Category: Demographics

Not this Sh%$ Again

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France underwent a demographic transition in the late 1700s, with falling birthrates, and France is still here.

The Black Death in the 1300s killed off ½ of Europe’s population, and this was followed by an increase in productivity and standard of living that remains unparalleled to this day.* In fact, we know that the plague hit Poland only because of the skyrocketing wages, and the attempts of ruling elites throughout Europe to suppress those wage increases.

Japan has had falling working age populations for year, but the GDP per working age person has been growing faster than in the United States.  (Total GDP has been growing more slowly though.)

Falling populations are good for most of the population, but because of the laws of supply and demand, it means that the elites have less leverage to keep wages and other remuneration lower, so they do not do as well, so we periodically get hand wringing articles from journals of conventional thought, in this case from the New York Times, suggesting that the end of population growth world wide in the next 50 years or so is an oncoming disaster.

Using American Social Security numbers, if the demographic transition results in an increase in taxes from 7½% to (for example) 15%, but wages increases by 20% because dollars are chasing fewer workers (Supply and Demand, Econ 101), the most people are MUCH better off than they were before.

The only people who lose in this situation are people who employ low wage workers, because they will have to pay higher wages.

My heard bleeds for these ratf%$#s.

*Also, the increase in standard of living led to the adoption of underwear, which led to paper, which led to one of the first information revolutions, but that’s another story.

So Not a Surprise

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A study of the insurrectionist rioters show that economic hardship did not drive them to be there, it was a fear of losing white privilege.

Why am I not surprised?

The Jan. 6 assault on the Capitol by a violent mob at the behest of former president Donald Trump was an act of political violence intended to alter the outcome of a legitimate democratic election. That much was always evident.

What we know 90 days later is that the insurrection was the result of a large, diffuse and new kind of protest movement congealing in the United States.

The Chicago Project on Security and Threats (CPOST), working with court records, has analyzed the demographics and home county characteristics of the 377 Americans, from 250 counties in 44 states, arrested or charged in the Capitol attack.

Those involved are, by and large, older and more professional than right-wing protesters we have surveyed in the past. They typically have no ties to existing right-wing groups. But like earlier protesters, they are 95 percent White and 85 percent male, and many live near and among Biden supporters in blue and purple counties.

The charges have, so far, been generally in proportion to state and county populations as a whole. Only Kentucky, Maryland, Missouri and Montana appear to have sent more protesters to D.C. suspected of crimes than their populations would suggest.

………

When compared with almost 2,900 other counties in the United States, our analysis of the 250 counties where those charged or arrested live reveals that the counties that had the greatest decline in White population had an 18 percent chance of sending an insurrectionist to D.C., while the counties that saw the least decline in the White population had only a 3 percent chance. This finding holds even when controlling for population size, distance to D.C., unemployment rate and urban/rural location. It also would occur by chance less than once in 1,000 times.

Put another way, the people alleged by authorities to have taken the law into their hands on Jan. 6 typically hail from places where non-White populations are growing fastest.

CPOST also conducted two independent surveys in February and March, including a National Opinion Research Council survey, to help understand the roots of this rage. One driver overwhelmingly stood out: fear of the “Great Replacement.” Great Replacement theory has achieved iconic status with white nationalists and holds that minorities are progressively replacing White populations due to mass immigration policies and low birthrates. Extensive social media exposure is the second-biggest driver of this view, our surveys found. Replacement theory might help explain why such a high percentage of the rioters hail from counties with fast-rising, non-White populations. 

There are legitimate economic causes of unrest in the United States, but a fear of losing privilege seems to be driving the worst of the extremism.

Ummm ……… the Solution Here Is Straightforward. Better Pay and Benefits.

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Over at Aviation Week, there is much hand wringing over the fact that their workers are retiring, and they can’t find replacements:

There are two statistics that haunt the U.S. aerospace and defense (A&D) industry when it comes to its workforce: 10% and 2.6%.

 The first, according to Aviation Week’s 2016 Workforce Study, is the percentage of the overall workforce who were qualified to retire in the past year. The second is the percentage that actually did.

 Industry faces a potential crisis in its workforce, just not the one that formerly predominated. For sure, defense prime contractors, OEMs and top-tier suppliers continue to fear the mass departures possible as the baby-boom generation begins reaching the traditional retirement age—65—en masse. At the same time, employers would like a little more actual turnover because they are eager to staff their companies with the new and younger talent offered by technology-oriented “millennials” because they fear losing those Gen Y workers to the lure of Silicon Valley.

 “While retirements are of concern, so too is attrition,” the study says. “As the industry comparison illustrates, the attrition rate for A&D is low, with only the chemical industry coming close to a comparable rate.”

 ………

 But the business risk of seeing so many skilled, experienced workers leave in a relatively short time remains a deep concern, and for good reasons that have been widely documented. According to a National Bureau of Economic Research July working paper by Nicole Maestas, Kathleen J. Mullen and David Powell, economies face a double whammy of lost productivity and lost labor capacity as working populations exceed 60 years old.

Gee you need something in short supply, if only there were some medium of exchange that would allow you to adjust the value that you assign to it based on that scarcity.

If you are losing skilled staff, then you need to set pay or benefits or job security at a level that will attract a sufficient number of skilled replacements.

This is a Feature, Not a Bug

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You are no doubt aware of how proposals for tax advantaged retirement programs, the IRA, 401(k), the 403(b), etc., have been sold.

We have been told that by allowing retirement funds to engage a the markets, higher returns can be achieved, and thus provide for a more secure retirement.

In the process, trillions of dollars have flowed into stock and other financial markets, resulting in, as the laws of supply and demand indicate, significant appreciation in asset values.

Of course, at some point, people have to retire, and at that point, they have to cash in their assets.

What happens when those trillions of dollars leave the markets.

This is going to get ugly:

This morning the Wall Street Journal ran a story which showed that 2013 was the first year in decades that there was a net outflow from 401(k) plans. The immediate reaction by many was that this is just the start of a mass exodus from the markets by retiring baby boomers, which could have huge implications on the markets in the coming years as we patiently wait for Millennials to pick up the slack with their savings in the 2020s.

………

One of the things I’ve learned over the years is that demographics play a huge role in shaping the economic landscape from everything to the unemployment and labor force participation rates to the buying habits in the real estate market to economic growth (see Calculated Risk on why 2% growth is the new 4% growth for more on this). People are quick to blame or shower praise on politicians when it comes to the booms and busts we see in the economy. More often than not, the economic success or failure of those politicians has more to do with lucky timing in regards to where we happen to be in the economic (or demographic) cycle.

So while demographics does play a large role in shaping economic growth, it’s difficult to say how the mass exodus from the workforce by baby boomers is going to affect the financial markets. It probably comes down to investor behavior more than anything. It’s fairly easy for models to predict how the demographics will play out in the U.S. and abroad in the coming years. It’s not so easy to model out how investors will react to those changing demographic profiles.

This guy is a lot more sanguine about this than I am.

Of course, Wall Street gets paid when you invest, and when your money sits there, and when you pull your money out, so the parasitic financial class will be just fine, it’s just the rest of us who will end up asking, “Do you want fries with that?” for the rest of our lives.

Preach It, Brother

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I agree with New York Times reporter Richard Pérez-Peña, that the range for the baby boom generation, 1946 to 1964, covers two distinct generations:

There is no baby boom generation.

Oh, sure, there was a baby boom: a neatly defined, pig-in-the-python bulge from 1946 to 1964. But the kind of broadly shared cultural experiences that could bind together people across that whole span? That just didn’t happen.

This year the youngest of the baby boomers — the youngest, mind you — turn 50. I hit that milestone a few months back. But we aren’t what people usually have in mind when they talk about boomers. They mean the early boomers, the postwar cohort, most of them now in their 60s —not us later boomers, labeled “Generation Jones” by the writer Jonathan Pontell.

I never had to worry about being drafted and sent to Vietnam.

I wasn’t a part of the job market until after the post war economic dynamism, along with the great compression between rich and poor, had ended.

I do not remember the Kennedy assassination.

I do not remember when the Beatles came to the US.

I do not remember the civil rights protests.

When I entered college, it was Punk and New Wave, not folksong inspired protest songs.

I have never felt any kinship with the generational experiences of the early Boomers.

I would also note that my experience is somewhat atypical, I was born in 1962, and lived in Alaska from 1963-1969, so I missed the 60s even from the perspective as a child.

Alaska was much more isolated than it is now.  It didn’t even get direct dialed long distance until after we left the state.

Where the Conventional Wisdom is Wrong

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This New York Times article about German authorities freaking out about Germany’s falling birth rate:

At first glance, this town in central Germany, with rows of large houses built when it was a thriving center of toy manufacturing, looks tidy and prosperous. But Heiko Voigt, the deputy mayor here, can point out dozens of vacant homes that he doubts will ever be sold.

The reality is that the German population is shrinking and towns like this one are working hard to hide the emptiness. Mr. Voigt has already supervised the demolition of 60 houses and 12 apartment blocs, strategically injecting grassy patches into once-dense complexes.

“We are trying to keep the town looking good,” he said.

There is perhaps nowhere better than the German countryside to see the dawning impact of Europe’s plunge in fertility rates over the decades, a problem that has frightening implications for the economy and the psyche of the Continent. In some areas, there are now abundant overgrown yards, boarded-up windows and concerns about sewage systems too empty to work properly. The work force is rapidly graying, and assembly lines are being redesigned to minimize bending and lifting.

In its most recent census, Germany discovered it had lost 1.5 million inhabitants. By 2060, experts say, the country could shrink by an additional 19 percent, to about 66 million.

Demographers say a similar future awaits other European countries, and the issue grows more pressing every day as Europe’s seemingly endless economic troubles accelerate the decline. But bogged down with failed banks and dwindling budgets, few are in any position to do anything about it.

………

If Germany is to avoid a major labor shortage, experts say, it will have to find ways to keep older workers in their jobs, after decades of pushing them toward early retirement, and it will have to attract immigrants and make them feel welcome enough to make a life here. ………

This is not a problem.

A labor shortage is not a problem.  One only has to look at what happened after the Black Death hit Europe:  Wages for ordinary folks exploded, because of  this.

The top of the feudal hierarchy was hurting, because they lost power, and wealth, relative to the hoi polloi, but that is a good thing.

Doubtless, the costs of supporting an elderly population will increase per capita, which is a sort of social safety net that did not exist in 1350, but if we look at things like a Social Security fix the costs for a timely fix are relatively low.

Even if the taxes of the 99% go up by 5%, and their wages go up by 10%, the 99% wins.

Do the math.

Ancient history, bitches, it just works.