I’m going to try something a little different here at The Glittering Eye today. I’m going to publish several posts with a unifying theme. In this instance the theme will be demographics.
Since the start of the current recession (or previous recession if you’re in the financial industry), we’ve read an almost constant stream of analyses, critiques, prognostications, and laments on the state of the economy. The preponderance of these took a sort of econophysics point of view, a view from 30,000 feet in which forces applied had deterministic outcomes. Local, regional, cultural, or demographic differences tend to be ignored.
I don’t think this view of behavioral or social phenomena is realistic and over the last few years I’ve repeatedly emphasized the local variants in the economic downturn and how that tends to obscure what’s actually going on nationally. Today I’m going to try to come up with an explanation of the changes in the economy that focuses on our changing demographics, particularly the differences among age cohorts. We’ll see how far I get.
A good place to start is with the graphic above. That’s what’s called the “age pyramid” for 2010. There are bars for each five year age cohort. The number of men for each cohort is shown on the left and the number of women on the right. It’s a straightforward visual snapshot that captures the country’s age and gender demographics in an eye-catching manner.
There are a couple of things I’d like to point out. First, half or more of the people in the country are age 40 or over. Second, fully a third of the people in the country are Baby Boomers, those born between 1946 and 1964 (ages 46 through 64).
This sounds like a very promising series of posts.
A quick glance tells you we have too many old people, too many middle-aged people, not enough kids. Short of the State taking over the procreative function (Note to self: good idea for a novel. Call it Brave New World) I’m not sure what one can do about people having fewer babies and living longer.
You forgot the obvious answer: immigration. Relaxing immigration standards and allowing for more people to enter the country. I know may conservatives think this would be the end of our great nation, but that kind of blinkered thinking has been going on for a long time. In fact, go back far enough and you’d find guys like Henry Cabot Lodge whining about Tom Tancredo’s progenitors, which makes Tancredo’s whines all the more idiotic.
As for the book idea, wasn’t that idea taken up in a Handmaid’s Tale? Not that you couldn’t do something with it.
Steve:
I’m actually very pro-immigration, although I’d prefer a mix that was less gardener and more entrepreneur.
I floated an idea long ago on my blog to essentially open the gates to anyone who could supply proof of potential: http://sidewaysmencken.blogspot.com/2007/08/crazy-suggestion.html
It depends entirely on what your objective is. The level of educational attainment of Hispanics is substantially below that of either whites or blacks in the United States. Further, immigration into this country has been overwhelmingly Hispanic over the last few decades.
If your objective is a population divided between plebs and patricians, by all means increase immigration indiscriminately as we’ve done it for the last forty years or so. If, on the other hand, your objective is something more egalitarian (as I’d prefer), we’ll need to be more selective in immigration, something I see no appetite for among the powers that be (although it’s overwhelmingly favored by most Americans).
Dave –
I thought I knew where you were going with this in the first three paragraphs, but then things wandered.
I have made the point, on this very site, as well as OTB, that key in the mix of economic issues (like wealth destruction in housing and public equities) is the demographic cycle. In a book called The Great Depression Ahead, by Harry Dent (and you have to put the sensational title behind you and just focus on some of the data) he makes the point that the zenith of the babyboomers lifetime spending pattern has just passed; if memory serves, literally in 2009. This big old rat passing through the economic snake has just passed peak spending. It shouldn’t be surprising, given that the baby boom has affected so much of economic life for 50 years, that it will similarly affect the next 20 years.
It has implications for securities markets, housing, retirement housing, consumerism – of course health care – etc.
I’d suggest a look, not because I think this guy has predicted The Next Great Depression, but for the demograpgic data, which you don’t get easily.
Drew, do you turn to the last page of mystery stories to see how things are going to end? 😉
You’re anticipating my conclusion but I’m taking my time getting there.
Dave,
I expected much more in terms of response. Our immigration that you reference has been more of a, “Well they are already here, might as well make them legal since rounding them up and shipping them home would be cost prohibitive,” than anything else. To call the last 40 years immigration policy as aimed at letting in more hispanics in a deliberate fashion is to abuse the english language in a rather x-rated fashion.
Further, even for well educated people getting into the U.S. is not easy. It can take years. Letting in more educated foreign born people would actually be reasonable given your recent education posts.
And this is why our current policies so blinkered, IMO.
A series noting that something other than taxes is relevant to economic performance is welcome.
Steve
I’m not understanding Steve Verdon’s response to Dave’s immigration comment. Steve, what more did you expect? The libertarian ideal of open borders ignores both the reality of the existence of social welfare states and the variance in human capital.
Dave correctly points out that there are problems with being non-selective in who we admit and that sheer numbers don’t solve the problem and may actually compound the problem by introducing more net tax recipients into a social welfare system thereby increasing the denominator (net tax recipients) while holding the numerator (net tax contributors) mostly constant.
TangoMan,
Getting into the U.S. is not easy if you are trying to do it legally. If you are educated and want to live here and work in a field related to your education your best bet is to come here legally.
Most illegal immigrants are low/un-skilled and can work just about anywhere and in a variety of jobs and often make more than they would in their home country. Hence there is a considerably economic incentive to do so, and shockingly people in this catagory come here.
Now if we made it easier for the skilled to immigrate to the U.S. then we might counter act, at least to some extent, the problems Dave has noted.
Dave –
😉
There are a number of caveats on the point that Steve Verdon is making about increasing legal immigration. One is that it might actually be harder to get individuals with skills to come here than it used to be.
There have been some empirical studies of relative incomes and immigration (I’d have to hunt around to put my hands on them right at the moment—I’ve cited them here before) that have suggested that there isn’t complete elasticity in movement of labor. IIRC there needs to be a substantial differential for people to move, on the order of 3X. It takes a lot for people to leave hearth and home for a foreign country.
Increasingly, the differentials are not as big as they used to be in skilled fields. For example, in OECD countries GPs make within something like 10% or 20% of each other regardless of what country they’re in. That means it isn’t as easy to get a GP to leave England or France to move to the U. S. as it used to be. And GPs from non-OECD countries pretty much have their pick of what country they’ll move to and won’t take much of a salary hit as they used to.
Increasingly, engineers and computer scientists aren’t leaving India to move to the U. S. but staying home. Wages are higher in India than they used to be, jobs in the U. S. aren’t as plentiful as they used to be, and then there’s that leaving home thing.
Dave,
I made that point on another blog earlier today, but what I’d ask is what is the limit for the U.S. and do we hit it every year? If so, then start raising it till we don’t. To make it a bit more concrete, if the legal immigration limit is 100,000 and we hit that limit every year, try setting it at 200,000 or higher. At the very least squeeze as much out of it as you can.
I made that point on another blog earlier today, but what I’d ask is what is the limit for the U.S. and do we hit it every year?
Let me play off your question on limits.
What is the limit to the population of the US? What is an ideal limit? Would it be ideal for the LA basin to have a population of 85 million, say, or for Seattle to have a population of 25 million? Should rush hour traffic ( and related delays) triple or quadruple before we reach a population limit? Should residential density similarly increase with more high rise living and more crowded parks?
Give us a sense on your vision of population limits for the US because ultimately, when you speak of raising annual limits on immigration this will only accelerate the rate of population growth for the nation and for it’s most desirable cities.