On Mon, Jun 30, 2003 at 01:22:30AM -0000, iaamoac wrote: > High unemployment would strike me very unlikely, since a large number > of retirees will have a positive impact on demand. i.e. there will be > more consumers of labor, and fewer suppliers. I don't see how this > will produce high unemployment.
Well, I think that few Americans will be willing to work enough to support the consumption of the retired baby boomers. A lot more jobs will move overseas where people are willing to work for peanuts. > Moreover, Gautam's link, which projects population trends for the > next 50 years, shows the US working age population (definied rather > narrowly at ages 20-60 years) increasing steadly by about 30% from > 2000 to 2050. That growth alone should preclude an outright prolonged > contraction of GDP. You are neglecting the other side of the equation, consumption by non-workers. When the ratio of workers to non-workers goes from 4:1 (1990) to 1.5:1 (2050 est.), GDP will likely be affected. Actually, the Goldman-Sachs paper glosses over it a little, but they do mention that economic growth will be slower after 2010 for this reason. > Indeed, in the long run, economic growth is primarily determined by > growths in productivity. I would expect the pace of technological > advancement to be unaffected by these demographics - which would also > argue against a depression. Maybe. But I wonder who is going to fund the basic research necessary for this technological advancement. US corporations have very high debt levels. The US government is going to have its hands full funding Social Security and Medicare. > Lastly, remember that monetary policy can be used to balance out the > effects of ageing on liquidity of assets. I seriously doubt that. Monetary policy is not a fundamental effect. Number of workers vs. non-workers IS fundamental. Your statement is like saying that by wiggling the gas pedal around on a Geo Metro you can coax it to outrun a Ferrari. The best you can hope for is to keep that Geo Metro going at a steady speed, and even that is impossible if you are running out of gas. -- "Erik Reuter" <[EMAIL PROTECTED]> http://www.erikreuter.net/ _______________________________________________ http://www.mccmedia.com/mailman/listinfo/brin-l
