What’s Wrong With These Pictures?

The Same Thing as This

The “Facts”“fact finding is more effective

than fault finding”

•Demographic •Economic•Political

DEMOGRAPHICS

“Of all the forces that will change the world over the next generation, demography is probably the most important”

Hamish McRae, The World in 2020

Demographics: Living Longer

1920 1940 1960 1980 200040

50

60

70

80

Life Expectancies of Males

Age

Demographics: Aging

<5

5-1

4y

15

-24

y

25

-34

y

35

-44

y

45

-54

y

55

-64

y

65

-74

y

>7

50

10000

20000

30000

40000

50000

Aging of Boomers

Population (1,000s)

1970

19801990

Demographics: Changing

White Black Asian Hispanic NonHipanic0

100

200

Population Growth: 1995-2030

Growth (%)

Economics: Earnings

199019801970196019501950300

400

500

600

Inflation Adjusted Earnings

$s

POLITICS: The Theory

“A politician thinks of the next election; a statesman of the

next generation.”

A Model of the Issue

“If the world were perfect, algebra would

actually come in handy”

The ‘Model’

•SSB = B*R•R = POP65*(RTR65)•SST = t*I*W•W = POP18*LFPR18•SST = SSB

The Result

t = B * POP62 * RTR62 I POP 18

LF18

Social Security Tax Rate (t)

1990198019700.00

0.05

0.10

0.15

SS Tax Rates: Median and High Incomes

Rate Median

High

High = 3X Median

B/I

1990198019701960195019500

200

400

600

800

Average Weekly Earnings and Monthly Benefits

$sBenefits

Wages

POP18/POP62

20302020201020001990198019701

2

3

4

5

6

Relative Size of Elderly

Young

Workers

Young (<18/>65) Workers ((18-65)/>65

RTR62/LF18

1970 1980 1990 2000 200510

15

20

25

30

Labor Force Particpipation Rate: Males >65

%

Policy OptionsLower B/I

• Lower benefits (B)

• Raise income (I)

Lower (POP62/POP18)

• Immigration (POP18)

Lower (RFR/LF18)

• Raise retirement age (RFR)

• Raise labor force participation rate (LF18)

Arnold Toynbee

“The first tragedy is that man allows himself to be victimized by the artificial environment that he has created...The second tragedy is that he could save himself from at least the direst of consequences if... he were to allow his foresight to get the better of his inertia.”

What’s Wrong With These Pictures?

QuickTime™ and aGraphics decompressor

are needed to see this picture

Intergenerational Conflict

“The baby-boom generation has crippled our economy with 13 digit debt and depleted our natural resources. Unlike our parents, we will have difficulty finding jobs,we will not own our own homes... We see the world they have left us and many of us choose to drink”