How much will the fewer younger be willing to give up in order to help the larger number of older?

Sir, John Dizard argues that It is hard to have a tax cut-driven jobs boom for the ‘real Americans’ if there are fewer of them around” “Financial world’s promises impossible to meet within an ageing demographic” October 22.

Indeed, demographics will make all so much serious, but let us not assume things are going so as to be a rose garden without that factor.

The kicking the 2007-08 crisis can forward with QEs; the ultra low interest rates that makes it easier to take on debt and in some ways introduces economic laziness; getting equity out of homes like with reverse mortgages in order to spend; risk weight of 35% on financing residential houses and of 100% when lending to the riskier SMEs and entrepreneurs who have the best chances of building future and create jobs; a mindless 0% risk weight for so many sovereigns only based on that these can print money to repay… is driving the world towards a crisis not only because of the lack of young workers, but also because of excessive unpayable debts.

There will come a day when all those young living in the basements of their parents’ houses will say “Hey ma-and-pa, you go downstairs, now it is our turn to live upstairs”… and that is perhaps even the best case scenario. Things can get to be truly ugly (ättestupa)… except perhaps if we are able to put billion of robots to productive uses (like they are trying in Japan) and tax them and share out those revenues with a universal basic income.

I have always argued that the best pension plan that exists is having children and grandchildren that love you, and who are able to work in a workable economy. Thank God I got the first… but I am beginning to seriously doubt achieving the second. 

@PerKurowski

More safer drones now- less risky feet on the ground. That’s great for now… but what about tomorrow?

Sir, Simon Kuper writes: “Every society tries to make the trade-off between security and freedom… According to Google, mentions of “freedom” exceeded mentions of “security” in English-language books every year from about 1830 through to 1985. In 1985, mentions of “security” surpassed “freedom” in books… We entered an era of compulsory seatbelts, bans on public smoking and laws against drink-driving.” “Safety first: the new parenting” October 1.

To which I would add that we also entered into the era of the risk weighted capital requirements for banks (1988 Basel I); with which regulators cared more about the short term safety of banks than about the long term safety of economy.

So when Kuper writes: “Every society tries to make the trade-off between security and freedom”, I would hold that de facto more often that represents a trade-off between short and long term security. That is because unfortunately, c'est la vie, security weakens and freedom strengthens. Simon Kuper, having cycled alone to school at age of eight, and comparing that to his daughter’s (perhaps even supervised) walk of one block to the bakery, knows what I mean.

And one major security issue is that security measures are not all equally applied. Out there, in the real world, there are still “savages” living in strengthening freedom, while we subject our young to suffer debilitating security. What that is going to mean to their future no one really knows… but while our kids are more comfortable [and “safer”] in their rooms socializing on computers, the “abandoned” are perhaps getting stronger and making the streets ever more insecure.

Don’t we wish we had the strength to allow our kids to be more savages? That strength can only come out of fully understanding and accepting the implications… we must allow them to take more risks. But it is so hard to gain acceptance for the concept that there’s nothing as risky as excessive risk aversion… especially when so many nannies are in charge.

Here we are, soon 10 years after a crisis that should have laid bare the stupidity of bank regulations that only lead to dangerous overpopulation of some safe havens (AAA rated securities and Greece) and equally dangerous under-exploration of risky bays (SMEs and entrepreneurs)… and the issue of the distortions it produces in the allocation of bank credit is not even discussed.

Sir, I do fret we, as a society, are slowly drowning ourselves in oceans of imagined security. Even our war capabilities are security driven… more safe drones - less risky feet on the ground. That’s great now… but what about tomorrow?

If our sons are not allowed to lose themselves, how on earth will they learn how to find themselves?

PS. I just refer to “sons” as I had only daughters, and both my grandchildren are girls, and you know it is not easy to live as you preach.

@PerKurowski ©