Washington Post columnist Robert J. Samuelson wrote on 29 Dec 2004 about some fundamental changes that loom large for the US (and "developed" world) economy. He argues that we've had a good run, for the past half-century or more — but several of the key curves are about to bend, maybe fold. Inspired by Samuelson's article, my big-picture synopsis of our situation:

• Total debt can't continue to grow faster than general income.
• The stock market (and wealth in general) can't continue to rise faster than overall productivity.
• Governmental spending (including transfer payments) can't continue to expand relative to the rest of the economy.
• Wildly divergent prices for the same goods (including information and services, allowing for transportation costs) can't continue to exist in different parts of the world.
• Ever-increasing numbers of people can't continue to enter the workforce.
• Entertainment can't continue to replace education for an ever-larger fraction of everyone's lives.

What does all this add up to? Note that, unlike the litany of downers, technological progress can continue indefinitely. (Athough if that last bullet above doesn't turn around soon, maybe not.) And "natural resources" can continue to be discovered, invented, and exploited. (Again with some big footnotes, particularly concerning agriculture.) But those possibly-positives don't outweigh all the emergent negatives during the next several decades.

Bottom line: I predict tight times for young people who expect to live better than their parents without working nearly as hard ... and for old people who expect to retire in comfort by taxing the next generation.

(see also TheCancerIdeology (19 May 1999), MoneyWisdom (20 May 2001), PopGoes (19 Jun 2001), BubbleBusters (6 Feb 2002), BeatingExpectations (13 Aug 2004), FeedOrFeedback (6 Sep 2004), ...)

TopicSociety - TopicEconomics - 2005-01-31

(correlates: BeatingExpectations, MySpeciality, For Themselves, ...)