Demographics & Economics

[Kane]

I think this will be a large developing field of study in the near future. Edward Hugh in Spain has been focused on this data for months and is using it to show just how disastrous the EU policy towards the periphery has been (But I believe he argues in favor of dissolving the EU monetary union as he is not in favor of additional government spending in some instances such as Japan).

Let's discuss current trends in the US:

1) Student Debt: This problem is quite literally destroying future economic potential in this country. It's targeting recent college grads and depending on what degree was obtained and which school you went to, you may be saddled with so much debt that your ability to purchase a house is pushed back by a decade or more, your discretionary income is depressed, and your ability to acquire further skills/education is seriously hampered. Household formation rates may begin to reflect this as the gravity of the issues come to bear (As much of our current woes are, I believe, derived from the crash). I'm not in fear of an increase in delinquencies to any massive degree, not yet anyways, but I do believe that by allowing this problem to persist we are seriously damaging future potential. Our economy is more service based than ever before and we are graduating students that will not be able to take advantage of those services for decades. This is also occurring as the industries most in need of employees require four year or advanced degrees. It should also be noted that those with high paying jobs are just as vulnerable, a dentist today might spend $350K getting accreditation and certification complete. It should be quite clear that this has the potential to impact those benefiting from the degree in the long term as well as those unable to obtain a degree at all.

I am not in favor of paying off all student debts forever and making it permanently subsidized but we need to recognize that: Trade Schools will not solve this problem. Telling kids to avoid college is akin to telling our nation to settle for less. Why? There needs to be a solution to the problem that makes upper education obtainable so that freedom of opportunity is restored to all social classes. This system is entering a spiral in which the poor and lower middle income households are losing access to education that matters and thus decreasing social mobility. That is a serious issue.

2) Employment: The labor market sucks. The participation rate or emratio out of the St. Louis Fed for 25 to 49 year olds (I think it's 49) is still well below historical averages. Recent college grads aren't only competing with ever increasing student debt loads, they have limited employment opportunities. Most internships are unpaid which makes living on ones own while paying back astronomical student debt impossible. And that's if they can get an internship. Add to this the fact that since the crash the should be retiring boomers are staying in jobs longer to recoup losses on 401ks, equity investments, etc. Potentially even a loss of a house.

3) Boomers: With all of the above occurring we have a large tide of boomers set to retire. This will increase the burden on future and current graduates as there will be fewer workers per retiree. They will also be living on a fixed income which will deter typical spending patterns more commonly associated with the US consumer.

These all point to a long term slow down (Further than what's happening now) in economic output as consumers consolidate their incomes further than even now (With the slightly increased savings rate). If these trends remain constant we are setting course for a path of economic stagnation, at least until the boomer hurdle is overcome. And to wit, this is not a problem specific to the US, China and the EU have a similar fate looming and the the EU might already be in it (Demographic trends in the peripheral nations most hit by the crisis are wholly discouraging, the emigration rate out of Portugal recently hit the record set in 1961 - the entire periphery is suffering a brain drain).

Thoughts?

[The Dharma Bum]

The sum total of human knowledge is the heritage of all. Advanced education in this knowledge is a right and ought to be extended to any that want to take advantage of it. Trying to make educated people a privileged class and monetize entry into this class is the crux of the problem. It commodifies the individual, and thus interferes in their freedom and autonomy.

The problem is unsolvable in the context of today's higher education system, which is basically concerned with teaching a specialized skills to someone who is headed to a compartmentalized organization. Thereby management is able to maintain granular control over the work force at the cost of the flexibility of systems that allow individual autonomy.

[Mr.Bill]

[The Dharma Bum]

That raises a good question. What is it about our system that causes these things to cost more here than it does elsewhere?

[Kane]

Obsession with profitability at all other costs. Rigid opposition to government funding of anything.

[The Dharma Bum]

JP Morgan makes .31-$2.30 per transaction made with a SNAP card. There's no real opposition to social funding from the corporate world. It's JP Morgan that wants more people on food stamps, not Obama.

That's around 560 mil taken off the top of the program by profiteering in 2012.

[lnrw]

Once the government is forking over money, the pigs will already have their places at the trough.

Would not adding state funds to any cause, draw out the flies?

I find the spiral analysis to be correct.

But how will you spend more government money when there is far less to go around? The boomers will be a huge burden and if Kane's analysis is right, and I agree with that part, then there promises to be less money and more dependency on something that may not be there.

It's not like the gov isn't spending a pile of money. They are.

Things do cost too much and you can look at the most ginormous government on the planet as being the primary culprit. They take far too much, and they do not deliver. I don't see the J.P. Morgans of the world as a separate issue, because they are the pigs at the trough and the gov is joined at the hips with them.

The benefits are less and less and the cost is more and more for less and less. We're basically in the same sort of situation that Greece was in. In so far as we recognise that we have to cut spending, but just don't want to.

[lnrw]

[Mr.Bill]

[Kane]

Food stamps can't provide a job, give a person's life a bit more meaning. They're playing with fire.