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

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

FROM: Megan McArdle
TO: Phillip Longman, Clive Crook
SUBJECT: Megan McArdle's Jan/Feb article
DATE: December 21, 2007

As any professional writer knows, there is never enough room in a piece to fit in all the interesting things you have learned. It is somewhat bewildering to recall the hours my collegiate self spent glumly contemplating the vast blank expanse of ten or twenty sheets of paper. Half of my working life now seems to be spent laboriously excising excess words to suit the space specifications of miserly editors. So I’m grateful for the opportunity to flesh out my thoughts a little, and to Phillip and Clive for providing their own amplifications on a huge and unwieldy subject.

Phillip brings up childlessness, which is certainly bound to be important. I touched on it briefly, in my discussion of why Boomers will need higher savings rates than their parents: they will need savings in order to purchase the sorts of services, often from immigrants, that they have been providing for free to their own parents. According to the US Department of Health and Human Services, one in four American families is providing some sort of home care for an elderly relative, neighbor, or friend. Clive is optimistic that in the future, older, healthier Americans will be living longer and more independent lives, and to be sure, they will for quite some time. But the services required to assure that independent living are quite costly. Without family obligated to drive them to church—or pick up the tab for your meals-on-wheels—many seniors may find that independence curtailed.

In some ways, Phillip doesn’t go quite far enough in exploring the problem; he might have added “working women” to “childlessness” as a source of future familial friction. Women are usually the caretakers of both parent and child—not merely the physical caretakers, but the people who make sure that Mom got a phone call this week and a lavish family dinner on her birthday. As women’s lives are increasingly pulled outside the family sphere, they will not be able to maintain the current level of engagement with their parents.

Those services could be hired out, if people saved enough. But even children who are not direct caregivers play an important role in supervising their parents’ affairs, particularly for the sizeable minority of seniors who experience significant cognitive decline in old age. The elderly are frequently targets of fraud. Those who require assistance from outside caregivers, either at home or in an institutional setting, are vulnerable to neglect or worse. To be sure, it's not unheard of for family members to steal from, or neglect, or even assault one another. But it is a safe bet that most Americans care more about their own parents than some strangers.

Finally, family acts as a check on the temptation that the elderly have to leave those who come after them with the short end of the stick.

When they are choosing between their own consumption desires, and the wants of total strangers, seniors for the most part act in the way that rational self-interest models would predict. As a bloc, they vote for less spending on schools, and more spending on health care and pensions. And they mostly believe that this is no more than their due, having worked hard all their lives. But when they are trading-off their own consumption, and that of their children, they behave very differently. Many, many people sacrifice their own comfort in order to leave something—the house, a brooch, a trust fund—to the kids.

Today’s elderly have already indulged the temptation to maximize their current consumption at the expense of future generations. America’s entitlement problems are simply the national version of the “I’m spending my kids’ inheritance” t-shirts popular with a certain type of senior. How will American policy, and culture, look when the numerous elderly have a lot fewer children to give them a stake in our collective future?

As Clive mentions, a good place to answer this question is Europe. Alas, The Atlantic was unwilling to give me either another 5,000 words, or an all-expenses-paid trip to Italy, whose current demographics look very much like ours will in a few decades. But even without doing Old Man on the Street interviews on the Via Condotti, I find plenty of support for my arguments in the European experience. Economic growth is slow—what passes for a boom year in Italy would have American pundits screaming “slump.” This slow growth exacerbates the ballooning fiscal problems created by health-care and pension bills, which have so far proven astonishingly impervious to political solution. In France, thousands of old people died in a heat wave; even a lavish government safety net proved no substitute for having relatives to check on you.

Europe also points the way to possible solutions. I don’t think it is an accident that Ireland and Britain have had much less dramatic pension problems than many of their European neighbors. The two nations have been much more open to immigrants (in the case of Ireland, many of them returning ex-pats), which has expanded the labor supply to help cover the shortfalls. They are also growing relatively rapidly, which gives the government more room to finesse the competing demands of workers and retirees. And they have both managed to curb the biggest cost of an aging population: exploding health-care costs. As a percentage of national income, health care spending in these two countries is rather modest compared to that in other European nations.

Perhaps because of this, I am not worried, as Phillip is, by the prospect of a growing racial and ethnic divide. In the future, low skilled workers will not be hated minority groups; they will be valuable (and probably considerably better paid) assets. Moreover, even using the most pessimistic estimates of their fiscal impact, immigrants are very cheap compared to senior citizens. As the divide between old and young widens, it will leave less room for other brands of conflict.

Besides which, I am unconvinced by the notion that we will all inherit all the problems and prejudices and pieties of our parents. Assuming current trends continue, America in 2030 will be a more diverse society, but it will also be one in which racism is less prevalent. And while cultural attitudes are heritable—unless you were born to an LDS family, you are probably not a practicing Mormon—this overlooks the fact that entire cultures undergo shifts in their opinions and politics over time. I myself am a member of one of the most reliably religious and Democratic-voting the groups in American history: Irish (Catholic) Americans. But I am neither a registered Democrat, nor a practicing Catholic. Mobility from Boston’s Irish ghettoes, and substantial shifts in the culture of my ethnic group explain almost all that change. My sister and I both inherited “Irish-American”-ness, but that inheritance no longer includes allegiance to Pope or party.

Anyway, the most important demographic group in 2030 won’t be fundamentalists or foreign-born citizens; it will be old people. Those old people will be culturally conservative in many ways, because that is the nature of aging—one suspects that the invention of clothing inspired the near-immediate counterinvention of grandmotherly complaints about the trampy outfits young girls wear nowadays. But they will be fiscally liberal, because guess who the money is getting spent on? I suspect that the generation born now will view their elders as irresponsible and excessively self-absorbed. But I suspect this will have more to do with the increasingly naked self interest of the elder lobby, than with family values or Vietnam.

Page 1: Phillip Longman launches the discussion
Page 2: Clive Crook reacts to McArdle's piece and responds to Longman