Demographics

[HenryTo]

This is the obvious solution that I see as well. I see no reason why people should TOTALLY stop working at 65 - unless you find something much better to do and that won't bore you if you're to spend 40 hours a week on it. This will keep your mind sharp as well - especially for today's educated labor force. Working part-time or as a consultant would make one's retirement life much more enjoyable, I think. Golf is only fun if you can only play it twice a week.

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FT.com
Lex: Demographics
Sunday October 9, 3:35 pm ET

The rapid ageing of the developed world is too often regarded as an inescapable doom that will drastically slow economic growth.
It is certainly true that demographic trends are hard to reverse. Moreover, the obvious remedies raising fertility rates and immigration run counter to prevailing social and political trends. That makes the extension of working lives, however unpalatable, the obvious solution. The good news, using numbers crunched by Goldman Sachs (NYSE:GS), is that this could make a big difference, even if implemented gradually.

Assume that labour force participation rates rise over the next two decades, so that each five-year group of workers is by then working at the current rate of the immediately preceding cohort. In other words, by 2025, there should be as many 55-59 year-olds working as there are people aged 50-55 working today.

Under this scenario, the combined workforce (defined as 15-70 year olds) of Germany, the UK, France and Italy would grow by 5 per cent rather than declining by 7 per cent. In Japan, the workforce would still shrink, but by 9 rather than 15 per cent. And in the US, it should rise by 17 per cent, in line with general population growth, rather than by just 10 per cent.

The pay-off would be huge. Basing its calculations on a model of total-factor productivity, Goldman projects substantially faster economic growth over the next 20 years than under today's base case. Trend growth in Europe would rise to 2.2 per cent a year, 0.6 percentage points faster than otherwise. US growth would rise by half a percentage point to 2.8 per cent and Japanese growth would rise 0.3 percentage points to 1.5 per cent.

As a result, GDP per capita in Europe would be 12-16 per cent higher than under today's base case, making its citizens thousands of dollars a year better off. US incomes would gain 11 per cent and Japanese ones 7 per cent. Enough, perhaps, to finance a decent pension for those who make it to 70.

[rffrydr]

The great migration south is fading:

http://www.chron.com/disp/story.mpl/headline/biz/6326262.html

[HenryTo]

This is definitely one of the most anticipated census count ever. The $14 billion budget is definitely worth it in spades given all the demographical information we would obtain from this census:
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Census Bureau said behind schedule for 2010 count
Mar 05 09:51

By HOPE YEN

Associated Press Writer

WASHINGTON (AP) -- With the 2010 census fast approaching, computer glitches, operational missteps and ballooning costs could overwhelm the government's ability to conduct the once-a-decade count of the nation's population, congressional investigators said Thursday.

Reports released by the Government Accountability Office show critical preparations for the 2010 census are behind schedule and the Census Bureau has no clear strategy for improving the count of hard-to-reach minorities.

The reports are the latest to highlight difficulties for the census, which now costs $14 billion and has been beset by partisan bickering. Disagreements over the handling of the census were part of the reason that President Barack Obama's pick as commerce secretary, Sen. Judd Gregg, withdrew his name last month.

The GAO found that the bureau had failed to complete checks on several of its systems that are used to compile address lists that will be critical to mailing out census forms, canvassing homes and following up with people who don't submit responses.

Partly faulting a lack of "executive-level oversight," the GAO said the bureau, which has been operating without a permanent director since January, had set questionably short timelines for completing its work that would put it behind in delivering maps to field offices.

Investigators also found the Census Bureau lacked specific plans to improve participation from minorities. They noted a special challenge in reaching out to Latinos and people of Middle Eastern descent, who could be particularly skittish due to immigration raids and other stepped-up law enforcement since the Sept. 11, 2001, terrorist attacks.

"Uncertainties surround the bureau's readiness for 2010," wrote Robert Goldenkoff, GAO's director of strategic issues, who was testifying Thursday in back-to-back oversight hearings in the House and Senate.

"At a time when major testing should be completed and there should be functionality of key operations, the bureau instead finds itself managing late design changes and developing test plans," he said.

Thomas Mesenbourg, the Census Bureau's acting director, told Congress he was taking steps to fix some of the mistakes and remained confident that preparations remained on track. He noted that the bureau was now training 140,000 employees for address canvassing, the first major operation in the 2010 census, which begins later this month.

"Let me stress that the Census Bureau is on solid ground as the 2010 census begins," Mesenbourg said in prepared testimony to a House Oversight and Government Affairs subcommittee. "We are poised to meet the enormous challenges in front of us."

The GAO also faulted budget planning for the census, saying the bureau lacked procedures to ensure it provided Congress "reliable cost estimates accompanied by sound justification."

In its 2010 budget request, the Obama administration increased Commerce Department funding by $4.5 billion to ensure it has "the resources it needs to complete the 2010 Decennial Census effectively, efficiently and on time." The department, which oversees the Census Bureau, also received $1 billion in the economic stimulus package.

Obama has yet to name a new Census Bureau director to lead the high-stakes count, which will be used to redraw congressional districts and distribute federal money. Last week, Obama introduced former Washington Gov. Gary Locke as his nominee for commerce secretary after Gregg withdrew.

Early attention to head the Census Bureau focused on Kenneth Prewitt, a former director who led the 2000 census, but Prewitt last month withdrew his name from consideration.

After Gregg was nominated in February, black and Latino groups questioned his commitment to the Census Bureau given his past record in seeking to limit the agency's budget. That prompted the White House to indicate it might take greater control over the bureau.

But amid GOP criticism -- and after the nomination of Locke, an Asian-American -- the White House clarified that it will "work closely with the census director" and said the Census Bureau would not be removed from the Commerce Department.

House GOP leaders have since called for a census free from "partisan interference" from White House chief of staff Rahm Emanuel, the former chairman of the Democratic Congressional Campaign Committee. The lawmakers threatened to file a lawsuit if the White House becomes overly active in deciding how the 2010 census is handled.

[victor]

John Mauldin explains in his book Bull's Eye Investing that the aging economies are facing an economic problem (supply and demand) rather than a financial problem (savings and consumption).

A very very very simple example:

Take you have 3 workers for each dependant. Take that every worker produces 10 units, so you have 30 units to feed 4 people: 3 workers and 1 retired.

Imagine, no matter why, a near future where society becomes 2 workers and 2 dependents. Take that productivity has increased to 12 units/worker.

The final result is that the output will be 24. That means a) less output and b) more dependants. Are the producers (workers) going to tolerate this?

Mauldin's says that (and here is when it gets interesting) it actually doesn't mind what the baby boom dependants have saved along their working years. The problem we are facing is about supply and demand. Offer will be 24 units, demand will be more than that. Too many dollars (or shares, bonds, gold,...whatever you've saved) chasing too few goods.

You hold one Cisco share knowing that today it can buy a meal, and hoping that whenever you retire it will be able to buy several meals and maybe a SUV. Well... don't take for sure.

Mauldin concludes that we will have to work longer.

I'm not John Mauldin and I'm writting in a language that not's mine, but I think you get the idea. For a much better understanding of the underlying dynamics take Bull's Eye Investing. It's worth the price.

Best regards.
Victor