Golden Years Tainted As Retirement Savings Dwindle
Posted 06-10-2013 at 06:55 PM by Escort Rider
Quote:
Originally Posted by Escort Rider
You make an excellent point, namely that there are always ups and downs (recessions, recoveries, periods of runaway inflation, and so on). For example, the housing bubble which burst in 2007-2008 was not the only such bubble in my living memory, although it may have been worse than the one in the 1990's (at least I think it was in the 1990's). I have never been one to believe that economic "collapse" is around the corner and I have disputed that notion both in the Economics Forum and in the Self-Sufficiency and Preparedness Forum. However, I really doubt that we will see a return to the general status quo ante (ante 2008) of the period of unprecedented prosperity which began at the end of World War II and continued (with the ups and downs you so correctly point out) until about 2008.
At no time in the previous history of the human race were so many people blessed with such a high standard of living as in the United States and Canada starting at the end of World War II (and then a bit later in western Europe and Japan). What was unprecedented was that the vast majority of people enjoyed great prosperity. It was even tempting to say (although not quite ever really true) that the United States had evolved into a classless society, as even workers with minimal skills such as those who worked on assembly lines lived the good life. But the paradim has changed, and we had better get used to a slightly lower living standard. Here are the significant differences which I see:
1. Off-shoring. As more and more third-world countries develop their own manufacturing bases, they can produce cheaper than we can. Therefore our wage earners are earning too much, not too little, despite recent wage cuts. This has upset the long-time pattern set near the beginning of the industrial age of industrial nations producing the product from raw materials supplied by colonies or "undeveloped" countries. The communications revolution made the world smaller, and hence more alike, and we in this county are now suffering from that. Third world people such as the Chinese and the Indians are no longer content to go barefoot and live hand-to-mouth without electricity and running water. They are beating us at our own game (manufacturing). Result: Decent-paying jobs have been less and less available here at home, permanently.
2. Imbalances in costs which weigh down people's ability to get ahead. The two main areas I see here are the cost of health care and the cost of a college education. The very high technology of which we are so proud and which put us on the moon is one driver of high health care costs. In education, it has become extremely hard to emerge debt-free at the other end of a college education, as we all did when I graduated. These two factors alone take a big bite out of families' ability to spend on consumer goods, which in turn slows and limits economic recovery and growth. This becomes a viscious circle.
3. Debt. Some of the tremendous growth in standards of living was underpinned by excessive consumer debt which was simply not sustainable in the long run. Now that we have fallen over that cliff, people are going to have to get used to living a somewhat more frugal lifestyle. This is coming as quite a shock to a lot of people who feel "entitled" to their granite counter tops and BMW automobiles.
Look at some recent trends: a huge glut of law school graduates many of whom will never find lucrative employment in law, employment growth providing mostly jobs at lower pay than the formerly unemployed were used to before losing those plum jobs, disability rolls growing all the time (how was it there were fewer "disabled" people, percentage wise, in the 1950's?).
No, there will be no "collapse". But there will be no return to previous levels either, the way I see it.
At no time in the previous history of the human race were so many people blessed with such a high standard of living as in the United States and Canada starting at the end of World War II (and then a bit later in western Europe and Japan). What was unprecedented was that the vast majority of people enjoyed great prosperity. It was even tempting to say (although not quite ever really true) that the United States had evolved into a classless society, as even workers with minimal skills such as those who worked on assembly lines lived the good life. But the paradim has changed, and we had better get used to a slightly lower living standard. Here are the significant differences which I see:
1. Off-shoring. As more and more third-world countries develop their own manufacturing bases, they can produce cheaper than we can. Therefore our wage earners are earning too much, not too little, despite recent wage cuts. This has upset the long-time pattern set near the beginning of the industrial age of industrial nations producing the product from raw materials supplied by colonies or "undeveloped" countries. The communications revolution made the world smaller, and hence more alike, and we in this county are now suffering from that. Third world people such as the Chinese and the Indians are no longer content to go barefoot and live hand-to-mouth without electricity and running water. They are beating us at our own game (manufacturing). Result: Decent-paying jobs have been less and less available here at home, permanently.
2. Imbalances in costs which weigh down people's ability to get ahead. The two main areas I see here are the cost of health care and the cost of a college education. The very high technology of which we are so proud and which put us on the moon is one driver of high health care costs. In education, it has become extremely hard to emerge debt-free at the other end of a college education, as we all did when I graduated. These two factors alone take a big bite out of families' ability to spend on consumer goods, which in turn slows and limits economic recovery and growth. This becomes a viscious circle.
3. Debt. Some of the tremendous growth in standards of living was underpinned by excessive consumer debt which was simply not sustainable in the long run. Now that we have fallen over that cliff, people are going to have to get used to living a somewhat more frugal lifestyle. This is coming as quite a shock to a lot of people who feel "entitled" to their granite counter tops and BMW automobiles.
Look at some recent trends: a huge glut of law school graduates many of whom will never find lucrative employment in law, employment growth providing mostly jobs at lower pay than the formerly unemployed were used to before losing those plum jobs, disability rolls growing all the time (how was it there were fewer "disabled" people, percentage wise, in the 1950's?).
No, there will be no "collapse". But there will be no return to previous levels either, the way I see it.
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