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Boomer Retirement Roundtable
Round 1 | Round 2 | Round 3 | Round 4 | Round 5 | Round 6

FROM: Clive Crook
TO: Phillip Longman, Megan McArdle
SUBJECT: Megan McArdle's Jan/Feb article
DATE: December 17, 2007

Megan was insufficiently provocative. Like Phillip, I find little to disagree with in her excellent article. But I’ll add a couple of observations, and see if I can start a quarrel.

As often when I pay attention to conversations like this in the United States, I want to point out that this is not the only country in the world. Ageing of the population is far less advanced in the United States than elsewhere. Fertility is higher here; so is immigration (though this may be changing); so is labor-force participation by the over-50s. In every major respect but one (which I will come back to) America is better placed, so far as employment and demographics are concerned, than Western Europe or Japan.

The ratio of workers to retirees stands at about 3 to 1 in the U.S., and is projected to fall to around 2 to 1 by 2030. That is a dramatic shift, all right. But the ratio has already fallen to roughly 2 to 1 in Ireland, Italy, Sweden and the United Kingdom, for example, and to less than 2 to 1 in Spain. The old-age dependency rate (the number of people over 65 divided by the number between 15 and 64; note that this figure does not take employment status into account) stands at about 20 percent in the United States, and is expected to rise to a little over 30 percent by 2030 and then level off. Italy’s old-age dependency ratio is already 30 percent; by 2030 it will be nearly 50 percent, and by 2050 nearly 70 percent. By mid-century, Germany, Japan and Spain will also have old-age dependency ratios of more than 50 percent.

Some of the difficulties Megan draws attention to—notably, paying for pensions and maintaining high rates of growth—are already apparent in these other countries. On the other hand, life as we know it has not yet stopped in Italy. Western Europe can and should be watched as an early indicator of problems ahead. But for the moment my main reaction to Megan’s article, and to Phillip’s response, was to think, if the United States has a demographic problem, God help Western Europe.

Phillip says that Megan neglects to consider childlessness (actually, she does consider it, briefly), and thus pays too little attention to loneliness in old age. “Friends will die off or move away. Spouses will pass,” he says. Well, yes, they always have. But people over 70, and 80, are going to have more friends of their age in future, not fewer. They are going to be healthier and living independently for longer, as well. Let us not forget that this is a huge advance in social welfare. As for the momentous shift from housing elderly parents in their children’s homes to housing them in retirement communities,  and later in nursing homes, this has already happened, for the most part, hasn’t it? Even in the comparatively young United States, we have been living this future for quite a while.

Phillip’s point about conservatives outbreeding liberals and turning the country patriarchal is interesting but strikes me as unconvincing. “The apple rarely falls far from the tree,” he says in defense of this view. Didn’t the Baby-Boom generation overthrow their parents’ value system? They had fewer children, at any rate, and raised them very differently. “[I]n the eyes of many if not most younger people, a Boomer without a family will be taken for an aging yuppie, a decaying narcissist, or ailing atheist—none of which stereotypes will be helpful in drawing public sympathy,” he says. I find this hard to believe. The sympathy of the working young will be tested, for sure, when their taxes rise to finance public pensions and health-care subsidies for elderly people who are more prosperous than they are, but I find the idea of an in-bred cultural hostility difficult to accept. (Moreover, if the conservative, pro-family types keep breeding furiously, won’t birth rates start rising again, and the demographic problem go away?)

I think the most intriguing question is how we Baby Boomers retiring in strength will change the way our societies see themselves. We have monopolized the culture, and won’t let go—still we worship the youth we no longer have. We have marginalized, mocked or ignored the elderly. Does that fate now lie in store for us, or will we change the rules to our benefit, yet again, through sheer weight of numbers? I know we will try. Perhaps we will succeed.

I said I would come back to the one respect in which the United States is worse off, demographically speaking, than other comparably rich nations. Again it is something that Megan touched on: health care. Medicare combines European-style universal coverage with American incontinence (forgive the expression) in outlays. It is a fiscal catastrophe in progress, and one way or another will have to be addressed.

Next page: Megan McArdle responds

Page 1: Phillip Longman launches the discussion

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