the Chinese wages have risen very quickly. And U.S. wages have gone to visit Mr. Tidy Bowl. Not too far in the future, there will be a great and painful meeting in the middle.

Sun, 08/19/2012 - 09:47 | Link to Comment HurricaneSeason
HurricaneSeason's picture

The meeting in the middle will be about $16 an hour gross. Take away the benifits and taxes, that will be about $1 an hour take home. They'll never be able to do that, so the dollar will have to be much more worthless. Both political parties beg the Chinese to double the value of their currency to begin to accomplish that.

Sat, 08/18/2012 - 22:35 | Link to Comment Bear
Bear's picture

Damn ... I sure don't like the trend of this chart

Sat, 08/18/2012 - 23:17 | Link to Comment Dr. Sandi
Dr. Sandi's picture

There's probably some official branch of the Federal Government that has come up with some charts that look a lot better.

It doesn't change anything, but it makes us feel less afraid that way.

Sat, 08/18/2012 - 22:36 | Link to Comment ZeroAvatar
ZeroAvatar's picture

'with barely 2 US workers for every retired person in 2035'

  • Contrary to previous assurances, the Mexican government acknowledges in this report that falling birth rates and increased economic development in Mexico will not lead to a reduction in immigration to the United States for at least three decades.
     

  • The Mexican government projects that mass immigration to the United States will continue at between 3.5 and 5 million people per decade until at least 2030.
     

  • Even assuming strong economic growth and declining birth rates in Mexico, and weak demand for workers in the United States, immigration in 30 years is still projected to be nearly 400,000 people a year.
     

  • Immigration will cause the Mexican-born population in the U.S. to at least double by 2030, reaching 16 to 18 million regardless of economic conditions in Mexico.
     

If there aren't enough 'contributions' , it's not because of falling population levels.  World population to be at least 10 Trillion by 2050.  The United States will not be immune to these levels. 

There may only be 2 workers paying in for each 1 recipient, but it's not because there aren't going to be 'people' here. It will be because everyone is on welfare.

 

Sun, 08/19/2012 - 09:55 | Link to Comment Kalevi
Kalevi's picture

10 TRILLION?

WTF?

Your emigration from Mexico projections are already blown.

Mexicans are emigrating to USA for WORK, and when they can't find it, they stay home.

BUT, the narco state makes living in Mexico a nightmare, that might make them start again jumping the fence.

Sun, 08/19/2012 - 10:12 | Link to Comment Offthebeach
Offthebeach's picture

Why work and have nothing when you can welfare, not work and be more secure?
Kind of why be private sector when you can get a in by 9 out by 3 govey job?

Private sector is for chumps.

/ modern ethos off

Sat, 08/18/2012 - 22:45 | Link to Comment Makati66
Makati66's picture

1. Remove caps on taxable income for Social Security.

2. Require means testing for the Meds.

3. Stop 'heroic' measures for those over 80.

ALL of these WILL happen and be necessary to keep the US from collapsing into a 3rd world country, although, it is going to end up there anyway.  And, I am 68 so don't think I am just a young whiner...

Sat, 08/18/2012 - 22:45 | Link to Comment praxiteles
praxiteles's picture

SS. started working at 14.  retired at 62.  if i live to be 100 i will never get my money back  do the math.

Sat, 08/18/2012 - 22:51 | Link to Comment Dr. Sandi
Dr. Sandi's picture

Sorry, I can't do the math. I'm just an average American.

Sat, 08/18/2012 - 22:54 | Link to Comment suckerfishzilla
suckerfishzilla's picture

If the dollar's value doesn't fall to zero in 15 years then benefits will have to be cut.  I mean since nobody wants to tell the DOD to take a hike that's what the options are.  I never planned on SS to be there anyway.  The SLA has a retirement plan.   

Sat, 08/18/2012 - 23:05 | Link to Comment Muppet
Muppet's picture

Not buying this.  The thing about demographics is that projections 50 years out involve peoplealready born, whose numbers are known.  Its not subjective.  The US, with its ample ability for immigration, is ideally suited.   Japan has a demographic catastrophe occurring.   Not the US.   Love ZH but not buying this.   We have serious problems in the US but not demographics.

Sat, 08/18/2012 - 23:13 | Link to Comment deflator
deflator's picture

 It isn't a demographic cliff per se that is the problem, clearly the immigration floodgates could be opened wider -- the problem is reaching a plateau in resources with which to distribute.

 Our entire economic model is based on the premise that resouces are infinite and that an infinite resource base turns classic economic theory on it's head ala' John Kenneth Galbraith's Affluent Society.

 The past 150 years of persistent economic growth is an anomoly in contrast to the rest of human civilization. Modern economists(and their government benefactors) attribute the past 150 years of persistent economic growth to our greater understanding of economics.

 I believe the past 150 years of persistent economic growth is primarily attributable to the surplusses of energy in producing, refining and distributing crude oil, coal and natural gas.(and of course, the technology that consumes it) For the past 150 years we have been able to produce ever more surplusses of energy via conventional crude oil, coal and natural gas.

 

Sun, 08/19/2012 - 01:14 | Link to Comment JR
JR's picture

It is not a question of opening the floodgates wider; the floodgates are wide open now and have been opened far too wide for far too long; unchecked immigration has caused massive disruptions in housing, infrastructure, employment, crime, voting patterns, and most of all, a reversal in the political ideals that built a free enterprise nation.

There are far more factors to consider than resources, however, but it is important to recognize that the floodgates have been wide open long enough to cause massive unemployment, a lowered standard of living for America’s middle class and such an overload on America’s contract entitlement programs from non-payer Medicaid and welfare recipients that they are bordering on dysfunctional.

The open floodgates also are letting America’s resources leave through outsourcing and off-shoring and giveaways of military secrets and patents and industrial processes, while at the same time letting U.S. multinational corporations keep their untaxed profits outside the gates.

Sat, 08/18/2012 - 23:25 | Link to Comment ebworthen
ebworthen's picture

The old folks have a hard time getting out in the streets with a pitchfork, much less a battle rifle.

The young are distracted with bling and glitzy technology, and the siren song of generational warfare.

Whether by design or happenstance and the expediency of money/position/power NOW we are all being sold out.

Sun, 08/19/2012 - 00:06 | Link to Comment fnord
fnord's picture

I think we could manage if it was just a demographic cliff. Way I see it the problem is the employment cliff we fell of off 2 years ago as a result of the perpetual growth with limited resouces cliff we fell off of somewhere in the previous 40 years.

Sun, 08/19/2012 - 00:19 | Link to Comment Frozen
Frozen's picture

Woo!  Green shoots!

Sun, 08/19/2012 - 00:30 | Link to Comment ArsoN
ArsoN's picture

simple answer: immigration.  

Sun, 08/19/2012 - 00:38 | Link to Comment JR
JR's picture

Obama was elected with an almost obscene percentage of the younger vote; nobody had ever seen anything like it.

So the main strategy in the selection of Paul Ryan as VP was to actually make an issue out of entitlements in hopes of capturing the apprehension that young voters have over the future of Social Security, Medicare, et cetera.

Never mind that it was Lyndon Johnson and a Democratically-controlled House and Senate that took the SS money out of its independent and solvent “Trust” fund and put it into the General Fund so that Congress could spend it, or that Jimmy Carter and the Democrat Party began giving SSI SS payments to immigrants at age 65 who had moved into the country and never paid into SS.

Biden already has responded that the Obama Administration’s intention is to make no changes at all in SS; that’s a red flag to many young people who believe they will be paying into something their whole lives that they’ll never be able to collect on.

So, if Paul Ryan can appeal to the younger people that he is out to hit SS and entitlement programs on behalf of the younger generation, the Republicans hope to peel off a lot of those young votes that went for Obama. Ryan is young and maybe was picked partly on that basis to make an issue out of entitlements.

At the same time, the Ryan Plan does not affect anybody who’s 55 or older; their SS remains the same.

IOW, the Republicans hope with this argument to change the percentage of youth votes that Obama previously received.  But it’s a big risk because the Republicans need states like Florida that have a heavy retired population.

There is a point, of course, where Obama isn’t going to get the youth vote that he did before; the younger voters expected a new kind of politician, one that was going to get in there and fight the Establishment. And he turned out to be the biggest supporter of the Establishment we’ve ever had.

The tragedy in all this is that the politicians use these fears and proposals to get elected, creating divisions and generational animosities while never intending to seriously attack the problems which in many cases they created. I mean they’re the ones who stole the SS money and voted for billions in TARP bailout for the bankers.

Sun, 08/19/2012 - 08:17 | Link to Comment Red Raspberry
Red Raspberry's picture

Only problem is Ryan has no plans to cut SS, he did vote for the TARP crap and he intends to put any federal medicare savings onto the backs of the state taxpayer.

Sun, 08/19/2012 - 00:39 | Link to Comment dark_matter
dark_matter's picture

Don't worry you'll get the amount you've been promised in that cheery annual letter from the SSA. You will cash that check every month and buy a loaf of bread, except the loaf will get smaller and smaller.

Sun, 08/19/2012 - 01:50 | Link to Comment icanhasbailout
icanhasbailout's picture

Whoever wrote this article is brain damaged.

 

Let's get some things straight:

1) In the future, there will be far fewer retired persons since retirement will become well-nigh impossible. Good fucking luck retiring when your investments are ZIRPed - if not outright Corzined.

2) There won't be lower crime rates, except in the same sense that considering people as not in the labor force "lowers" unemployment; as more and more laws get passed, everyone becomes more and more a criminal simply by virtue of staying alive. The only way to get lower crime rates from here without totally overturning the major part of the existing body of law is by lowering enforcement rates.

3) Extrapolating current trends as if they will be substantially unchanged in the future is fantasy. Everyone who knows how to type zerohedge.com in a browser window should know that there are hard stops well before 2035 as the various Ponzi schemes that pass for government budgeting and a financial sector run up against the hard physical limits of the real world. At least some of these are guaranteed to happen by 2016 (and that date is generous).

The future will not be a variation and/or extrapolation of current trends. That which cannot be sustained will not be sustained.

 

 

 

Sun, 08/19/2012 - 02:33 | Link to Comment the tower
the tower's picture

I have written posts about the "demographic cliff" - as ZH calls it - before. This article is a doom version of my posts and sadly misses the point, as do the comments.

- Europe and Japan are forced to take action, they have no choice, and immigration is certainly not on the menu. They must take action now, not in 20 years.

- The only solution for Europe and Japan is automation and robotics, which will start a new industrial age but on scifi steroids. The USA will pick the fruits of this revolution.

- Investment opportunities will be in healthcare, pharmaceuticals, robotics, high-tech, sustainable food production and local green energy production.

- The USA is not affected by the inverted age pyramid as much as Europe and Japan. In fact, the USA will probably solve the problem with immigration but will add some of Europe's and Japan's high-tech solutions as well.

On a side note:

1. Yes, the current pension system is not sustainable - especially not in Europe and Japan - but neither will allow this to be an issue. Robotics - and pharmaceuticals - will cause a massive paradigm shift in our economic structure, current systems will be obsolete.

2. Pharmaceuticals will keep people healthy and productive for much longer which in turn will cause the age pyramid to become even more top-heavy. This is not a problem though as people will work much longer too.

3, When the current crisis reaches its zenith Europe and Japan will create their own Marshall Plan and push on with the above.

Sun, 08/19/2012 - 07:10 | Link to Comment Dr Benway
Dr Benway's picture

Magic robots will save us? Really?

Sun, 08/19/2012 - 07:36 | Link to Comment Marco
Marco's picture

They have been saving Japan all along ... it's curious that people somehow present this as a problem for the US, when the US doesn't even fucking produce what it consumes. Labour is not the limiting factor for the US, the House of Saud's willingness to keep lending them money is.

Japan is much further along the curve and it has managed a trade surplus almost all the way, until the Tsunami.

The problems are distributional and personal health related, not fundamental ... the labour resources to maintain first world standards of living will be there even if we get to 1:1 ratios of working to retired, we don't need magic robots for that ... just automation continuing on it's present pace, it's benefits being distributed equitably and people living slightly more healthy.

Of course distributional and personal health problems are fundamental in the US due to the US's completely broken political framework ... but well, that too shall pass one way or the other ... lets hope without nukes flying and making their problems everyone elses.

Sun, 08/19/2012 - 07:48 | Link to Comment the tower
the tower's picture

That's all you picked up? Robots?

For your information, Japan only managed to take over automobile production because of robotics.

Ford's assembly line on steroids.

A similar revolution will happen and will be driven by the economies that need it the most.

Japanese car manufacturers are betting on robotics in a big way, so do the Germans.

Follow the money.

Sun, 08/19/2012 - 05:39 | Link to Comment BattlegroundEur...
BattlegroundEurope2011's picture

AGENDA 21 !

 

GO USA! GO USA!

 

Sun, 08/19/2012 - 09:40 | Link to Comment You Didn't Buil...
You Didn't Build That's picture

Crime rates are skyrocketing now...not decreasing. My neighborhood and city used to be safe until this mass demographic shirt the past 8-10 years. Used to listen to the farm reports and weather news in the mornings as I drive. Now turn on the radio and one hears:

1. who was murdered last night;

2. traffic jam reports; and

3. pollution alerts.

Sun, 08/19/2012 - 13:20 | Link to Comment CoolBeans
CoolBeans's picture

While youth tend to commit more crime, we've been seeing an apparent rise (in our area, at least) of older people committing crimes. Many are drug dealing (we're talking people over 50) and I suspect to raise funds for food, medicine, roof over their head, etc. Hopefully this is just an odd spree of late...

Sun, 08/19/2012 - 09:49 | Link to Comment exartizo
exartizo's picture

"The key... is to weaken them, until adversity does not make them stronger".

- Benjamin de Rothschild, Early 21st Century Minion Of The Fallen Angel Of Light

Sun, 08/19/2012 - 10:23 | Link to Comment Marley
Marley's picture

Oh no, we're all going to die.

/Sarc

Sun, 08/19/2012 - 12:10 | Link to Comment bugs_
bugs_'s picture

Hey Ed take over the drone for me my arthritis is acting up again.

Sun, 08/19/2012 - 15:03 | Link to Comment Lore
Lore's picture

Sociopaths would regard this merely as a problem of numbers. Be vigilant.

Sun, 08/19/2012 - 18:23 | Link to Comment Don Levit
Don Levit's picture

boogerbentley:

I agree with you that the SS trust fund is empty.

On another web site, I have provided several excerpts and links from governmental sources, even one from the Social Security Administration, attesting to the lack of liqudity.

The reply I got was that is the way all insurers handle their reserves.

That no insurer is able to simply liquidate its reserves when the cash outgo exceeds the cash income.

I asked him then, just to make sure:  "Are you saying that it is impossible for a reserve fund to be pre-funded and left intact, in order to pay out claims when cash outgo exceeds cash income?  All insurers , when they tap their reserves, either require new revenues or increased debt (as is how the SS trust fund is tapped)?"

What do you say to someone like that?

Don Levit

Sun, 08/19/2012 - 19:54 | Link to Comment Marco
Marco's picture

You're both wrong ... SS is not insurance, it's pay as you go wellfare. The trust fund is just a little something set aside to cover fluctuating revenue, but it's ultimately up to the government to guarantuee sufficient revenue to pay benefits through determining the level of benefits and taxation.

Of course your political system is too paralyzed to make changes on either side of the equation.

Sun, 08/19/2012 - 19:03 | Link to Comment Monedas
Monedas's picture

A new burgeoning crime category will be grand kids torturing their grand parents for their PMs !          Monedas        1929        Comedy Jihad When Monedas Talks People Yawn

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