[Excelsior]

I'm an avid George Friedman reader, and one of the scenarios in his book "The Next 100 Years" got me thinking.

In the book, Friedman notes the major demographic imbalance the USA and most developed nations are facing, a topic we're all familiar with. Our fertility rates have dropped precipitously in the past few decades.
The Baby Boomers have had far fewer children than their parents did, creating a disproportionately aged population.

I'm twenty years old, and I started thinking about the socio-economic implications of this for people like me. We all know about the problem this presents for social security and all that, but there's another outcome Friedman highlighted: a decline in unemployment.

It makes sense. Baby boomers currently control everything the USA and most of the west. They have the VAST majority of the wealth as well. When they start retiring en masse (should begin right around 2020 or so), this nation is going to face a massive skills shortage. These people will vacate their jobs, but they won't quit consuming or demanding services. Someone will still need to work to service them, but the population to draw from to do this will be much smaller.

This could potentially lead to much higher demand for a lower supply of employees, which in turn leads to low unemployment and much higher wages. There will be tremendous opportunity for those few in my generation who have built tangible experience or qualifications over time , as they are going to be in very high demand across the western world (not even including developing countries who will always value quality western educated applicants and might begin suffering their own brain drains, as I'm about to mention).

This gets even more interesting when you start thinking on a more global scale. Friedman notes that developed nations will try to deal with this by trying to lure more immigrants, competing with one another for these migrants.

Their arrival could boost the tax base enough to mitigate the increased strain/tax burden that would presumably be placed on the younger generation supporting the larger baby boomer populace. At the same time, however, homegrown members of my generation educated in the west will have an edge over newer immigrants. Immigrants could mitigate the downsides my generation will face, but because they will be new and relatively few of them will have been educated in their home countries with the same skills as homegrowns, they won't be in quite as high demand.

End result? My generation might make a killing, holding a monopoly as the most sought after employees best prepared to tackle the future job market. The world's current elite (almost all baby boomers) will be leaving their posts soon, and there will be an abundance of opportunities to usurp that space for the members of Generation X who will be in their prime (30's-40's) when the full force of this baby bust hits in the next decade or so. They'll have low unemployment, high wages, and plenty of economic options.

The question for Gen Xers (of which there are many on this forum) is: how best to take advantage of this development?

[scorpio]

Japan redux.

[blurb]

Interesting analysis, but here's some monkeywrenches I'll throw into your equation.

Hypothetically, let's say that you have a population of 100 people. Those 100 people have 50 children. When the adults retire and the children go on to run society, then those children will be taxed at 2x the rate to maintain welfare programs such as Social Security, Medicare, Medicaid, etc.
The upcoming generation is going to have to pay higher taxes to pay for their parents' pensions, benefits, entitlements, and benefits. Simple mathematics. Less people = higher taxes to maintain status quo (all else being equal)

What's to say that Baby Boomers simply will NOT retire until they drop dead? In fact, with higher costs of living and lower wages, retiring is going to be hard for many Americans. This would postpone the date until a later time.

[YoungGunner]

So essentially generation Y benefits as the in-demand work force when generation x takes over the baby-boomer power positions and the retired baby boomers spend/invest their wealth?

[rudebwoy]

There will be less jobs in the future.
Companies are leaving America and the west in droves. Good example of this is the manufacturing jobs that have disappeared.
Retirement age has been increased to 67 in some countries and will continue to rise.
On a personal level, the company I work for has a branch in Costa Rica. They are moving into a new building which is twice the size, I think the writing is on the wall.

[Hooligan Harry]

Rapid wage increases lead to inflation. Its unfortunate, but no economy can function without low levels of unemployment. There has to be some competition for jobs and something that keeps a lid on rising wages. The sweet spot seems to be about 5% in countries with no welfare, 7%-8% in countries with welfare. You wont see growth with population decline, you will see economic decline. Skill shortages in a declining economy make it even worse.

Your generation is fucked if you try and follow your parents path. Feminism killed the middle class I am afraid and its a dead duck now.

There has been no transfer of wealth from the baby boomers and there will be no transfer. They transferred debt because they spent everyone into oblivion with their social experiments and over the top lifestyles. You will probably not have the certainty your parents or grandparents did in employment unless its civil service or something like medicine. Which means you need to skill up and make sure you are reliant on yourself for your income. They did a real number on everyone and they have squandered everything.

Get a trade before you get a degree if you are unsure. Its something to always fall back on.

Immigration, when its predominantly unskilled and your manufacturing base is dying, will bleed you dry. It wont save you.

There is a ton of opportunity that will come from all this though. But there will be very little room in the middle, the gap between rich and poor will get wider and the comfort that came from a middle class existence is going to be tougher to find as each year goes on.

[Excelsior]

(11-17-2011 10:04 PM)blurb Wrote:  

Interesting analysis, but here's some monkeywrenches I'll throw into your equation.

Hypothetically, let's say that you have a population of 100 people. Those 100 people have 50 children. When the adults retire and the children go on to run society, then those children will be taxed at 2x the rate to maintain welfare programs such as Social Security, Medicare, Medicaid, etc.
The upcoming generation is going to have to pay higher taxes to pay for their parents' pensions, benefits, entitlements, and benefits. Simple mathematics. Less people = higher taxes to maintain status quo (all else being equal)

Immigration has the potential to mitigate this, as I mentioned above. Whether or not it actually does, we'll see.

Quote:

What's to say that Baby Boomers simply will NOT retire until they drop dead? In fact, with higher costs of living and lower wages, retiring is going to be hard for many Americans. This would postpone the date until a later time.

This could be a problem, but I do not foresee it stalling these developments too much. The baby boomers are the wealthiest generation in recent history, and they've done so largely at the expense of their children and grand children. There will be plenty of cheese for them to live off of in most cases.

[Excelsior]

(11-17-2011 11:45 PM)Hooligan Harry Wrote:  

Rapid wage increases lead to inflation. Its unfortunate, but no economy can function without low levels of unemployment. There has to be some competition for jobs and something that keeps a lid on rising wages. The sweet spot seems to be about 5% in countries with no welfare, 7%-8% in countries with welfare. You wont see growth with population decline, you will see economic decline. Skill shortages in a declining economy make it even worse.

Undoubtedly true. Population decline is, in many ways, as unhealthy for an economy as rapid growth. And inflation is going to be a major issue as well with the wage increases that are inevitable.

Quote:

Your generation is fucked if you try and follow your parents path. Feminism killed the middle class I am afraid and its a dead duck now.

I have several relatives who work for my state's government/civil service.

Those who got in on the ground floor during the 70's and early 80's enjoy ridiculously generous retirement packages that pay above this nation's average salary yearly($40k and up). The first of their group have just recently started to cash in. These people are flying to central America and building their own mini haciendas, living the good life.

It is impossible for their successors to get similar packages. The state has not only instituted a hiring freeze, but those who have gotten in will never see the generous retirement plans and insurance benefits their parents may have gotten, even if they put in the same number of years. New regulations have ensured this.

The state government was once a great safety net for the middle class, providing attainable employment (not too hard to get a gig there with just a local state school degree or even a community college diploma) that was secure (tough to get fired, strong unions), paid well by local standards and had great benefits. A lot of local wealth in my area is built on state salaries and benefits accrued over time. Now, that safety net is slowly being wittled away, with the hiring freeze preventing new applicants from even using it.

I expect this story to be repeated quite a bit in the future, unfortunately.

Quote:

Immigration, when its predominantly unskilled and your manufacturing base is dying, will bleed you dry. It wont save you.

I'm interested to see how developed countries handle this. They absolutely need bodies to stave off population decline in the short term (with the best long term solution involving increasing fertility rates at home), but can they get the right bodies to contribute properly?

I guess we'll see. Either way, the developing world flood is coming to the West. I don't think we've seen anything yet.

Quote:

There is a ton of opportunity that will come from all this though. But there will be very little room in the middle, the gap between rich and poor will get wider and the comfort that came from a middle class existence is going to be tougher to find as each year goes on.

Yes, though that is largely the point of my argument in many ways. The old elite are going to pass on or move on one way or another. My generation is going to have a lot of chances (arguably more than there have been since the middle of the 20th century, when the US Government via the GI Bill/FHA funded that massive post-war transfer of wealth and essentially built the modern American middle class we know today, also establishing many of our current elites) to take their particular spots and become entrenched as the new elite for the foreseeable future.

Whether or not the society they come to preside over is a particularly ideal one is something we will see. I predict that it will indeed be more unequal, and may not be as idyllic as the one our current elites inherited in the 50's, 60's and 70's.
In fact, the USA will probably just look a little more like many parts of the developing world when it comes to income inequality and some of the other social indicators that go alongside it. Think Jamaica or Mexico (though we can only hope our crime rates don't catch up to those two).

[raliv]

Open a Funeral Home, bro. Bury the Boomers into riches.

[Arado]

Any analysis that focuses on huge numbers of retirees ignores the fact that life expectancies are skyrocketing. And with more insight into alzheimers, stem cell research, and prosthetic limbs, in 20 years I see people maintaining their productivity well into their 80's and beyond.

We would gradually raise the retirement age to prevent senior from living off the system for decades post retirement. They would be forced to work from dwindling savings, and will be healthy enough to do it, thanks to technology.

The Baby boomer generation may be with us much longer than we hope.....

[Samseau]

A few problems here.

1. Population = wealth, more often than not. There is no mobility without a large young population to consume beneath it. Unlimited growth is bad, but there needs to be enough youngsters going forward to support the new up-and-comers. Civilization is basically a ponzi, and without real populationg growth there will be less opprotunity going foward.

2. We shouldn't assume population growth will remain low. Things can spark baby-booms very quickly, just like WW2 did. In times of great stress, war happens. When wars break out, women breed like there's no tomorrow (because there literally might not be). My prediction is that the way things are right now, the game world, will not exist very long into the future. In the post-game world, women will seek security above all else and breed like flies when given the chance.