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Old 12-24-2009, 04:13 PM
 
Location: Chino, CA
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Economists have argued that the industrialized nations will have an upcoming demographic problem when a larger ratio of the population ages and becomes less productive. Furthermore, they assert that this problem is magnified as the birth rate in most industrialized nations fall bellow the 2.3 children required for replacement and that people live longer than before (further lengthening the period of less productivity).
McKinsey & Company - The coming demographic deficit: How aging populations will reduce global savings

Japan is the forerunner with the highest proportion of older people. They are trying to meet this challenge through technology, and robotics to maintain/increase productivity.
Japanese see robots as answer to demographics, aging population | Asia > East Asia from AllBusiness.com (http://www.allbusiness.com/population-demographics/demographic-trends-aging/11671329-1.html - broken link)

Is this going to be a challenge, problem, opportunity, or a non-issue in the coming future. Are businesses in the US dealing with this threat differently with more "do it yourself", computer AI, outsourcing, and robotics? If people spend less, and save more, wouldn't this amplify the duration of any recession? Wouldn't there be more people out of work as demand waynes?

How do we prepare for the eventual loss in human capital, capital expenditure, reduced consumption, higher costs and demand of social safety nets? Are we going to be ready?

Thoughts?

-chuck22b

Last edited by chuck22b; 12-24-2009 at 04:25 PM..
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Old 12-24-2009, 04:16 PM
 
Location: Oak Point, TX
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When walkers and wheelchairs outnumber strollers, it's a huge problem. My favorite economic book of all time deals with this very issue:

The Coming Generational Storm - The MIT Press
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Old 12-24-2009, 04:35 PM
 
Location: Conejo Valley, CA
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Quote:
Originally Posted by chuck22b View Post
How do we prepare for the eventual loss in human capital, capital expenditure, reduced consumption, higher costs and demand of social safety nets? Are we going to be ready?
How do you personally prepare for it? You don't..other than noting its possible effects on investments.

This issue is not so much a problem in the US.
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Old 12-24-2009, 04:55 PM
 
Location: Chino, CA
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Quote:
Originally Posted by user_id View Post
How do you personally prepare for it? You don't..other than noting its possible effects on investments.

This issue is not so much a problem in the US.
What are the potential effects on investments? Tax rates? Compensation? Equality/inequality. Has this ever occured in the past?

Actually, in my mind, it's basically a problem of having a higher ratio of unproductive vs. productive people in a society/nation.

The US can definitely have this problem... even though it may not necessarily be purely an "aging" issue. It can simply be that the ratio of trained/skilled/educated/productive people grow fewer as more of the productive people stop/reduce production and more of the up and coming people aren't as productive or lack skills/training/education.

What happens in a society when there are more unproductive people vs. productive and what about politics (mob rule) and social safety nets when the majority are unproductive?

-chuck22b
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Old 12-24-2009, 05:14 PM
 
Location: Conejo Valley, CA
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Quote:
Originally Posted by chuck22b View Post
What are the potential effects on investments? Tax rates? Compensation? Equality/inequality. Has this ever occured in the past?
I only care about the first, and the general sense of things seems to be avoid stocks and real estate. The government can't indefinitely raise taxes, in fact I doubt they could raise them much more than they currently are. They can change the mix of taxation, but actually getting more revenue is difficult.

There have been numerous demographic issues in the past due to disease etc.

Quote:
Originally Posted by chuck22b View Post
Actually, in my mind, it's basically a problem of having a higher ratio of unproductive vs. productive people in a society/nation.
I think its funny that people think they have to "solve" these sorts of things, the reality is that the market will solve the problem. Any supposed "solution" to the problem will just back fire as the markets sneak past it.

Quote:
Originally Posted by chuck22b View Post
What happens in a society when there are more unproductive people vs. productive and what about politics (mob rule) and social safety nets when the majority are unproductive?
The answer to this is obvious, namely that there will be a reduction in the aggregate standard of living. But we are no where near having a majority of "unproductive people".

The likely result of the aging boomers in the US is that they will have to remain productive longer. There problem solved.

Anyhow, this is a fairly boring thing to think about. I'm only concerned with how the aging boomers in this country will change the (historic) behavior of certain markets. There will undoubtedly be shifts in behavior, but to what exactly? Knowing the answer here will allow one to raid their coffers.
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Old 12-24-2009, 05:17 PM
 
Location: Planet Eaarth
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Quote:
Originally Posted by chuck22b View Post
What are the potential effects on investments? Tax rates? Compensation? Equality/inequality. Has this ever occured in the past?

Actually, in my mind, it's basically a problem of having a higher ratio of unproductive vs. productive people in a society/nation.

The US can definitely have this problem... even though it may not necessarily be purely an "aging" issue. It can simply be that the ratio of trained/skilled/educated/productive people grow fewer as more of the productive people stop/reduce production and more of the up and coming people aren't as productive or lack skills/training/education.

What happens in a society when there are more unproductive people vs. productive and what about politics (mob rule) and social safety nets when the majority are unproductive?

-chuck22b
Could it be the brain drain of experience that you speak of?

I know at the company where I retired from the brain drain is a killer. All the knowledge that made the company a world leader either has gone out the door or will leave very soon. The companies response to this is to take the short view to make short term profit king with no thought to any future growth or stability.
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Old 12-24-2009, 05:23 PM
 
Location: Conejo Valley, CA
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Originally Posted by Tightwad View Post
I know at the company where I retired from the brain drain is a killer. All the knowledge that made the company a world leader either has gone out the door or will leave very soon.
There is no brain drain, just stupid companies. Many companies now expect younger workers to pick up where workers with decades of experience left off. Its completely unrealistic and just rather silly. These companies needed to be hiring younger workers years ago and training them so they can orderly replace their older workers.

So please, let them die off. These is the result of years of short-sightedness.
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Old 12-24-2009, 05:47 PM
 
Location: Chino, CA
1,458 posts, read 3,061,690 times
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Quote:
Originally Posted by user_id View Post
I only care about the first, and the general sense of things seems to be avoid stocks and real estate. The government can't indefinitely raise taxes, in fact I doubt they could raise them much more than they currently are. They can change the mix of taxation, but actually getting more revenue is difficult.

But since the Baby Boomers disproportionately hold more of the wealth (incomes), and once they work less... they will also be "taxed" less. So, it would be difficult to continuous "shift" the tax burden as more of the taxes would have to be taken from fewer productive or income generating people.

I guess, somehow they can formulate taxes based on net worth?? instead of incomes? But, of course that wouldn't be popular or voted on.

There have been numerous demographic issues in the past due to disease etc.

But few that are as targeted and deliberate/predictable. Disease usually kills older and more weaker people leaving the more productive around. Wars kill more youth, but usually the economically disadvantaged. A mass shift in demographics like we are witnessing? has this happened before?

I think its funny that people think they have to "solve" these sorts of things, the reality is that the market will solve the problem. Any supposed "solution" to the problem will just back fire as the markets sneak past it.

Of course the "market" will shift and things will work out in some way or another. Just wondering how the "environment" would change and what/how one can prepare.

The answer to this is obvious, namely that there will be a reduction in the aggregate standard of living. But we are no where near having a majority of "unproductive people".

The likely result of the aging boomers in the US is that they will have to remain productive longer. There problem solved.

Regarless of how long, it's still a diminishing level of production/productivity. Age is age.... we all get older, more slower, more forgetful, regressive, etc.

Anyhow, this is a fairly boring thing to think about. I'm only concerned with how the aging boomers in this country will change the (historic) behavior of certain markets. There will undoubtedly be shifts in behavior, but to what exactly? Knowing the answer here will allow one to raid their coffers.
So, what behaviors? who will benefit? who will suffer? If there are fewer productive people, then those who are productive/educated/skilled would be better compensated and/or taxed more?

What shifts do you see happening? Are their tightly grasped coffers really worthwhile raiding? Or because of the shift, other opportunities exist?

-chuck22b
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Old 12-25-2009, 01:54 AM
 
Location: Conejo Valley, CA
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Quote:
Originally Posted by chuck22b View Post
But since the Baby Boomers disproportionately hold more of the wealth (incomes), and once they work less... they will also be "taxed" less.

Older folks always hold more wealth than the younger, there is nothing new here. The only difference is that the boomers are the largest single cohort and as a result they can have more influence of the markets when they both enter and exit them.


Quote:
Originally Posted by chuck22b View Post
Regarless of how long, it's still a diminishing level of production/productivity. Age is age.... we all get older, more slower, more forgetful, regressive, etc.
No, not really. If the boomers want to keep up their standard of living they will have to work longer. You are speaking as if in 10 years the majority of people are going to be in retirement, but that is rather inaccurate. The boomer cohort is large, but not that large.


Quote:
Originally Posted by chuck22b View Post
What shifts do you see happening? Are their tightly grasped coffers really worthwhile raiding? Or because of the shift, other opportunities exist?
The boomer cohort was large and when they collectively entered a market it would distort it (e.g., stocks and real estate), now when they exit the markets it should do the opposite. This is what I mean by shifts. Predicting exactly what will happen is impossible, what I think is important is putting little weight on the historic record of the last 2-3 decades. That period was largely driven by the boomers and the dynamics will change as they collectively exit the markets.

Personally, I think the most obvious issues are with stocks and real estate. Both of these were bid up by boomers, as they age they will move from net buyers to net sellers of stocks/real estate. And there is no way to avoid it, they can't continue to hold the assets because they need it for their retirement. I think certain aspects of business will change too, but that is more complicated.
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Old 12-25-2009, 10:58 AM
Status: "Retired and happy about it" (set 1 day ago)
 
Location: WA
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Too many people focus on what they see here in the US and miss this trend that started in Japan and most of Europe. The population growth in this world is being driven by undereducated, poor, and mobile (not necessarily law abiding) segments that will affect all of us much sooner than you expect. First impacting populations financially and politically and then directly affecting our quality of life.
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