1.25.2010

Long term trends look a bit gloomy

I worry about the future.  Especially 20 years down the road.  There is a major demographic change that will occur that will surely plunge our country into a long, long recession, if not a full blown depression, not unlike what Japan has experienced.  The baby boomers are going to retire.

There are several problems with this change:
1. The outlays for Medicare and Social Security will rise.  But the funds to do so are not there.  We will need to drastically increase taxes to afford these programs.  And since baby boomers are such a large voting bloc, they will likely do so.
2. Since the baby boomers are retiring, their income will drop dramatically, so they will not be paying those taxes.
3. Businesses will lose many of their most experienced workers, thereby hurting their chances for growth and possibly their bottom line.
4. Smaller business growth means smaller profits and smaller taxable income.
5. Business stagnation will mean lower stock prices. 
6. Retirees often want to switch from growth to income investments.  There will likely be many retirees pulling money out of the stock market and into other income investments, thereby draining the stock market of much needed capital.
7.  Businesses, unable to raise sufficient capital through stock issues, will struggle to grow, further depressing the economy.
8.  Even if ObamaCare does not pass in total, sufficient changes will likely pass that will raise costs of medical care.  With an aging population, more and more of our economy will have to support their medical care (again, because they will likely vote themselves the money).  This means less capital for other industries.
9. As America goes, so goes the rest of the world.

Our best hope to avoid such a deep recession or possible depression is to remember our individual rights.  America must relearn respect for each individual and stop mooching off of others.  We must teach people about the role of individual rights and become activists in the pursuit of freedom.  We must defend individualism and selfishness and demonstrate the facts associated with looting Peter to pay Paul. 

We must become educators!

5 comments:

  1. I can't agree with you more. The coming tidal wave of entitlements will be a surprise to so many, in spite of all the warnings. I keep arguing with people that we need all of the immigrants that we can get with all of their kids. And, even if we could swing the nation to a more rational course, we will still have many retired people in peril.

    And, thank you for your kind comment.

    C.W.

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  4. Hi John,

    I really, really like your summary and call to action. The future is scary -- I don't know how these retirees will be able to pay for retirement without raising taxes. I suspect that many will work until they can't stand upright anymore.

    I'm going to forward your post to the local Tea Partiers -- it's such a clearly written look into the future, and they need to warned. But they also need to be reminded that reason and individual rights are the real issues, if they want a better future for their loved ones.

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  5. Thanks Amy. And welcome Tea Partiers.

    There is still time to change this bleak outcome...but just barely.

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