July 18, 2005

Boomer's Bills

I am reading 'The Coming Generational Storm' by Laurence Kotlikoff and Scott Burns. The book uses 'generational accounting' to make some sobering points concerning the economic crisis current policies are creating for our children and grandchildren. Some of the main points so far:

Life expectancies are up, birth rates are down and the world is getting older, fast. Right now, worldwide, children (age less than 15) outnumber older people (age greater than 65) by three to one, and the best estimate is that by 2050 this ratio will decrease to one to one. At this point the number of older persons will outnumber the number of children for the first time in human history. The ratios are higher in the developed world-- it is estimated that in Europe in 2050 there will be 2.6 older people for every child. In a single century (1950 to 2050) Japan will have gone from a ratio of 4.6 children per older person to 3.4 old people per child. This demographic change is going to put severe strains on household and national economies.

Older people vote, kids don't, and these numbers show up in what the government does with its money. In 1995 federal spending per child under 18 was $1,693, and per adult age 65 or over, $15,636.

The former chairman of the Council of Economic Advisors, N. Gregory Mankiw says, 'the [Social Security] benefits now scheduled for future generations under current law are not sustainable given the projected path of payroll tax revenue....They are empty promises.'

3 Comments:

At July 18, 2005 10:49 PM , Anonymous Tim said...

hey, great post. I am wondering if the stuff on their website covers what is in the book or does the book have more stuff?

Why won't immigration save us?

 
At July 19, 2005 9:14 AM , Blogger Matt_J said...

According to the book, immigrants do add to the economy, but not enough. From today's ca. 800,000 legal immigrants per year (plus ca. 500,000 illegal), the rate would have to be increased to about 5 million per year to make a difference and save Social Security and Medicare/Medicaide. So many immigrants is not politically viable.

 
At July 19, 2005 4:16 PM , Blogger Matt_J said...

(Forgot to say: the book has more stuff!)

 

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