Anyone who
has read Foot's and Stoffman's "Boom Bust & Echo" or given the
matter any thought at all knows that a disproportionately large part of the
population, the "baby boomers", is rapidly moving from the productive
to the consumptive sector. Whereas, until now, the large number of boomers have
created much of the income needed to support the relatively small numbers of
retired, the boomers, as the retired, will soon depend on the support of the
relatively small number of workers who follow in their wake.
Another book has recently been written on this issue: "Gray Dawn: How the Coming Age Wave will Transform America and the World" by Peter G. Peterson. In reviewing this book for the New York Review, economist Robert M. Solow finds much of it alarming and at times foolish. Nevertheless, in recognizing the legitimacy of the problem, Solow himself falls back on solutions which have taken on some of the character of the obvious. Indeed, if there are fewer workers, the productivity of those who work will have to rise if the current standard of living and care is to be maintained. How might productivity be raised? Why, by moving savings out of unproductive government deficits and into productive private investment - etc.
All of this is well and good, if it can be made to happen. But there is one set of factors which neither Solow nor the baby-boomster authors have taken into account -- the competing alternative uses to which the income produced by the smaller, more productive labour force will have to be put. Recent events have suggested that one such use -- the production and use of military hardware -- will outweigh all other potential uses. As an example, today's Ottawa Citizen carried a front page story on how outmoded and depleted Canada's military hardware has become.
We expected a peace divided at the end of the Cold War. It has never quite arrived. In the words of the Bonn International Center for Conversion, "When disarmament got seriously under way after the end of the Cold War there was much hope for a 'peace dividend' of savings from military expenditures that could be used for other purposes. Since then, none of the competing claims seem to have been fulfilled and there is a general feeling that there was no 'peace dividend.'" Why? Perhaps because there really wasn't much disarmament.
But I would speculate that there is also another reason. Because military preparedness required such large resources during the Cold War, ever so many other things were left undone. Enormous social holes arose in the form of decaying cities, poor health, bad schools, environmental degradation, and growing alienation. These have come to rest as poor housing and homeless people, growing unemployment, overtaxed health systems, under-educated children, increasing rates of environmentally related diseases, higher crime rates (despite official statistics) and dangerous slums. These problems have become so endemic and complex as to be virtually unfixable. Money that has not gone into armaments since the end of the Cold War may have quickly fallen into a series of social black holes.
Now we seem to be coming around full circle. We are resuming the Cold War. The war against Serbia is giving extreme elements in Russia all of the evidence they need that the west can not be trusted. For the time being, Russia will remain friendly to the west because it continues to need IMF money. But, inevitably, it will rearm and it will prove hostile. China remains a question mark, but it is certain that it too is gathering evidence on the reliance it can place on the west. If Russia rearms and China remains a huge question mark, the only option left to the west is to continue to arm and remain the biggest bully on the block.
So where does this leave our smaller, if more productive, labour force in its efforts to provide a decent standard of living to the growing numbers of grays and to meet the many other demands of society? When the Cold War resumes full scale, the result will again be an enormous diversion of resources that might otherwise be used for social good. During the height of the Cold War, the United States spent some 40% to 60% of its federal budget on defense. In recent years this has come down to some 20% or less. Extrapolating current events, we can, with some confidence, expect it to rise again. Russia is a much poorer country that the US. To again achieve full Cold War status, it would have to spend a much higher proportion of its GNP on armaments. But in both Russia and the west, the next round of Cold War spending will create even larger social black holes than the previous one. Perhaps, ultimately, the winner will be the country least laid waste by social rot.
Ed Weick
