»  Taki's Magazine

November 16th, 2010

  From Baby Boom to Bust


Barack Obama's election to the U.S. Presidency was an anomaly, a lurch backwards. Or better to say, perhaps, that it was a defiance of the apparently inevitable: a standing athwart history crying "Stop!"

It has been clear for ten or fifteen years, at least, that the structure of public finances that prevailed through the second half of the 20th century in all the Western nations — what one might call the Boomer Economy — would soon become untenable.

A nation with a big supply of energetic young people, plenty of work in low-level technical or manual positions, and a strong work ethic, can afford extensive and expanding public services. A nation with below replacement fertility, lots of healthy octogenarians, a dwindling supply of craft jobs, and a disdain for manual work, can't.

The cratering fertility rate means that you will soon have a diminishing number of adults in their prime productive years to tax-harvest for government revenues. Those swelling numbers of octogenarians strain whatever parts of the pension and healthcare systems are publicly funded — even as they expand them, since no model of private provision can cover the 20-40-30 life path: 20 years of education, 40 years of work, 30 years of retirement.

The loss of craft jobs puts pressure on governments to create unproductive make-work desk jobs for the second quartile of ability in their populations. A person who, a couple of generations ago, might have been an inventory clerk or a production-line supervisor is now a GS-8 or administrative assistant in a college or hospital, some portion of his salary drawn, directly or otherwise, from the public fisc.

Meanwhile the disdain for manual work encourages the infantile fantasy that all citizens are entitled to well-paid middle-class jobs, with the consequent need to import unskilled foreigners for the rest, putting further demands on government resources in healthcare, education, and law enforcement.

The Boomer Economy trended towards socialism because it could. The huge technical advances that followed WW2 — Air travel, telecommunications, and all the wonders of electronics, from TV and hi-fi to computers — generated wealth on a scale never seen before over large areas. It was reasonable to ask that some of that wealth be taken by government for redistribution to the old, the sick, the helpless. It was entirely human that the standard of reasonableness suffered slippage as the decades went by — imperceptible slippage year by year, but cumulatively devastating.

Cumulatively devastating. I grew up in the 1950s in a street of working-class people in a provincial English town. Every house was a nuclear family: Mom, Dad, kids. The men all had jobs. Still today, fifty years later, I can read them off, house by house along the street. My Dad was repo man for a furniture company. On one side of us was a butcher, beyond him a jobbing carpenter, then a worker at the local brewery, then a railroad worker. Going the other was a bus driver, a cinema projectionist, another brewery worker, a truck driver … all down the street. Down there, near the bottom of English society, everybody worked.

Now I read that currently in Britain, one person out of four lives in a household where nobody works. One out of four! Nobody works! There are probably quite large areas of the U.S.A., perhaps entire states, where the same is true. That's what I meant by "cumulatively devastating."

Not that there wasn't some resistance to the socialistic trend, at least in those nations with a strong tradition of expressive individualism and personal independence — which mainly means the Anglosphere. In the 1980s we got Reaganism, Thatcherism, and their lesser offspring elsewhere — like the "Rogernomics" of New Zealand's finance minister Roger Douglas. (A friend of mine who was in New Zealand at the time claims to have met the last employee of the NZ Forestry Department, which just a few years previously had employed thousands on government salaries. Douglas privatized the whole shebang.)

In the long run, though, that was just a blip. Margaret Thatcher used to complain of the "ratchet effect." When the Left is in power, they turn the wheel of socialism forward a few clicks. When the Right is in power, they slam down a brake, so that the wheel can't go forward for a while. It never goes backward, though.

That's an over-simplification: pre-Thatcher Britain had a nationalized auto industry, a thing Thatcher got rid of, that has never come back … well, not in Britain. On the large time-scale though, Margaret Thatcher was correct. The welfare state of 1979 was puny compared with its equivalent today. Those of us who like to find numerical patterns in things might note that from WW2 to the Thatcher-Reagan victories of 1979-80 was 34-35 years, about the time it takes a generation to come up to full maturity. Another cycle of that size gets you to 2013-2015.

And here we are, with 2013 just over the horizon. The Boomer Economy is no longer tenable, and thoughtful people all know it. Many countries have acted on the knowledge, including some surprising cases. Did you know that in Sweden, of all places, government spending as a proportion of GDP has shrunk by ten percent since 1993? Sweden! In France they are raising the retirement age; in Britain they are slashing social-welfare spending; in Ireland they are cutting everything in a desperate effort to avoid a Greek-style national humiliation.

That's History at work; and here's Barack Obama, standing athwart history yelling "Stop!" As the need for a complete break with the Boomer Economy, a comprehensive divorce, becomes ever more plain, here is Obama renewing his vows to it. As our debts and our obligations simultaneously soar into the trillions and tens of trillions, here is the President of the United States promising more, spending more, guaranteeing more.

It was an astonishing thing, that we elected this man when we did; and it is a tragic thing that his predecessor, who had the political capital and support to address the coming crisis, did less than nothing. They were of course both Boomers; and I suppose you could defend Bush by pointing out that as an early Boomer, his commitment to the Boomer mentality was more forgivable than that of Obama, a late Boomer.

Whether Obama is the last of the Boomer presidents is for the future to decide. We can be sure, though, that either he or his successor — depending how long before the dam gives way — will be the last president to preside over a Boomer Economy. You can shout "Stop!" all you like, but History will have its way.