I believe in age demographics. I believe that in a society such as ours the age distribution of individuals has a decisive effect on what we think and what we do. For me, this distribution not only explains a large part of our current social behavior but also foreshadows much of our future. We live in a time when age demographics are the key to history.
[quoteright]It has not always been this way. During most of America's growth, the age distribution curve remained stable or changed gradually; hence its social effect was not particularly visible. But in the years after 1945 a unique demographic phenomenon was launched. Nothing quite like it had happened before, and its effects on our society became palpable. It was the "baby boom," also called the Rat in the Python.
For fifteen years or so after World War II we concentrated on injecting babies into American society. This effort peaked in 1952. Like a rat moving through a python, the resulting demographic blip then started moving along the age distribution curve, growing older year by year. In the 1960s the baby-boomers became teenagers; in the '70s they started buying houses; in the '80s they are beginning to accumulate estates. Hence a first approximation to understanding age demographics is to imagine that America was born in the years after World War II.
Another way to visualize the Rat in the Python is to measure the average age of our society. Today it is 31.6 years and growing, the oldest average we have ever experienced. In terms of influence, however, it is even older, because below age 13 the social impact of individuals drops off sharply. Hence the average age of the individuals that actually shape our tastes and actions will soon reach 40. We are truly an "aging society."
No "invisible hand" is required to translate age distribution into social behavior. We are a commerce-driven society, and commerce always analyzes its market. In general, businesses that cater to the demographic middle grow and prosper; those that don't remain small and uninfluential, although they may do very well in their chosen niche. This is particularly true of the national media. In television, for example, the loop that connects viewer ratings, advertising rates, and program content is tight and responsive. TV shows, including the news, succeed just to the extent that they target the largest possible audience. As a result, the information we all receive tends to be the information most agreeable to those of us born in the late 1940s.
By similar mechanisms the baby-boom Rat tends to elect legislators, influence judges, determine foreign policy, and manipulate our overall lifestyle. Besides being the center of the news and the focus of mass merchandising, it represents the largest community of values in the country and hence the most effective political target. By rewarding national decision-makers who cater to their tastes, those born in the late '40s establish de facto norms for all the rest of us.
How has the age of the Rat in the Python affected our history so far? Take economics, for example. During the '60s and '70s American banks and government agencies handled money like teenagers — borrow as much as you can, spend it freely, and loan what's left to your ne'er-do-well friends. They accumulated vast debts without any clear plan for repayment, ran perpetual budget deficits, and accepted IOUs from foreign countries that would normally have had little credit standing. The consequences, from the perspective of the mature Rat, are now evident: a towering backlog of unpayable debts and the habit of debasing paper money with respect to tangible property. Fortunately, the Rat is now entering the hard-work-and-savings time of life. Provided it retains confidence in paper money, the Rat will probably save more of it than it borrows. This will push down interest rates and make it easier for the bankers to sweep all those bad debts under the carpet.
In domestic policy, the aging Rat has become disenchanted with fixing social problems by a few quick tricks. Nobody talks about the "Great Society" anymore, or even about the "War on Poverty." After you reach 30 you realize that life is a very complicated business, and the less you tinker with other people's lives the less likely you are to mess them over. Thus Government by promises and flashy "programs" is giving way to steady-as-she-goes. To liberal charges that its attitude is unprogressive, the Rat replies: "Look at me — I made it OK."
In foreign policy, the Rat is becoming tired of the theory of Mutual Assured Destruction as a way of life. The idea of protecting your home by stockpiling dynamite may appeal to juveniles, who love fireworks and think they're never going to die; but it gets scary as you grow older and more cautious. Regardless of the technical merits of Star Wars, the idea of Effective Defense is much more satisfying to an adult. And if the Rat can ever manage it, the concept of Arms Control is the most mature of all.
What future social effects can we expect from the Rat? Certainly an increasingly conservative society, one based more on preserving the status quo than on trying to reform the world. A society where personal security is more important than progress, and wisdom more valued than brightness.
Does the Rat have any big surprises in store for us? The main one I foresee will happen about 30 years from now, when the Rat stops working and expects to be supported in its "golden years." As most of us are aware, the Social Security program is not a savings plan; it is a plan whereby those who are now working are forced to support those who are now retired. This will work fine while the Rat is employed (and I, who will retire ahead of the Rat, plan to take full advantage of it). But sometime around 2015 the Rat is going to stop earning money and show up at the Government's benefits window, bringing with it a lifetime of expectations and the votes to enforce them. The poor slobs still working are going to find their hands full and their pockets empty.
If you are doing any long-term investing (your IRA funds, for example), keep the Rat in mind. Ask yourself what 40- and 50-year-olds are going to do with their money. Expect a decline in interest rates — possibly even deflation. Among all the shifting factors that may influence the value of investments in the future, none are more predictable than the steady aging of the Rat in the Python.
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