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To: LindyBill who wrote (99614)2/9/2005 9:10:27 PM
From: LindyBill  Respond to of 793625
 
Best of the Web Today - February 9, 2005

By JAMES TARANTO

America's Winning Streak
Not so very long ago, American opponents of the Bush administration were rejoicing in the election victories of anti-American or anti-Bush candidates in such countries as Germany, South Korea and Spain. They've been awfully quiet of late, and little wonder: In recent months President Bush has been doing very well in elections around the world.

In October, Australians resoundingly re-elected the pro-American government of John Howard, and Afghans voted for the first time. In November, of course, President Bush won a second term, a prelude to the triumph of last month's Iraqi elections.

There's more: Yesterday "Danish Prime Minister Anders Fogh Rasmussen's center-right coalition government retained power in the general election," Agence France-Presse reports from Copenhagen. Denmark has troops in Iraq, "something a clear majority of Danes are opposed to" according to AFP, but this wasn't the main issue in the election, which centered on immigration and taxes.

The AFP report has a wonderfully whiny quote from Mogens Lykketoft, head of the losing Social Democrats: "It's a very unreasonable and unfair result and it pains me that we have to deal with the center-right government, supported by the DPP [Danish People's Party], for another four years." No doubt John Kerry* feels his pain.

Columnist Greg Sheridan of the Australian notes another recent victory:

So here's the scenario. A conservative prime minister, much reviled by the liberal press and disliked personally by all the left-wing intelligentsia, sends hundreds of his country's troops to Iraq in support of the US operation there and in the next general election wins a victory far beyond expectations.

John Howard, right?

No, the scenario was played out by Thaksin Shinawatra in Thailand last weekend. . . .

Thaksin did not send troops to fight the Iraq war, but despite its being generally unpopular he did send two consecutive troop deployments of 450 soldiers for the peacekeeping phase. And despite some Thai fatalities he did not bring his troops home until the scheduled end of the second six-month deployment.

An exception of sorts is Ukraine, whose newly elected President Viktor Yushchenko says he will withdraw the country's troops from Iraq. Yet the Bush administration supported Yushchenko's challenge when the party in power tried to steal the election. Promoting democracy is in America's interests even if the democratic process sometimes yields results we don't like.

The haughty, French-looking Massachusetts Democrat, who by the way delivered weapons to the Khmer Rouge.

Fleeing for Good
Sen. Mark Dayton, the Minnesota Democrat who fled Washington in October because he feared a terrorist attack but returned after President Bush's re-election, is leaving the capital for good. St. Paul's KSTP-TV reports Dayton will retire from the Senate after just one term:

Dayton had been seen as vulnerable in a run for a second term. Late last month, a Star Tribune Minnesota Poll found Dayton's approval rating had fallen to 43 percent.

Dayton's departure from the race presents a major opportunity for Republicans in a state that has become increasingly more friendly to GOP politicians. Among those considering bids were Congressmen Gil Gutknecht and Mark Kennedy, as well as former Senator Rod Grams, who lost to Dayton in 2000.

Minnesota is a longtime Democratic bastion in presidential races, last backing a Republican in 1972. But in 2002 the GOP won races for both senator and governor, and John Kerry's margin last year was only 3.5%. You can bet the GOP will be eyeing this seat.

Getting Prickly
The Chicago Tribune declined to publish Monday's Prickly City comic strip, which made a joke at Ted Kennedy's expense, Editor & Publisher reports. In the strip, one character says, "Did you hear what Ted Kennedy said during the Condoleezza Rice confirmation? 'They lied and people died.' " The reply: "Wow! Ted Kennedy said that? Was he driving?"

The Trib says it pulled the strip not out of sympathy to Massachusetts' senior senator but because Kennedy didn't actually utter the quote. Cartoonist Scott Stantis says his syndicate fouled up:

Stantis said he knew "They lied and people died" wasn't a direct quote from Kennedy. The cartoonist condensed and paraphrased what Kennedy had said into those five words, and didn't put them in quote marks before sending the strip to Universal. The syndicate, according to Stantis, inserted the quote marks.

"Of course, they have an absolute right to edit their newspaper," Stantis said of the Tribune.

Mary Jo Kopechne could not be reached for comment.

The Good Old Days Are Here Again
If you're nostalgic for the 1990s, check out the article in today's New York Times about the indictment of a fund-raiser for Sen. Hillary Clinton:

In August 2000, Bill and Hillary Clinton attended a Hollywood fund-raiser billed as a tribute to a president ready to leave the White House after eight years and a first lady seeking to establish herself as a force of her own in American politics.

The guest list reflected the glitter of the occasion: Cher, Diana Ross, Brad Pitt and Patti LaBelle, to name just a few. But a person who later emerged as perhaps the most memorable--to the Clintons and their associates, anyway--was a well-connected figure with a checkered past who helped organize the event. He is Peter Paul, a man who pleaded guilty to cocaine possession and trying to defraud Fidel Castro's government out of millions of dollars in 1979, among other things.

Mr. Paul said he spent nearly $2 million of his own on the fund-raiser as a way to curry favor with Mr. Clinton, and photographs show him chatting with Mr. Clinton at a dinner table, having a discussion with Mrs. Clinton and striking poses for the camera with both of them.

Associates of the Clintons say the couple did not know of Mr. Paul's troubled past at the time, and in the months after the event, Mr. Paul turned on the Clintons, later urging investigators to look into the fund-raiser.

Clinton lawyer David Kendall makes an appearance in the article, as does gadfly legal group Judicial Watch. Ah, it takes us back. Still, anyone who tries to defraud Castro can't be all bad.

Also amusing is the "Times News Tracker" box on the right side of the Web page, which offers the following topics: "Clinton, Bill," "Clinton, Hillary Rodham" and "Frauds and Swindling."

Slavery: Blame America First
In a review of a PBS documentary called "Slavery and the Making of America," Washington Post TV critic Tom Shales weighs in with this observation:

In his State of the Union address, George W. Bush said Americans should congratulate themselves on turning "the abolition of slavery" from a dream into reality. Now there's a man who sees the glass half full, no matter what. He'd like to view slavery, the foulest blight on the history of this great nation, as something positive, a real victory for Our Way of Life.

Of course, if Shales were capable of nuance, he would see that it is true both that slavery was the foulest blight in American history and that its abolition was a real victory for Our Way of Life. Slavery, after all, was not just an American phenomenon, as Thomas Sowell points out:

To me the most staggering thing about the long history of slavery--which encompassed the entire world and every race in it--is that nowhere before the 18th century was there any serious question raised about whether slavery was right or wrong. In the late 18th century, that question arose in Western civilization, but nowhere else.

It seems so obvious today that, as Lincoln said, if slavery is not wrong, then nothing is wrong. But no country anywhere believed that three centuries ago.

Treating slavery as a peculiarly American evil reflects a weird sort of self-loathing ethnocentrism, an attitude that one's own country can do no right.

Eine Kugel, Ein Dummkopf, Ein Kuttner
Robert Kuttner, editor of The American Prospect and a columnist for the Boston Globe, endorses Howard Dean for chairman of the Democratic National committee and compares the disorganized Democrats unfavorably with the GOP:

The contrast with the unified Republican machinery is striking, where, as some obscure German didn't say, there is ein Bush, ein Rove, and ein party.

Get it? President Bush is just like Hitler! Or, uh, maybe not just like Hitler. After all, the Nazi expression was "ein Volk, ein Reich, ein Fuehrer." So we guess Bush is just like the German people, Karl Rove is just like the Nazi regime, and the Republican Party is just like Hitler.

Anyway, let's not overanalyze here. The point is that in some way, President Bush and the GOP resemble Hitler and the Nazis. The amazing thing is that even though Bush has been in office four years and Rove spells his first name with a K, Bob Kuttner is the first person ever to think of making this comparison.

Yet not everyone on the Angry Left agrees with the Nazi analogy. Baltimore's Mayor Martin O'Malley thinks Bush is more like another Osama bin Laden, the Washington Post reports:

O'Malley yesterday compared President Bush's proposed budget cuts to the Sept. 11, 2001, terrorist attacks, saying that Bush, like the al Qaeda hijackers who crashed planes into the World Trade Center and the Pentagon, has launched an assault on America's cities. . . .

"Back on September 11, terrorists attacked our metropolitan cores, two of America's great cities. They did that because they knew that was where they could do the most damage and weaken us the most," O'Malley said. "Years later, we are given a budget proposal by our commander in chief, the president of the United States. And with a budget ax, he is attacking America's cities. He is attacking our metropolitan core."

This isn't a new theme from O'Malley; as we noted, back in June he said: "I remember after the attacks of September 11, as mayor of the city, I was very, very worried about al-Qaida and still am. But I'm even more worried about the actions and inactions of the Bush administration."

Kidnap Mastermind Confesses
The SITE Institute reports that "an Iraqi by the nickname of 'al-Iraqi4' " claims to have masterminded the "kidnapping" of "John Adam," an action figure actually called Special Ops Cody. Here's the message, which SITE says was posted on "Jihadist message boards":

In the name of God, the Most Merciful and Most Compassionate,

Soldier John Adam is [only] a toy.

I am a 20-year old Iraqi young man. I am unarmed, independent and do not belong to any party or group. I apologize to all the parties and everyone, for I meant nothing by that [no harm].

The picture was a scheme that I made up with a toy that I bought with $5.

Today I am announcing that this news was made up, and that the picture was of a toy that I worked on with the help of some children.

I cannot provide any information about me because, as I mentioned earlier, I am unarmed, and any information about me might jeopardize my life and the lives of my family [members].

My apologies to everyone.

The Number 10 Is Unconstitutional!
It turns out there's someone nuttier than the Ninth Circuit. Ryan Donlon, "who was admitted to practice before the 9th U.S. Circuit Court of Appeals in June," is suing the circuit, alleging that "the certificate admitting him contains the court's seal which unlawfully contains what he believes is a tablet object representing the Ten Commandments," reports the Associated Press.

According to the AP, "Cathy Catterson, the court's clerk, said the seal highlights a woman, known as 'the Majesty of the Law' who is reading a large book. At her feet is a tablet with 10 unreadable lines on it--what Donlon believes is the Ten Commandments." Catterson acknowledges that the tablet has "the same shape" as the Ten Commandments, but "you can't read the text of it."

Just to keep us safe from religious influence, perhaps the court ought to ban from federal property any list of 10 items, including the Bill of Rights, Roger Ebert's list of the Ten Greatest Films of All Time, and David Letterman's Top Ten Ways to Make Religious History More Entertaining (No. 2: "Epic new film: 'The Ten Commandments Broken By Darryl Strawberry'). This would apply to state and local property too, though some might argue that would violate the Nth Amendment.

Then They Spat, Now We Cheer
Yesterday's item on the divergent reactions to Vietnam and Iraq veterans brought many responses from readers eager to tell their stories, and we thought we'd publish a sampling. This one is from David Kruger:

I travel for business. In the past two weeks I have witnessed American Airlines giving empty first-class seats to soldiers and an entire terminal (in Denver) giving a plane full of disembarking soldiers a standing ovation on a busy Friday night. I pity those both here and abroad who don't understand that this public, spontaneous, unrehearsed and heartfelt honoring of our men and women in uniform is a privilege enjoyed only by the proponents of a just cause.

Chris Mallow tells a similar story:

This past summer, I was traveling on business to Atlanta. As I was walking through the terminal in preparation for my departing flight, I passed a large group of soldiers, at least 100, all in battle dress, holding their gear, waiting patiently in line. Seeing that they were checking in for a domestic flight, I assumed they were on their way home, so I asked where they were headed. All responded with the same answer: "Afghanistan."

I don't know any active soldiers personally. All of the military people I know have long since retired. However, all I could do was marvel at these men. While the group was somewhat subdued, all were very pleasant, none somber or sad. Most were talking pleasantly with each other as they killed time in the line. They were a true slice of America--many different colors of hair and skin, many different accents (I heard at least four as I passed by), all standing together. They knew where they were going and why, and they did it willingly, for all of us.

All I could do was shake as many hands as possible, smile, and thank them for going. I felt prouder to be an American at that moment than at any other moment in my life.

Steven Liston, a physician, recounts his Vietnam-era experience:

I, too, was spit upon and called "baby killer" in September 1971, in the San Diego airport, while wearing my Navy uniform. That was ironic, in that I was on pediatrics as a medical intern at the San Diego Naval Hospital at that time, hopefully helping save babies' lives.

The airport Super Bowl ad brought me to tears, not of pain remembering my experience, but from pride in today's American patriots.

Kenneth Millspaugh had a bad experience with beer nearly four decades ago:

Anheuser-Busch's Super Bowl ad spoke loud and clear to me. As a 19-year-old Army private training at Fort Belvoir, Va., in 1966, I visited the nation's capital. Walking down the sidewalk, I approached three of the city's young citizens. As I passed, I felt beer running down my back. The "youth" challenged me, "Hey, soldier boy." Not a welcome sign.

With a beer-soaked back, I walked away, and thankfully they did not follow. They had me surrounded, the poor bastards. Now, 39 years later, I get a vicarious welcome from Anheuser-Busch. God bless America, and thank God I lived to see it.

And Tom Reynolds sums up the differences between then and now:

My son is a Marine reservist who was called up to serve in Kuwait and Iraq to topple Saddam Hussein and liberate his millions of victims. Upon his return, we took a family vacation in December 2003, which found us having dinner one night at the Hollywood and Vine restaurant in Disney-MGM Studios. Being myself a veteran and proud father, I asked the staff if they had something special I might arrange to commemorate his return.

To my surprise, they made a very extravagant presentation and involved the rest of the restaurant's guests. They gave my son a standing ovation.

Later, as he chided me for causing him embarrassment, I told him I didn't do it for just him. I did it for the other guests too. Despite what some foolish pacifists or the head-in-the-sand media think, many people need and want to acknowledge our servicemen. Soldiers are applauded entering JFK or disembarking a plane in Portland by a citizenry both thanking the individual and making a public statement of support for the values for which this country stands.

To me, the Anheuser-Busch ad is successful because it reflects a current attitude and practice the media won't report. The war in Iraq isn't Vietnam; it's not a quagmire, and it's not something the media are going to spin as dishonorable or as a failure.

What Would We Do Without Experts?
"Expert: Sexual Predators a Menace"--headline, St. Petersburg (Fla.) Times, Feb. 9

It's Not the Crime, It's the Coverup

"[Virginia's] House of Delegates passed a bill Tuesday authorizing a $50 fine for anyone who displays his or her underpants in a 'lewd or indecent manner.' "--Associated Press, Feb. 9

"A Collection of Briefs From the State Capitol"--headline, Associated Press, Feb. 8

Where Are the Rest Deployed?
"Most of the Air Force's 58 Predators are deployed around the world, but officials could not discuss the locations."--CNN.com, Feb. 9

No One's Done That in Almost 2,000 Years
"Williams Holds Out Hope for Reversal of Execution"--headline, Contra Costa (Calif.) Times, Feb. 9

Look Out Below!
"American Tosses Pillows Off Most Domestic Flights"--headline, USA Today, Feb. 9

Don't Know What a Slide Rule Is For
The New York Times science section has a series of letters about the Larry Summers kerfuffle, ending with this one, from Sandra Roche of New York:

Many years ago, after taking the G.R.E. [Graduate Record Examination], I discovered that there were two sets of norms for reporting my math scores--as a woman, and as a "person."

As a woman, my scores were in the high 90th percentile; as a "person" in the mid-80th percentile.

What's the message? That as far as math was concerned, I might be a smart woman, but just an average person. I did not pursue a career in math.

Assuming the scores are normally distributed, the average would fall near the 50th percentile. Roche's score actually was well above average; the difference between the two percentile rankings means only that a large majority of those who scored better than she did were men.

If Sandra Roche had pursued a career in math, she might have known that.



To: LindyBill who wrote (99614)2/10/2005 1:08:38 AM
From: KLP  Respond to of 793625
 
Exactly what he said. And as an 'oh, BTW', he also said that if we had exactly the same birthrate as we did 15 years ago, there would be NO SS problems now, or coming up anytime soon...certainly not as we have become aware by mid century...But we don't have that same birth rate, and for sure Europe and Japan don't.

>>>Yep, it looks like, "the higher the standard of living, the lower the birth rate." Malthus undone.<<<

blupete.com



To: LindyBill who wrote (99614)2/10/2005 10:20:03 AM
From: MulhollandDrive  Respond to of 793625
 
mauldin had an excellent piece on the impact on declining birthrates in the western economies
2000wave.com

Demography is Destiny:
Is It Something In the Water?

Now, let's look away from the US, and focus our eyes on the rest of the world. If we think the retirement problems facing the US are severe, then the facts suggest the rest of the developed world is facing a major crisis. Over the next few decades, we are going to see a shift in economic and political power that is simply staggering in its implications. Let's look at facts first, and then draw conclusions.

I am going to quote at length from a study by the respected Bank Credit Analyst. Martin Barnes and his crew at BCA are some of the most respected analysts in the world, earning their reputation by simply being as accurate as any letter in the world for decades. They give us some sobering thoughts (you can see their work and subscribe at www.bcaresearch.com):

The population of the "developed countries" will drop rapidly over the next 50 years, while those of undeveloped countries, especially Islamic countries, will rise dramatically. Germany will experience no population growth and will remain at 80 million people, while Yemen grows from 18 million to over 84 million.

Russia will drop from 145 million to slightly over 100 million. Iran grows from 66 million to 105 million. Japan drops to 109 million, while Iraq and Saudi Arabia grow to 110 million. Italy declines from 57 million to 45 million, while Afghanistan grows from 21 to 70 million.

This underscores the 100-page CIA report released in July 2001, entitled Long-Term Global Demographic Trends: Reshaping the Geopolitical Landscape. The following are some quotes from that report:

"Dramatic population declines have created power vacuums that new ethnic groups exploit. Differential population growth rates between neighbors have historically altered conventional balances of power....Our allies in the industrialized world will face an unprecedented challenge of aging. Both Europe and Japan stand to lose global power and influence... The failure to adequately integrate large youth populations in the Middle East and Sub-Saharan Africa is likely to perpetuate the cycle of political instability, ethnic wars, revolutions and anti-regime activities that already affect many of these countries. Unemployed youth provide exceptional fodder for radical movements and terrorist organizations, particularly in the Middle East."

The Canadian based BCA concludes: "The cynical view is that the U.S. desire to attack Iraq is mainly about oil. That may be part of the agenda, but other long-term strategic considerations are probably at work. The growing number of young people in a number of unstable or troubled countries could work both ways. For example, there are signs that many young people in Iran want the country to move away from fundamentalism toward a more relaxed regime. The rising power of youth can be a force for positive change as opposed to instability. However, there will be a huge challenge in bringing democracy to countries that have no history of it. This will be especially true if the global economy is struggling because poor demographics are undermining demand in the industrialized world." (emphasis mine)

Let's look at some of their other conclusions (the following are direct quotes):

Declining aggregate demand in the developed world. Sharp declines in working-age populations in Europe and Japan will lead to large falls in the demand for consumer goods and real estate. Demand for aging-related services will rise, but not by enough to offset the growth-sapping impact of falling demand in the prime income-earning age group.

Full employment and labor shortages in the industrialized economies. There will not be any problem finding jobs and a negligible unemployment rate implies that real wages should tend to rise. This will be good for per capita incomes, but not for profit margins.

Steady demand growth in emerging countries. Rising populations hold out the hope that demand growth in many parts of the developing world will offset the weakness in industrialized countries. However, there will be huge regional differences within the emerging markets, with Asia likely to be the star performer, and Africa remaining mired in crisis.

Continued transfer of manufacturing production to Asia. The shift in manufacturing capacity to Asia will continue, not least because of weak demand and labor shortages in the developed world. Even the auto industry may eventually move away from Europe and the U.S. The developed economies will thus continue to become increasingly service oriented.

The welfare state will be under threat. It will be difficult to maintain the current level of public sector services and transfer payments as fiscal strains rise. It is almost inevitable that the retirement age will rise in most advanced economies and real benefits may be cut. Meanwhile, aging populations will put immense pressure on state-funded health care facilities. New medical technologies could even exacerbate the problems by creating expensive new treatments and boosting life expectancy rates.

It may be difficult to keep the euro area intact. Europe's grim fiscal outlook raises a big question mark about the sustainability of the euro zone. The Stability and Growth pact will eventually have to be scrapped, and different fiscal positions across countries will create enormous strains, given a common monetary policy and currency. Meanwhile, expanding the European Union eastwards will not alleviate Europe's demographic problems as all the new prospective members (Turkey excepted) have even weaker population dynamics than existing EU members.

China will face many of the same problems as the West. The Chinese economy currently is booming, but it too faces demographic challenges down the road. The fertility rate is below replacement level and the working-age population is projected to peak in around 2025. This will make it easier to employ those workers flowing from rural areas to cities, but, as in other countries, the aging population will create a large fiscal problem, albeit later than in the West. Other important issues discussed in the CIA report include the implications of increased urbanization in a number of unstable countries, the global spread of infectious diseases, and the adverse environmental consequence of rapid population growth in the developing world.

The long-run picture for Europe and Japan looks bleak in that a deteriorating fiscal picture will be bearish for bonds while weak aggregate demand is bearish for stocks. Those two trends would be consistent if the eventual outcome is a stagflationary environment, which could occur in the context of labor shortages and attempts to inflate out of a government debt trap. (emphasis mine)

Age Vulnerability: Your Pension or Your Life

Let's next look at a lengthy report entitled "The 2003 Aging Vulnerability Index" by the Center for Strategic and International Studies and Watson Wyatt Worldwide (Richard Jackson and Neil Howe were the authors of this extremely well researched article. They are to be congratulated for avoiding the usual indecipherable academic language and writing a very readable paper. You can read the entire piece at csis.org. FYI, Howe is also the co-author of one of the more important (and very readable) books on the future I have read called The Fourth Turning.)

The report analyzes the cost of public pension funds (like Social Security, the state retirement funds mentioned above, etc.) for 12 different developing countries. It then analyzes how the various countries will fare in the future, factoring in their economies, taxes, costs, and the actual circumstances surrounding retirement. (For instance, it makes a difference on whether you are likely to be supported by your kids or out on your own.)

In short, it clearly shows us that there will be staggering budget problems for these countries, and some more than others. The report categorizes Australia, the UK and the US as low vulnerability countries. Given what we know of potential US problems from an aging population, this means the report posits grim news for certain countries, especially the mainstay countries in Europe (France, Germany, Italy, Spain and the Netherlands). Howe and Jackson give a whole new meaning to the concept of "Old Europe."

Let's look at a few salient items:

"Today, there are 30 pension-eligible elders in the developed world for every 100 working age adults. By the year 2040, there will be 70. In Italy, Japan, and Spain, the fastest-aging countries, there will be 100. In other words, there will be as many retirees as workers. This rising old-age dependency ratio will translate into a sharply rising costs for pay-as-you-go retirement programs - and a heavy burden on the budget, on the economy, and on working age adults in any country that does not take serious steps to prepare... public benefits to the elderly will reach an average of 25% of GDP in the developed countries by 2040, double today's level."

"... In Japan, they will reach 27% of GDP; in France, they will reach 29%; and in Italy and Spain, they will exceed 30%. This growth will throw into question the sustainability of today's retirement systems - and indeed, society's very ability to provide a decent standard of living for the old without overburdening the young.... It is unclear whether they can change course without economic and social turmoil. (emphasis mine)

"For most of history, the elderly - here defined as adults aged 60 and over - comprised only a tiny fraction of the population, never more than five percent in any country. Today in the developed countries, they comprise 20 percent. Forty years from now, the share will reach roughly 35 percent. And that's just the average. In Japan and some of the fast-aging countries of continental Europe, where the median age is expected to exceed 50, the share will be approaching 50 percent."

Today, looking at the data, the five main economies of the European Union spend about 15% of their GDP on public benefits to the elderly. This will rise rapidly to almost 30% by 2040. Japanese benefits will rise 250% to 27% in 2040 from today's "mere" 11.8%.

Contemplating the Impossible Events

How do you pay for such increases? If the increase were paid for entirely by tax hikes, not one European country would pay less than 50% of its GDP in taxes, and France would be at 62%. By comparison, the US tax share of GDP would rise from 33% to 44% (I assume this includes all level of taxes). Japan's taxes would be 46% of GDP.

It should be clear to everyone that such an outcome would be an utter economic disaster. Taxes for the working population would be consuming 80-90-% of their income. It would be an economic death spiral. Whatever economic growth might be possible in an aging US, Europe or Japan will be completely squelched by such high taxes. The "giant whooshing sound" would be that of young workers leaving for more favorable working and tax conditions.

If the increase in benefit costs were paid for entirely in cuts to other spending projects, Japan would see its public benefits rise to 66% of total public spending, France and the US to 53% and Germany to 49%. Today, these expenditures are all around 31%. What do you cut? In the US, you might cut defense spending, but there is little to cut in Europe and Japan. Education? Welfare? Parks? Transportation? Medicare or health programs for the working? It gets so very ugly. Since such an outcome (50% of GDP for pensions) is impossible, long before that type of debacle is reached, other solutions, painful as they are, will have to be chosen.

The following is a quick table of when government debt reaches 150% of GDP if the various governments decide to pay for the costs by running deficits (borrowing).

Country Year
------- ----
US 2026
Japan 2020
France 2024
Germany 2033
Canada 2024

Some other gleanings: a mere 10% cut in benefits pushes approximately 5% of the elderly population into poverty in Europe - think what a 20% cut in benefits would do. Japan is ranked in the middle of the vulnerability pack, despite their poor economic outlook, because over 50% of the elderly live with their children. The three most vulnerable countries are France, Italy and Spain. Australians will live longer (86.7 years) than any group except the Japanese, who are expected to live to an average of 91.9 years.

In France, 67% of the income of their elderly population comes from public funding, in Germany it is 61%, compared with 35% in the US and Japan. These are projected to rise only slightly over the coming decades, but because the elderly population is growing so rapidly, actual outlays will soar.

Not surprisingly, if you add in medical costs, the percentage of public spending increases significantly, assuming no new benefits.

Demography Is Destiny

The world economy is currently dominated by the US, Europe and Japan. These studies suggest that there will be little or no help from Europe and Japan in regards to world growth. The world is already far too US-centric. Everyone wants to sell to the US consumer. Our international trade deficit for 2003 was over $500 billion, which simply cannot be sustained.

BCA suggests that the Japanese government debt will grow to 300% of GDP over the coming decades. To put this into perspective, that would be the equivalent of a $36 trillion dollar US debt. Even with zero interest rates, that is a staggering sum. The Japanese economy cannot handle such a deficit without turning on the printing press in a manner unprecedented for major countries. It is hard to imagine the dollar, as weak as some think it is, to drop long-term against such massive and mounting deficits which will have to be financed by attempts at inflation.

Europe is already spending a very small percentage of its budget on defense. As one wag puts it, they will be faced with the choice of "guns or rocking chairs?" With a declining population, they will be hard-pressed to find enough bodies to man their military as it currently exists.

Unless they unwind their pension promises, Europe will play a smaller role in the world of the future, notwithstanding the view from France. The role of Asia, especially China and India, will be far more significant in the future world of our children.

The problems outlined in the two studies suggest that turmoil is coming to the developed countries of Europe and Japan. They cannot pay for their promises to retirees and still grow their economies. They will have to choose one or the other. If they choose higher taxes and fewer opportunities, the best youth of Europe will vote with their feet, as did their ancestors in the 18th and 19th century. That will only make their situation worse. But can a retiring population which will be in the voting majority actually vote to cut their own benefits?

In short, for the world economy to grow, developing countries are going to have to look to themselves for growth. The aging developed countries will simply not provide the growth engine they have been for the last half of the last century.

For forward looking investors, that means there will be real business growth opportunities in the emerging markets and those countries which can sell to them.

As strange as it may seem today, in a few decades China will be complaining about cheap labor in the Middle East and Western Asia. If that sounds too far-fetched, think Japan only a few decades ago. The next stock market bubbles will be to the west of our shores.

As BCA noted, it is critical that the Iraqi experiment in democracy be successful for the future stability of the world. In 1945, there were many who thought it would be impossible for the regimented Japanese to establish a successful democracy. Today we watch as China moves to a capitalist economy and democracy. What stock market did the best in 2002? It was Russia, which not coincidentally has some of the lowest tax rates.

Call me naive, but I do not think the primary consideration for the Iraqi war was/is oil, American hegemony or establishing a democracy in Iraq. But I think that the current US administration intends to use the event to do its best to bring about a thriving Islamic democracy.

The Iraqi people are educated, are quite entrepreneurial and business oriented. Given the chance, I expect (or at least fervently hope) they may surprise many in the world with how fast they rebound. Given their explosive population growth rate, they could become an engine for growth in the region. If Bush is serious about helping Iraq, he should get rid of any and all trade barriers with the new regime and stand back and let the free market work.

Only a few years ago, we were fearful of the Chinese hordes and their army. They were the enemy. Today, our economies are so inextricably interwoven that it is our best interest to work any problems out peacefully. We now depend upon each other. If we want to find peace with the Arab world, we need to find ways to establish economic ties with them as well. If we do not, the demographic issues I outlined above will have very negative consequences for us, our children and our grandchildren.

Finally, if I were young and aggressive or starting out (or starting over) I would seriously consider learning a second and third language, moving overseas and looking for opportunity. I would learn a business here and go and reproduce it offshore. Or you could consider backing a younger person with the time and energy to start a business in a foreign country. But be prepared to travel, and even if you are "only" the investor, learn the local language and customs and be prepared for changing course quickly.