Alan Greenspan Ben Bernanke is delivering a speech in Dallas right now, creatively titled: Economic Challenges: Past, Present, and Future.
Obviously it’s the future we’re most concerned with, so we jumped down to that part, which was in fact interesting:
What about the longer term? The economist John Maynard Keynes said that in the long run, we are all dead.5 If he were around today he might say that, in the long run, we are all on Social Security and Medicare. That brings me to two interrelated economic challenges our nation faces: meeting the economic needs of an ageing population and regaining fiscal sustainability. The U.S. population will change significantly in coming decades with the combined effect of the decline in fertility rates following the baby boom and increasing longevity. As our population ages, the ratio of working-age Americans to older Americans will fall, which could hold back the long-run prospects for living standards in our country. The ageing of the population also will have a major impact on the federal budget, most dramatically on the Social Security and Medicare programs, particularly if the cost of health care continues to rise at its historical rate. Thus, we must begin now to prepare for this coming demographic transition.
His concern is in the right place… but is there actually a solution to an ageing population? Demographics, it would seem, is destiny.
And thus we go back to this chart we published yesterday on the civilian employment ratio. Even if the economy recovers and headline unemployment goes up, Bernanke is telling us that the number of civilians actually working (as a percentage of the total population) will go down.
Photo: St. Louis Fed
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