Warning: The following is a longish post, and contains things some people might consider political. It takes no partisan positions. It is a commentary on the underlying conditions upon which politics and economics will proceed over the next generation. If you wish to avoid this kind of thing, stop reading now.
So, politics is going crazy right now and everyone is trying to figure out why. Have the Republicans lost their minds? Have the Democrats sold out their base? Is the US doomed? And what the hell is going on with Europe? And why are the Russians taking an interest in our elections (even throwing government resources behind it)?
What, in fact, are we in for?
Predicting the future is a mug’s game because, most of the time, it’s impossible to get right. But sometimes, you really can boil everything down to one single factor, and this time we can.
In my Brexit post I explained a bit about the world’s demographic problem. Long story short, almost every country in the world has more old people than young people, and that’s creating huge economic and social changes. Because this is a situation that humanity has literally never had to deal with before (it’s basically the cultural equivalent of suddenly needing to breathe water), it’s creating a bunch of problems.
In the US, though, we have a different problem, and this is one we’ve dealt with before:
We have a demographic bulge chasing hard on the heels of a lost generation.
Gen X is SO small compared to the Baby Boomers that we are just now reaching wage parity with where we “should have been” at this point, based on historical trends, and that’s only because the boomers are retiring (finally!) and freeing up higher paying jobs.
But coming up right behind us are the Millenials, and they’re almost as big as the Boomers were (in terms of percentage-of-population). What’s more, their relationship to us is very similar to the Boomers relationship to the Builder generation.
When you have demographic stutter like this, you get a couple things that are VERY culturally destabilizing.
- A generation gap
Generation gaps–where the older people can’t even talk sensibly to the younger people because they inhabit different worlds–is normal when the younger generation is in their teens and still in high school. When there’s a demographic stutter, though, the effect persists into middle age.
Generation gaps are culturally dangerous, because they create discontinuity–younger people don’t acquire a natural understanding of history or heritage or the way the world works, and older people–who wield power–become unmoored from the ground-level problems that their power exists to address. A stark generation gap creates a society where almost nobody understands what’s going on–and where almost nobody wants to.This causes gigantic political divides and major political restructuring. Read up on how the Democrats and Republicans basically switched sides along the cultural divide in the late 1960s (setting us up for the culture wars we’ve been living through ever since) for a taste of what that can entail.
From the realm of politics, the generation gap brought us the Civil Rights movement and women’s lib, but it also brought us the drug war (specifically designed as a tool to disenfranchise young people and keep black communities down), the New Right, the New Left, race wars, etc..
In the realm of culture, it brought us psychadellic rock, the summer of love, and New Hollywood–but it also brought us Charles Manson, Jim Jones, the Satanic Panic (a late effect of the same demographic shifts), and a whole bunch of other crap–some of which is still ringing in our ears today.
- A jobs gap
Lots of twenty-somethings and not so many forty-somethings mean that there aren’t going to be enough jobs to go around. The Boomers marched like an invading army into the job market in lockstep between 1960 and 1975, and their entry into the job market created stagflation, declining wages, moribund unions, rising qualifications, and the general economic malaise that characterized the 1970s.
And because there weren’t enough American jobs to supply the generation with money, the goods for them to live had to come from somewhere. So, cheap foreign cars (VW and Honda and Toyota), and cheap foreign consumer goods (Chinese and Japanese electronics and trinkets) had to flood in to meet the demand–and these cheap foreign substitutes very quickly developed a superior reputation to the American alternatives, which drove American companies out of business.
Where once it was expected that wages in general would rise every year, suddenly they stopped. Benefits rose instead once job growth resumed (because benefits are taxed differently).
And, during this pinch-period, you started needing things like a high school diploma to collect garbage, or a college degree to go into electronics. This isn’t because those jobs required those things–a smart person willing to learn can pick up what they need in on-the-job training–it’s because there were too many applicants, and hiring managers needed a way to quickly thin the herd.
We are currently somewhere in the middle of our on-lining of our next demographic bulge, which would, in historical analog terms, put us in the 1969-1971 era. Not all the fundamentals are the same, so the effects won’t be identical, but I think we can extrapolate a few things.
So, here are a few things that I’m fairly certain will happen, no matter who’s in power, over the next few years:
Wages dip, then rise, for Millenials
Millenials are doing to the job market what the Boomers did, but the effect is a little less pronounced because the economy is more diverse, so it’s hitting different sectors differently. Still, we should see flat wages and eternal ennui for Millenials through about 2020-2022, after which things will get a lot better.
Interest rates are about to go way up
The Boomers are retiring. That means they’re pulling their money out of the lending markets. By about 2020, they’ll be all-out, and interest rates will go from 0-3% to 6-9% for mortgages and other prime-tethered stuff. Your credit cards will get a LOT more expensive.
Taxes will also go way up
The Boomers are going to cost us a fortune in social security and medicare, and employees are going to pay for it with higher SocSec and income tax contributions.
There will probably be another European war
Russia has the opposite problem we do–instead of too many people, they have too few even to secure their own borders…unless they re-capture the Balkans and some of the East Bloc countries (that gives them the Caucus mountains on their border, which they DO have enough people to defend). That’s why they’re moving on Ukraine now. Expect the rest of the Balkans to come soon–they only have another five years before their army is too small to do the job.
Authoritarian Political Candidates and the Destruction of Political Parties
As a result, partly, of the generation gap, the major political parties are in disarray. It’s in the nature of humans (especially ones in middle age and over) to react to uncertainty and cultural fragmentation by looking for “strong leaders” who will “help people” and “preserve our failing culture/nation/ideals/etc.” so that’s what both parties are nominating.
On the other hand, it’s in the nature of younger voters to seek more libertarian candidates. Expect a major political re-alignment along two major axes: class (working class vs. upper and middle class) and power (authoritarian vs. libertarian). This will replace our old major alignment which was forged by different attitudes toward culture (race/gender equality/immigration) and the cold war (too much to fit into a parenthetical).
in the mid-to-late 2020s through the 2050s, America is going to see the kind of prosperity it saw in the 80s and 90s
A demographic bulge sucks at the front end, but once the mass of people reaches their mid 30s, things get very, very nice indeed. We can expect a long period of stability and prosperity coming out of this shift, aided by a continually-rising floor due to other factors that I don’t have time to go into here.
The Take Away
It’s also going to be very, VERY bumpy. And this will happen no matter who gets elected or holds power. This is all the stage upon which politics is played–politicians can make things better or worse within a narrow window of possibilities set forth by reality.
Demographics is the biggest single factor shaping our reality today. And it will be for the next decade.
There are other big factors (like tech), but they pale in comparison to what demogrpahy is doing.
So, don’t worry too much. The future is bright. REALLY bright. Literally brighter than it has ever been in all of human history.
But, for a while, at least, it is going to require us all to be very adaptable and fast on our feet.