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Aging Demographics to Crunch Global Growth

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Yves here. I don’t mean to make an object lesson of the author of this piece, van Onselen, since the point he is making, about demographics as a driver of growth, is valid from the vantage point he is taking (that of investment time horizons, which by nature are comparatively short).

But this perspective is simultaneously frustrating to contend with. First, the discussion of dependency ratios (the ratio of people in the income-producing part of the economy versus those no longer earning a paycheck, such as children, students, and retirees) assumes that people of normal working age can actually find work. In virtually all advanced economies, that still is not the case, and is not going to be the case any time soon. So worrying about dependency ratios shouldn’t even be a first order concern; what about getting people who want a job some employment?

And the dirty secret there in the US, and I suspect again in a lot of advanced economies, was that there was a lot of un and under-employment even prior to the bust. I can tell you in my cohort I know of way too many people who retired early (as in far more modestly than they wanted to) or were working part time not by choice. These were all people with advanced degrees and strong to very impressive resumes. Basically, if you are older and have any real skills and fall off the corporate/big institutional ladder, the drop is far indeed. If you don’t want to work in retail or some other terribly temp-ish job, you face erratic at best employment at something that might suit your skills (another route I’ve seen people take is buying a franchise, but not everyone either has the dough or if they have it, are willing to risk it).

Second is I’m not sure we’d see lower dependency ratios if we had enough jobs. While there are a lot of jobs that are still taxing enough physically to necessitate retirement by 65, and rising diabetes will also curtail some career lengths, lots of people who comment on the blog clearly intend to work past 65 if they can because they must. They don’t have enough stashed away to retire.

Another issue is we really DO need to figure out, at least for one or probably several transitional generations how to live with higher dependency ratios, because that’s what you get if you stabilize or shrink the global population which we desperately need to do if we are to have anything resembling civilization 150 years from now. We used to have a lot more people working in the non-paid economy, most importantly wives (who used to do a lot of physical labor) and to a lesser degree, older women and men (the extended family living model).

And related to the “non-paid economy” question gets back to the notion of growth. Businesses want growing income levels because investors want returns to rise over time. Large organizations are easier to run if the empire is growing (more of the young bucks see more potential; one might argue that Game of Thrones illustrates the sort of struggles you see over a static pie). Growth has tended to mean “rising living standards” but have they really risen when we have more pollution, more mental health problems and more obesity?

By Leith van Onselen, Chief Economist of Macro Investor, Australia’s independent investment newsletter covering trades, stocks, property and yield. You can follow him on Twitter at @leithvo. Cross posted from MacroBusiness

Over the past few years, I have written a series of articles arguing that the ageing of populations across the globe would have major adverse implications for consumption spending, asset values, and government revenues and taxation.

I have also argued that the impacts from ageing would likely be most acute in Western Nations, although some developing countries, most notably China, would also be negatively affected.

The problem stems primarily from the coming end of the demographic ‘sweet spot’. That is, where there is a high proportion of working age people supporting only a small pool of dependents. Such an advantageous age structure has effected almost all of the world’s major economies and produced a population structure optimal to economic growth – that is, where the largest segments of the population were neither young nor old, but in the middle (i.e. working age).

These demographic sweet spots can be seen in the below charts, which show the dependency ratios of each major economy – i.e. the ratio of the non-working population, both children (< 20 years old) and the elderly (> 65 years old), to the working aged population.

In the Anglosphere, of which Australia is a part, the dependency ratios fell steadily in the decades to 2010. However, in the decades ahead, their dependency ratios are projected by the United Nations to rise steadily as the baby boomers retire and their populations age:

ScreenHunter_17-Jul.-09-12.38

In some major European countries, as well as Japan, their populations aged earlier and their dependency ratios bottomed in the 1990s, which might help to explain some of the economic malaise currently being experienced across those regions:

ScreenHunter_18-Jul.-09-12.38

Earlier this month, Index Universe published an interesting report estimating the impact of population ageing on a wide range of economies. And the results aren’t pretty:

…until recently 3–4% growth in real GDP was considered “normal.” So it should come as no surprise that the economic performance of the past few decades has strongly influenced expectations about economic growth. However, when optimistic expectations get detached from reality we risk creating a significant expectations gap—a disconnect between what we take for granted given our recent experiences and what we should anticipate given simple arithmetic.

…favorable trends in the size and composition of populations have helped to fuel the rapid economic growth experienced in the developed world over the past 60 years, and their reversal plays a crucial part in the current rapid deceleration in developed world growth…

We forecast growth in Real Per Capita GDP (holding everything else constant) for every five-year interval between 1950 and 2050, based on the demographic linkages observed in the 1950–2010 data spanning 22 countries. These are not “normal” GDP growth rates, they are abnormal GDP growth rates, reflecting the impact of a demographic tailwind or headwind…

ScreenHunter_16-Jul.-09-12.24

All 12 countries will confront varying speeds of demographic headwinds in the coming decades, first in the developed economies, then in the older emerging economies (China and Russia), and finally in the younger emerging economies (Brazil and India). These headwinds get stronger over time and appear to stabilize in the developed world and the older emerging economies only after about 2040. For the younger emerging economies, the demographic headwinds do not become acute for perhaps another 20–30 years.

All 12 countries enjoyed demographic tailwinds during the past 60 years, so these headwinds will feel more obstructive than they are. It is human nature to consider our personal experience to have been “normal,” so we evaluate subsequent events in comparison with this self-referential “norm.” If the people of Japan consider the former tailwind of 2–3% to be “normal,” then a future 2% headwind will feel like a ponderous 4–5% drag, relative to expectations. On average, the countries in this analysis enjoyed benign demographic profiles that boosted GDP growth by around 1% per year during much of the past six decades…

Our main goal in presenting these results is to correct the common misconception that developed countries went through a “normal” period of high growth, as if we are all entitled to fast-growing prosperity. In reality, the developed world is entering a new phase in which the low fertility rates of past decades lead to slow growth (in many countries, no growth) in the young adult population; young adults are the dominant engine for GDP growth. Mature adults, many of whom are at or near their peak productivity, are poised to retire, creating an impressive surge in the rolls of senior citizens. These newly minted senior citizens, transitioning from near-peak productivity to retirement in a single step, will be drawing on the economy while no longer producing goods and services. The unequivocal good news of a steady rise in life expectancy means that these retirees will create a very substantial drag on GDP growth, as these seniors move from peak productivity to negligible productivity in just a few years.

The danger is not in the slower growth. Slow growth is not a bad thing. It’s still growth. The danger is in an expectations gap, in which we consider slower growth unacceptable. If we expect our policy elite to deliver implausible growth, in an environment in which a demographic tailwind has become a demographic headwind, they will deliver temporary outsized “growth” with debt-financed consumption (deficit spending). If we resist the necessary policy changes that can moderate these headwinds, we risk magnifying their impact.

As argued above, the high growth rates experienced in the decades leading-up to the global financial crisis were an anomaly and growth is likely to be far more sedate going forward as the population ages and dependency ratios worsen. And although Australia won’t be hit as hard as some other nations, it too will feel the pinch.

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35 comments

  1. dnm

    “worrying about dependency ratios shouldn’t even be a first order concern; what about getting people who want a job some employment?”

    Absolutely correct. See this Billy Blog post:

    and (modestly) the graph accompanying this comment in particular:

  2. lakewoebegoner

    sheesh.

    Want people to have 2.1 babies? Lower income inequality/raise wages. The main reason why Franz Germany, Miss Wantanabe, Joe Costco are not having that marginal extra child (going from 3 to 2, or 2 to 1, or 1 to 0) is that housing, education or health care costs (or all three in the good ole USA) are too expensive compared to the prevailing middle class wage.

    People are voting with their wallets.

    Wonder if there is some sort of implied technocratic anti-women meme going on…..like “today’s women are too selfish to have a kid, etc.”

    1. lakewoebegoner

      this being said. while i’m an optimist about the ingenuity of human technology, i think that the technocratic assumption that the world economy can grow at 2% ad nauseum is going to be seriously challenged by the time i’m an old man.

      ie, look at africa (or even egypt/afghanistan right now). large population growth + limited resources + frustrated populace + lots of weapons floating around = recipe for some serious carnage.

  3. GK

    I may be missing something, but the graph seems to show the US dependency ratio stabilizing in 2045 at a level lower than the 1965 level. I can accept that rising dependency levels vs. today will have an impact of some kind, but if the point is growth in the future will be lower than in the 1960s then aren’t there some missing steps in the argument?

    1. reason

      Yep! You got it in one.

      Add in continued labour productivity growth (read robots) and FOI. This is a non-issue.

    2. BurfordHolly

      It levels off in 2045 (for the US) bcause the youngest Baby Boomerr will be over 80 and most of the Baby Boomers born prior 1955 will dead, pushing up daisies, taking the eternal dirt nap, worm food.

  4. Moneta

    I have been working with these ratios since 2001. I have also split the dependants in 2, the young and the old, because their impacts are very different.

    The structure of the population is at the root of my worldview. I then look at the distribution of wealth and debt. I always start with what we have now for sure. Then I try to imagine which power struggles will emerge.

    For example, since 2001, I have known that the number of workers per retiree here in Canada would peak around 2010-2013 so I have been expecting the real trouble to start after that. I have also known since then that there are proportionately more boomers in Canada than in many other countries, particularly in Qc, so I expect the power struggles to get particularly troublesome in Canada. We are an entitled country that still has a lot of faith in government. On top of that, Canadians current feel rich and insulated from the crisis in large part thanks to their homes. So when our bubble bursts, it will probably hit at the exact same time Gen-Y and Gen-X start feeling the squeeze.

    Since the senior cohort is increasing much faster than the junior one, I expect a crunch in education so as to fund healthcare… sure enough, we are starting to see US style inflation in education.

    The seniors expect to get the retirement they were promised but CPP is 13% funded and the average boomer has less than 100K saved up. This means it will have to be funded by taxes and/debt or not at all, meaning seniors will have to keep on working. Gen-X and Gen-Y are going to get royally sandwiched no matter how the whole thing gets funded unless boomers are forced to work. I can see power struggles building there.

    This whole situation was foreseeable 50 years ago but we did not do anything. 10-20 years ago, we should have been revamping healthcare and fixing the infrastructure. Instead, it went into cars and houses which were built with many materials that don’t even last 15 years anymore.

    Many keep on looking to Japan… I believe that is foolish because Japan has been a net exporter to a huge baby boomer cohort in its peak earning and spending years. We have yet to see what happens to an economy when a large percentage of its markets hit increasing dependency years.

    1. Art Eclectic

      “Gen-X and Gen-Y are going to get royally sandwiched no matter how the whole thing gets funded unless boomers are forced to work”

      There is the problem that Yves pointed out – boomers would sure like to work, but they can’t get hired anywhere at this point. If you are outside the corporate workforce right now and over 50 (or even 45) you will never be rehired back into it. People our age are expensive to insure and want higher wages than younger workers. With health insurance costs skyrocketing (and no end in sight) you simply cannot get hired over a certain age into any job that provides health benefits.

      There’s a lot of people who would love to work to 65 or past, but they aren’t going to be able to. Which is why you see so many flooding into programs like SSDI, those people are unemployable and uninsurable in today’s workplace.

      1. Moneta

        I know. Both my dad and FIL got knocked out around 55. They were fine because of savings and paid off houses but they were hoping for a grander retirement than they currently enjoy.

        That’s why I refuse to give away my life “to the man” so I am much less productive than what the statisticians think or wish me to be BUT paid off my house ASAP and I am setting up my life to have multiple income streams so when I hit 50, I’ll be my own boss. I’ve met another couple my age looking for ways to “live for free”.

        Not sure how many will do this or be able to but I am sure many in my generation will find different ways to protect themselves from what is being done to their parents.

  5. Eleanor

    Dean Baker always points out rising productivity of workers, when faced with this argument. Fewer workers can support more non-workers. What about growth, if we have parents buying for fewer children and more retirees living on limited incomes? Well, consumer spending is not the only kind of spending. We have huge work to do in the next 100 years to deal with environmental damage and global warming. This has to be done. It is enough to employ everyone able to work, and it will greatly increased fixed capital. At the end, we will have a world rich in dams, dikes, windmills, solar power, cleaned up pollution, replanted forests, improved agricultural land… You name it.

    1. Moneta

      I’m a skeptic when it comes to the productivity argument. I just have to look at my Gen-X, Gen-Y cohort:

      1. A large percentage have big debts. They have chosen a lifestyle that is, in my calculation, not sustainable. Old houses are usually in the city core and very expensive. Renos cost an arm and a leg. Windows and roofs already need to be changed in 5-10 year old houses. Planned obsolescence is going to hit them full swing in the next 5-10 years. Most have been forced to move in burbs where the commute eats up a lot of their time. So they are stuck in a time and money crunch.

      2. My parents and in-laws have 4+ sibling on average. A lot of helping hands for ageing parents. A lot less helping hands in Gen-X and Gen-Y cohort per number of dependents.

      3. The demands on Gen-X and Gen-Y are much bigger. When I was a kid, my parents just plunked us all in the back seat of a car. Now we legally have to have a helmet for nearly everything we do. When I had car seats and a stroller, I nearly had to buy a bigger car to get them to fit. I bought the 10$ strollers at Wal-Mart to avoid this expense. My grandparents rarely went to the doctor’s. My parents are routinely there for all kinds of preventive test… someone needs to pick them up when they are drowsy.

      4. Infra is falling apart, so they will probably start investing there to stimulate the economy, and since it will probably be PPP, they will be installing more toll booths… who will be the users and payers? The workers of course which will mostly be Gen-X and Gen-Y.

      5. Right now their houses are at peak prices here in Canada. They feel rich, they are still healthy, the dependency ratio is at the trough. They are on top of the world. Now, imagine how the psychology will change when everything they have come to believe is upside down. They will be in shock and will go through the stages of grief which usually take quite some time… they will not be productive until they hit the acceptance phase… BUT we have not even started the first phase of grief yet. We are still propping up the old economic model where your McMansion will make you rich.

      In my estimation, there will be a decade of pain before “productivity” levels adapt to our reality.

      So when I look at productivity, I don’t just look at the numbers coming out of Statcan, I also think about how much more I will be bale to do in 24 hours vs. what my parents could accomplish.

      1. Garrett Pace

        “When I was a kid, my parents just plunked us all in the back seat of a car. Now we legally have to have a helmet for nearly everything we do.”

        This improves your childrens’ chances of being around when you are old and grey.

      2. Larry

        This crunch on Gen X and Y that you speak of is what Michael Hudson is consistently railing against. The problem is rentiers extracting too much blood from stones. We’ve set up a system where it is easy for the proles to get a variety of things on credit, and very hard for them to get away from those obligation once they’ve taken it on. Unregulated expansion of credit has had a dramatic effect on the cost of housing. We have yet to step up to the plate to demand that the health care industry stop feasting on guaranteed profits in our hodge podge private care/charity care system where middlemen take a huge chunk and administrators and physicians are overpaid. If we could reign in costs, and especially explosive changes in cost, all would be fine. But you can’t squeeze people on the essentials and hope they’ll still do things like vacation etc. So if we could perhaps reign in or socialize the essentials of life, we might buffer the younger generations and not worry about ratios or sinkning populations. After all, the only problem with an increasing ratio of retirees to workers will be one of not having enough hands to help those in need. The spending choices to care for those in need are strictly political in a country with a sovereign currency.

    2. Lyle

      Lets take a view of one industry where productivity enhancements have gone on for over 100 years. Recall that 120 years ago or so over 1/2 of the population was engaged in Agriculture, today its 3% (In the US). Longer term we have things like making pins which used to be very expensive, while machine made pins today are cheap, as is true of nails and screws. Housing could be cheaper by at least building wall segments in factories if not going to modular homes. In addition to take another 100 year old example, the phone company in 1920 extrapolated that if nothing changed 1/2 the population would have to be phone operators, then they introduced automatic phone switching, and the employed phone operators were drastically reduced in number. (To boot today a phone can emulate the old operator by calling a person if you just give a name, just like with the old central operator). To boot back then it was party lines, with no privacy.
      So unless you believe that innovation has/will slow down the trend is clear that productivity increases will continue, when the relative cost of labor gets high enough.

    3. bobh

      At the end, we will have a world rich in dams, dikes, windmills, solar power, cleaned up pollution, replanted forests, improved agricultural land… You name it.

      And there’ll be rabbits, too, right George? Tell me again about the rabbits….

  6. John F. Opie

    Demographers have an old saying: Demography is destiny.

    I’ve done extensive work on demographics changes in my day job, and suffice to say that this is absolutely the case.

    The only real reason that the US has shown higher growth rates over the last several decades than, say, Europe is that the US has significant immigration (legal and illegal) that pushes the sheer number of consumers up. Europe doesn’t, as much migration there is internal, rather than external. Japan is actively hostile to immigration with few exceptions (professionals who speak Japanese and are sponsored by Japanese corporations) and the lost decade reflects much more the aging demographics than it does anything else.

    Ignoring demographics in economic analysis is akin to negleecting to get a passport and then sitting in the airport for two weeks and fantasizing about being in Paris.

    China faces a decade-long period where they can get their house in order (and that decade has already started): after that, they will be faced with a massive shift towards the elderly and will lose most of their current comparative advantages; Europe will go the way of Japan, but without Japan’s xenophobia (but there won’t be massive immigation: European companies are adding productive capacities where the people are); countries currently fully ignored will gain immense importance in the future (Tanzania!) based on the very large labor force that is growing up there in fairly abject poverty, ready for industrialization.

    The neat thing about using demographics is that real forecasts there start first in 2070 or so: given human life spans and current inventory (i.e. babies born this year), the only thing that introduces error into the equations are wars, human stupidity and greed, as well as die-offs due to epidemics and other natural and human-caused calamaties.

    Demographics: ignore it at your peril.

    1. Jim Haygood

      Indeed. Yves said, ‘I’m not sure we’d see lower dependency ratios if we had enough jobs.’

      Long run, changes in generational cohorts completely dominate short-run fluctuations in employment. The demographic histogram of say, Brazil, is wholly different than that of Japan.

      Social welfare systems that were designed for the demographics of Brazil but, two generations later, serve a population that resembles Japan, obviously are going to be in deep poop.

      Political systems do an atrocious job of responding to such secular changes. The notion of entitlement which they promoted has become a logjam blocking all reform.

      1. LifelongLib

        The biggest logjam is the belief that “there is not enough money” to take care of old people.

        We can create any amount of money needed to take care of old people, or do anything else. The only limits are the actual resources of our society. If we run so short of those resources that we decide to just let the old die, we have far bigger problems than the structure of our social welfare systems.

  7. reason

    The graph is completely misleading because it calculates purely by demographics and doesn’t look at labour force participation rates.

    1. reason

      I guess I should explain that that is important because for a number of countries it suggests that dependency ratios in the next few years will be unprecented. That is not true because in the post WWII period so few wives worked.

  8. Brick

    Are we sure that that we are going to have a demographic problem that is being explored in the blog item here?

    I am not totally convinced that we will end up with an dependency ratios suggested here and think the recession may have altered things. The argument seems to be at least partly based on extrapolation of historical increases in life expectancy without looking at recent changes. The carnary in the mine for me is the changes in the inequality of life expectancy and how it is spreading.

    http://americanreviewmag.com/opinions/The-new-white-underclass

    A quote from the article

    New statistics dramatised this situation but got relatively little attention, perhaps because they seem incredible to most Americans. Based on census figures, they showed a decline in longevity among the poorest and least educated Americans. Life expectancy for white men without a high school diploma has dropped by three years since 1990. For white women drop-outs, it’s even worse: down by five years.

    Lastly a quote from a guardian Newspaper article from 2006 which emphasizes the point and shows the problem started before the recession in inner cities in the UK. It suggests to me employment problems altered demographics

    There are ghosts sitting in the Cottage bar in Glasgow’s Calton area. The locals call them the missing generation, the men who died before their time. Sometimes the drinkers dip their heads or lift their pints to them. They may not see them but all the drinkers know they are there. Jimmy, Swifty, Davy and many more.For here in this multi-deprived inner city area, the average life expectancy of a male is just 53.9 years. In Iraq, after 10 years of sanctions, a war and a continuing conflict, suicide bombs and insurgency, the average man has a good chance of making it into his 60s; the life expectancy of a male there is 67.49. In Iran it is 69.96, in North Korea, 71.37 and in the Gaza Strip it is 70.5.

  9. Hugh

    This is a GIGO exercise. We live in kleptocracies. Under such conditions, for the many, growth is irrelevant. Gains in productivity are irrelevant, since they are all stolen to feed ever more extreme inequalities in wealth.

    It is not demographics but theft which is the driver here. Growth really isn’t the issue. The issue should be do we have the resources, human and material, to build a just, fair, and decent society, one which affords all of us the basics for a good and meaningful life. If we do and distribute our resources as a society to this end, who cares about growth? In a just society, there are no dependency ratios. There is the realization that all depend on all.

    1. jonboinAR

      Yes, we really have enough resources for all, or seem to anyway. The issue is equitable distribution, first, at least.

  10. peace

    An “expectations gap” sums it up well.

    A solution to an expectations gap involves knowledge about reasonable expectations of economic and social progress, which this article and nakedcapitalism.com in general provide. A solution can also involve shifting our identities to match realistic expectations of who we are and how others perceive us — as individuals, as institutions and as states. A solution can also involve perceiving and embracing a (hopefully non-violent) zeitgeist that includes social progress — and my choice of zeitgeist involves mutual aid.

    Thanks

  11. Timothy Gawne

    Hmmm… A problem with discussing these issues is that the proponents of cheap labor via rapid population growth have so corrupted the discussion that it is hard to get traction.

    Consider this: In a place like Bangladesh, there are many workers per retiree, yet many children per worker, so the dependency ratio is not low. However, rapid population growth and limited developed resources means that wages are perhaps 50 cents an hour. In a place like Switzerland, there are relatively more retirees per worker, but fewer children, so the dependency ratio is likely not higher than Bangladesh – but slow development of per-capita income means that wages (including benefits) could be $30 US per hour! Do the math.

    Translation: yes, ‘dependency ratios’ are largely a red herring used to distract us. So what? The big deal is real usable per-capita wealth, which can vary between societies by decimal orders of magnitude, swamping minor changes in dependency ratios. In societies without an open frontier, high real per-capita wealth can ONLY be achieved with low fertility rates, (HAS ONLY been achieved with low fertility rates) which means a relatively older age distribution.

    If ‘dependency ratios’ were the main event, Bangladesh would be richer than Switzerland. It’s not, is it?

    1. Moneta

      Demographics might only be a piece of the puzzle but if you don’t play around with the numbers you’re going to miss the big picture.

      So many things are moving according to what I predicted in the early 00s not because I’m a genius but because I took the time to play around with the demographics numbers. When you have a good grasp of the composition of your demography and its wealth and resources, the picture gets much clearer.

      It makes me think of an article I read on the funeral homes/services a while back. Business dropped for a while and they could not figure out why until they looked at the population table. They realized that a chunk of those who should be have been dying had already died in WW1. Now you’d think, they would have been prepared for it but nope; they were too preoccupied with their M&A activity.

  12. Moneta

    I can only imagine the problem in the US with no socialized health care. In Canada, where we have it, employers are not as tough on older workers but they are still getting the axe.

    Both my dad and FIL (engineers) were pushed out around age 55 when the high-tech bubble burst. They were fine because the house was paid off and frugality paid off in their investment portfolio.

    It will be interesting to see how Gen-X and Gen-Y will adapt to this. Already, I am not as productive as our leaders would want me to be. I could be working the big corporate job with a lot of money but I did it for 15 years and was disgusted with how it was soul and nation destroying so I prefer to slowly build a business where I can have multiple income streams until the day I die. I work according to my schedule and will be there for my parents need be. Because of my research, I knew the major part of the crisis when boomers would hit their retirement years and I prepared myself accordingly in the late 90s early 00s by living below my means and paying off my house ASAP so I could go off on my own and do my thing without having to put up with everyone’s delusions of grandeur.

    Interestingly, I met another couple my age looking at ways to live for free based on volunteer work. I thought the idea clever since I would not be surprised to see our income and investments gobbled up by inflation or taxes… the boomers will WANT to get the retirement they were promised. The monetary system will not change fast enough to fix the problem and we’ll probably be the sacrificed generations. There is always one every few decades.

    Not everyone will be able to prepare but something tells me that a lot of Gen-X and Gen-Y will be very creative after witnessing how their parents were treated. And productivity will take on a new meaning.

  13. kevinearick

    Out of Time: Conflict/Crisis Management

    Empires are creatures of peer pressure, mythology aggregated over time to eliminate thinking with specialization, nothing more than a black hole return line to the DNA churn pool. Its lead line of command is simply paid servants of the empire majority, to act as scapegoats, to manage the mythology. Politics is local, right down to the individual.

    If you are participating in peer pressure, watching the empire collapse around you, or are simply doing nothing but mocking its faults, rebelling with no cause to speed its descent, you have no one to blame but yourself. If Paul the highway patrolman gives Bob the tax assessor a $300 ticket and Bob raises Paul’s assessment by $500, they have no one to blame but themselves for the dilution of their currency. Bob and Paul turning on Fred doesn’t help any.

    In case you haven’t noticed, we are moving from a 40-hour week to a 24-hour week, because children need time, not money, and you need children, productive children, whether you choose to recognize the problem or not. This planet can easily provide food, clothing and shelter for everyone, if it gets what it needs.

    The empire majority, which is incapable of raising children to do so, wants to keep you busy morning, noon and night, feeding it, naturally, with extortion, taking your children and paying itself, with your future, to program them. Why would you expect anything else?

    To do so, the empire must pull you out of your time and into its time with some sort of damsel-in-distress, artificial conflict or crisis. Why would you exercise and eat reasonably so others can go to McDonalds and have heart attacks? Why would you raise children sensibly so others can go to McDonalds and have heart attacks? Why are you raising robots for the empire?

    Labor is not fixing Boeing, Microsoft, or any of these other moron corporations because they are not the future. They are not producers. They are organizations of consumers. Look at their participant credit reports. They don’t make anything a willing producer would buy. They are subsidized by and for consumers. Without extortion, they don’t exist.

    An empire can be grown with direct labor, or its derivatives, monetary and fiscal expansion. The amount of gravity derived depends upon your participation in peer pressure. If you want to increase gravity, step into the empire and do what the boss tells you. If you want to decrease gravity, step out.

    Each event horizon has its own divide and conquer itself mantra – “money goes to money,” “men are stupid,” “black people are lazy,” blah, blah, blah. They tell on themselves as soon as they open their mouths, and what they say supports what they do, which is to justify their own stupid behavior.

    If the ‘founding fathers’ were so f-ing smart, why did they need slaves? Why did they print money? So much for God and then family and then country. Empires run upside down and always have. The US Constitution doesn’t balance power; only you can do that. It delays responsibility, in a circle jerk…until you take it back.

    Of course the empire majority is going to kidnap your children and label you a dead-beat-dad. Of course it is going to tell you that raising children is an unbearable burden better left to the collective so you can occupy an empire make-work job. You have to be smarter than a rock.

    Of course an empire is going to tell you that you cannot buy and sell without its currency, its blessing. Of course it’s going to tax any currency you roll out. Tax it back, by discounting its currency. Step out of the feedback loop. If you don’t have the skills, go out and get them. It doesn’t take rocket science to mirror back the feedback loop 24 hours a week.

    If you don’t have any skill, it’s in your interest to ignore labor’s activity to the extent you are able. One way or the other, the easy way or the hard way, labor gets the job done. If it didn’t, you wouldn’t exist. Whether you survive the process or not, prosper or not, depends upon you. Capital can’t get out of its own way; it’s the lowest form of energy, the least common denominator.

    Divide by zero and what you get depends upon your ability to think, before you act, instead of the other way around. If you think about it, you can build your own generator, turn the earth 180 degrees on its axis, or blow up the solar system with the information provided. Don’t expect me to draw a diagram for you.

    If you think “all people are sh-,” an excuse to exploit others, you are part of the majority you are rebelling against. You are who you choose to surround yourself with. The difference between the perception of fight or flight is your destination.

    When has the collective majority, including its leaders and its rebels, ever been correct in its assessment of a problem? It has listening issues precisely because it is interested only in itself. It always crashes because it is always looking in the mirror, to the past, chanting “those who do not heed History are doomed to repeat it,” “never again,” or some other such nonsense.

    Hurry up and repeat the past, but don’t be surprised to find your self stranded. The empire majority has no patience to listen, but thinks it has an information advantage, due to numbers. Brilliant.

  14. anon

    Out of Time: Conflict/Crisis Management

    Empires are creatures of peer pressure, mythology aggregated over time to eliminate thinking with specialization, nothing more than a black hole return line to the DNA churn pool. Its lead line of command is simply paid servants of the empire majority, to act as scapegoats, to manage the mythology. Politics is local, right down to the individual.

    If you are participating in peer pressure, watching the empire collapse around you, or are simply doing nothing but mocking its faults, rebelling with no cause to speed its descent, you have no one to blame but yourself. If Paul the highway patrolman gives Bob the tax assessor a $300 ticket and Bob raises Paul’s assessment by $500, they have no one to blame but themselves for the dilution of their currency. Bob and Paul turning on Fred doesn’t help any.

    In case you haven’t noticed, we are moving from a 40-hour week to a 24-hour week, because children need time, not money, and you need children, productive children, whether you choose to recognize the problem or not. This planet can easily provide food, clothing and shelter for everyone, if it gets what it needs.

    The empire majority, which is incapable of raising children to do so, wants to keep you busy morning, noon and night, feeding it, naturally, with extortion, taking your children and paying itself, with your future, to program them. Why would you expect anything else?

    To do so, the empire must pull you out of your time and into its time with some sort of damsel-in-distress, artificial conflict or crisis. Why would you exercise and eat reasonably so others can go to McDonalds and have heart attacks? Why would you raise children sensibly so others can go to McDonalds and have heart attacks? Why are you raising robots for the empire?

    Labor is not fixing Boeing, Microsoft, or any of these other moron corporations because they are not the future. They are not producers. They are organizations of consumers. Look at their participant credit reports. They don’t make anything a willing producer would buy. They are subsidized by and for consumers. Without extortion, they don’t exist.

    An empire can be grown with direct labor, or its derivatives, monetary and fiscal expansion. The amount of gravity derived depends upon your participation in peer pressure. If you want to increase gravity, step into the empire and do what the boss tells you. If you want to decrease gravity, step out.

    Each event horizon has its own divide and conquer itself mantra – “money goes to money,” “men are stupid,” “black people are lazy,” blah, blah, blah. They tell on themselves as soon as they open their mouths, and what they say supports what they do, which is to justify their own stupid behavior.

    If the ‘founding fathers’ were so f-ing smart, why did they need slaves? Why did they print money? So much for God and then family and then country. Empires run upside down and always have. The US Constitution doesn’t balance power; only you can do that. It delays responsibility, in a circle jerk…until you take it back.

    Of course the empire majority is going to kidnap your children and label you a dead-beat-dad. Of course it is going to tell you that raising children is an unbearable burden better left to the collective so you can occupy an empire make-work job. You have to be smarter than a rock.

    Of course an empire is going to tell you that you cannot buy and sell without its currency, its blessing. Of course it’s going to tax any currency you roll out. Tax it back, by discounting its currency. Step out of the feedback loop. If you don’t have the skills, go out and get them. It doesn’t take rocket science to mirror back the feedback loop 24 hours a week.

    If you don’t have any skill, it’s in your interest to ignore labor’s activity to the extent you are able. One way or the other, the easy way or the hard way, labor gets the job done. If it didn’t you wouldn’t exist. Whether you survive the process or not, prosper or not, depends upon you. Capital can’t get out of its own way; it’s the lowest form of energy, the least common denominator.

    Divide by zero and what you get depends upon your ability to think, before you act, instead of the other way around. If you think about it, you can build your own generator, turn the earth 180 degrees on its axis, or blow up the solar system with the information provided. Don’t expect me to draw a diagram for you.

    If you think “all people are sh-,” an excuse to exploit others, you are part of the majority you are rebelling against. You are who you choose to surround yourself with. The difference between the perception of fight or flight is your destination.

    When has the collective majority, including its leaders and its rebels, ever been correct in its assessment of a problem? It has listening issues precisely because it is interested only in itself. It always crashes because it always looking in the mirror, to the past, chanting “those who do not heed History are doomed to repeat it,” “never again,” or some other such nonsense.

    Hurry up and repeat the past, but don’t be surprised to find your self stranded. The empire majority has no patience to listen, but thinks it has an information advantage, due to numbers. Brilliant.

  15. Conscience of a Conservative

    The author makes some salient points here. Aging demographics means slower economic growth and has implications for savings and consumption. Ohter obvious points are to expect aging baby boomers to be net sellers of equities and downsizers of homes.

  16. Generalfeldmarschall von Hindenburg

    I was listening to Mark Blyth’s rap on a podcast and I have to say his smiting of the Austerity Cultists was impressive. What was frustrating to me was the he, like so many others with good intentions to try to ameliorate the condition of the working classes still operates under the assumption that strong growth is the way to get out of the mess global civilization’s in.
    Sadly, I can only agree with those who say that growth economies are a dead end (barring interplanetary space flight – and, while I think that’s desirable, we’re ruled over by a lot of people who can’t think past next quarter). You don’t even have to believe in the peak oil idea to understand, if you’ll be bothered to look at the situation objectively that there’s not enough resources to sustain a market based, growth oriented consumer economy on a planetary scale. You can’t promise all the people of India, China and Africa that they or their children will have even the standard of living of 19th century Europe.
    Meanwhile, political democracy everywhere (such as it existed) is being sacrificed so that a global .01% can fortify themselves and make rebellion either impossible or a transitory phenomenon that might hamper production in some region or other but can never overturn the order.

  17. Frankie Holman

    The problem stems primarily from the coming end of the demographic ‘sweet spot’. That is, where there is a high proportion of working age people supporting only a small pool of dependents. Such an advantageous age structure has effected almost all of the world’s major economies and produced a population structure optimal to economic growth – that is, where the largest segments of the population were neither young nor old, but in the middle (i.e. working age).

  18. Fiver

    This is a perfect example of the sort of thinking that consistently fails to anticipate the future we get, rather than the one projected, as it abstracts 1 variable from a very large complex, then assumes nobody reacts to the projected emergent reality.

    The author simply assumes that production, wealth, societal health or whatever you wish to call it is a singular function of population size and demography, which is simply not the case – one look around the globe confirms it. Size only matters in particular circumstances, such as we have 10 times their fighters, so we win. The mix of rich vs poor has an enormously greater impact than old vs middling vs young in the workforce. The notion of population size being directly tied to power was a very big piece of how “growth” came to be the idiotic mantra it is, and the now-fashionable “demographic crisis” and the resulting “slower growth” is an ideological offshoot of that long-held, archaic view. As such, I would contend that the “demographic crisis” argument has become a very handy weapon in the all-out attack on today’s seniors (and disabled, “welfare bums” and all the rest) – the demolition of savings, pension obligations and the threat of health care reductions being obvious other facets of that attack – not that the Boomers haven’t in many respects been the least responsible generation of all time, but that doesn’t mean we should all live on the sidewalk, either.

    Currently, in Canada, the US and elsewhere it is altogether obvious that a large % of the population toil away in “jobs” that add nothing at all to the national wealth/production and precious little in the way of satisfaction to the job-holders. Ben Bernanke and the US Treasury have spent 5 years throwing tens of trillions of dollars at the wealthy pretending to believe enough will trickle down so millions of A can hire B and C to hand out flyers for a useless product D through M make in their basements before the next crash. If anything, the change in demographics will mean a job upgrade for a solid number of people.

    Even if the problem arrives just as forecast, are we therefore without options? No. Not by a long shot. One simple solution is to reverse the direction of technology in selected sectors, just to ensure everyone has a “job”, which is itself largely a cultural artifact that is no longer necessary for all to have, or all to have full-time, so long as wealth is produced and properly/fairly distributed – the latter a problem demonstrably endemic to capitalism since Day 1.

    Yves is correct that the “problem” as such is an accounting/actuarial problem as much as anything, in the sense that the Federal Government, banks, insurers and the like make estimates based on some formula of average individual “wealth” production over a lifetime. But surely nobody will claim the formula in 1813 would apply in 2013, that lifespan grew at anything like the rate of productivity? Just consider devoting the technology and budget of the permanent US war machine to actual productive use and the “crisis” vanishes. Only by arguing there is now zero flexibility/adaptability in the complex of systems we’ve created can we get a “crisis” out of this that is not a deliberate decision to feed millions to the wolves.

    The blunt fact is that the faster we can reduce the population, the better the odds we can all survive, not through the next 150 years, but through the next 20 to 40 years. There are decisive arguments to be made in support of the contention that the entire top half of the population, including well-off seniors, must accept a substantial and proportional hit to incomes and consumption else we will not make the cut for civilized survival – the current “demographic outlook” has nothing to do with it, except insofar as it is cited by the power elite as the reason to lay the pain on the politically weak.

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