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

Over time simplewissers will always trump condescending besserwissers

Sir, Joan Williams writes: “working-class whites who feel abandoned by professional and business elites. A few…have noticed their pain, but for the most part elites’ social consciences have been aimed elsewhere, at ending racism or sexism, at environmentalism or eating food that is sustainably farmed.” “Cluelessness about class means we miss Brexit lessons” November 24

Unfortunately the working-class whites are just the tip of the iceberg. The day our young will realize that we their elders have gladly allowed banks to finance the construction of the basements where they can stay with us, but not the SMEs that could give them the jobs they need in order to also afford becoming parents, something really bad could happen.

Over the years I have had way too many opportunities for my liking to remember that not fully confirmed Viking tradition of the ättestupa, that cliff from which the elderly voluntarily jumped from when not being any longer useful to society.

@PerKurowski

And there are similar ones at Grand Canyon

There are many reasons we the aging should pray for the young allowing us to fade away with grace

Sir, Manoj Pradhan explores the question: “What will the future hold for the world’s ageing populations” and titles his article “Ageing economies will grow old with grace” October 14. That is indeed a sunny view; let’s pray for it.

When Pradham writes: “The elderly will resist moving out of their homes; a huge wave of construction will be needed to house the young and the millennials” some difficult questions linger: Are the young and the millennials willing to cast themselves as the downstairs and allow the upstairs elderly to stay in their homes? Will the savings and pension plans of the elderly be sufficient for them to stay in their homes? With retirement comes the wish to hold savings more liquid and so who is going to finance that huge wave of construction?

As I have argued for years, bank regulators, with their capital requirements based on perceived credit risk, which has given perceived credit risk too much weight, has caused a stagnant world… and to keep social structures amiable to all in a stagnant world is not an easy task. 

In March 2007 Peter Peterson, in FT, concluded his “Sacrifice can solve the entitlement crisis”, by citing the German theologian Dietrich on the ultimate test in moral society being the world it leaves for the children, and saying that “It is time for us to become worthy and moral ancestors.”

And in August 2006, finished an article I sent to FT, but that was not published with the following:

“It is said that in Scandinavia, a long time ago, when the older people felt that they stood in the way of the young, they threw themselves off steep cliffs known as an ättestupa. These days it could seem like quite the opposite, if we consider how our democracies might have been captured by us baby boomers. We need to revise urgently how our society deals with the next generations, before they throw us down an ättestupa—for damned good reasons!”

Sir, there are many reasons we the aging should pray for the young allowing us to fade away with grace.

@PerKurowski ©

When the young get hold of what bank regulators are doing to their future, they will revolt… Ättestupa?

Sir, Ferdinando Giugliano writes about an “unholy alliance in support of the elderly” that expresses itself in “sparing pensioners and older workers from the cuts their governments need to make as they seek to reduce their budget deficits.” “Left and right across the bloc unite to protect pensioners” June 26.

He states: “many pension systems will pose a rising burden on government spending. But since the age of the median voter will also rise, it will become more tempting to penalise younger workers — for example by raising taxes and social security contributions — rather than cut pension benefits…reducing the incentive to work and, as a result, lowering growth. This would undermine the stability of the very pension systems they vow to protect.”

That is correct, but it is even worse than that. In essence, by means of the credit-risk weighted capital requirements for banks, regulators have imposed on banks investment/lending criteria much more appropriate for pensioners with few years life expectancies, than for the young who need much more risk-taking in order to have a chance to obtain jobs and be able to enjoy reasonably good retirements.

It is all so unsustainable. There is no way that when the young finally understand the hurt that is being done to them, that they will not revolt… and then perhaps suggest to us the reinstatement of “Ättestupa”

Is this crisis the beginning of a clash between generations?

Just this morning walking around the park on the farm where my mother lives in Sweden I stood on top of a cliff that is rumoured to be an “ättestupa”, one of those places where Swedes of ages ago were rumoured to have thrown themselves out when they felt they had become a burden for their children. I have always doubted this particular cliff as its relative low height has seemed more inclined to cause a broken foot, only aggravating the burden.

George Magnus writes the “Recession will compound looming issue of rapid ageing” November 6, and though he does have many valid points these are all from the perspective of those on the way out. In this respect we also must acknowledge the needs of those on the way in. This crisis might in fact just be the beginning of a clash between generations.

If you are a prosperous baby-boomer with plenty of assets, then you are indeed interested in keeping the prices of shares and housing growing, and, if just a baby-boomer, to keep your job. On the other hand if you are a young with nothing but future ahead of you, you would not mind seeing the lower prices that could allow you to acquire shares or your house at a reasonable price, or to have the elderly move over so as to get a decent job. I mean, who would like to start building a nest egg for the future with the Dow Jones over 14.000?

Different types of sacrifices can solve the entitlement crisis. How about an ättestupa?

Sir, Peter Peterson concludes his “Sacrifice can solve the entitlement crisis” March 20, by citing the German theologian Dietrich on the ultimate test in moral society being the world it leaves for the children, and saying that “It is time for us to become worthy and moral ancestors.”

 

To a baby boomer like me, that sounds indeed like a gloriously grand-eloquent reason for giving up some entitlements, but I have to confess though that, back in my mind, also lies the real possibility that if we don’t give something up, perhaps even quite a lot, the children will one day tell us, “it is time for you, worthy and moral ancestors, to start thinking about an ättestupa” by which they would mean those very high cliffs where supposedly the old Scandinavians, in time of the Vikings, threw themselves from, when they became a burden to society.

The ‛rights of children’ is anything but a juvenile concept.

Sir, if the average life length of a person in UK were 80 and our democracies had anything to do with representation of interests, as in companies, then a new born should have 80 votes, a middle age 56 year old like me 24 votes and someone over eighty should count his blessings if he is allowed to keep his single vote. Of course the previous is clearly just an exaggeration, but it serves to argue in favor of the one-child-one-vote concept, in which the votes of the children are to be exercised by their mother, father or older siblings.

I say this loudly protesting the title of grownup Christopher Caldwell’s “Why the ‛right of the children’ is a juvenile concept”, February 17 and some of it contents, among it his authoritarian conclusion that “Rights over to children will either belong to parents or to the state”.

Sir, with many of our current problems such as the climate change begging for longer perspectives than next quarter’s results, is it not high time that the children, who are the ones who could really have to live in the heat, should have their interests better represented in our societies? Also, the democracies that are now turning into baby-boomer dictatorships, it could truly behoove them to allow their young to have more say, before they all in frustration decide to carry out a coup and thereafter, hopefully politely, show their elders the way to the nearest “ättestupa”, those cliffs from were supposedly the Vikings threw themselves when they became burdens to the society.

How to save ourselves from an ättestupa

Sir, if countries were open-ended investment trusts, then if the average lifespan was eighty years, a newborn baby should have eighty shares, a fifty-six-year-old consultant (like me) should have only twenty-four shares, and anyone over eighty should count his blessings and be happy with the one he’s got left. From this perspective, the representation of the young in our current democracy is null.

Lorenzo Bini Smaghi, in “How to save the young from the burden of pensions” October 18, describes precisely the conflicts that are getting more serious by the day as the graying of the democracies in Europe (and the US too) is reducing even more the low representation of the younger generations. This though is not a problem restricted to the developed countries. The World Development Report 2007 from the World Bank titled Development and the Next Generation is a truly hair raising reading that evidences our failings as a society and that most of those coming after us are giving up on participation and hope, with damned good reasons.

It is said that in Scandinavia, a long time ago, when the older people felt that they stood in the way of the young, they threw themselves off steep cliffs known as an ättestupa. In this respect Bini Smaghi, instead of talking about saving the young would be more correct phrasing it as saving ourselves, before they throw us down an ättestupa—for damned good reasons!

An Ättestupa for Mr Lind

Sir, Mr Michael Lind in his “A labour shortage can be a blessing, not a curse”, June 9, sees himself in old age pampered on a chaplinesque modern times assembly line, and happily concludes that technology will take care of the current demographic imbalances. 

Of course, his vision, where it would seem that all the remaining young concentrates on helping the elderly, ignores that a country besides that very laudable activity, also has to think of a present and a future, and generate that kind of economic growth that will help it among other to educate their new young, defend themselves and service their debt. 

If going down the Michael Lind route then the applied technology will more probably be in line with going down an “ättestupa”, meaning those high and steep cliffs supposedly used by the Nordic elderly a long time ago to throw themselves from when their time to serve society had passed. By the way, when discussing immigration with those who vigorously oppose, it is amazing how a “well if you want to take care of repaying you public debts on your own so be it” dilutes much of the certainty in their eyes. 

Sent June 9, 2006 

Note: For this letter I based myself on myself as in my Voice and Noise you can read

The practical solutions available for solving the shortage of caretakers in developed countries are the following four:

 

1. Increase their productivity, but unless you wish to run the risk of being dehumanized on a Charlie Chaplin Modern Times assembly line cared for by robots… there might be a limit to how much this can help. 

2. Move the careneeders to another place (if there are caretakers available anywhere else), and this you should do as early as possible if at an older age you do not appreciate finding yourself in strange surroundings as much as you did when younger. 

3. Import caretakers, and this you should do as early as possible if when older you do not appreciate finding yourself in the company of strangers as much as you did when younger. 

4. Give incentives for having more children and grandchildren—which is not such a crazy idea when you start considering how much society is, one way or another, currently rewarding people for not having children. (Talk about externalities!)