Voder-Vocoder

Background:

The trustees of the Social Security Administration have traditionally used demographic, economic, and fiscal models that end after 75 years. The idea is that there simply is no way to accurately predict the future beyond that. (Aside: can’t we fix the long-term problems of SocSec by making _demographic_ changes? Exempli gratia: increase immigration.) The current administration made waves this year by integrating these numbers out to infinity to overstate the crisis.

Notion:

We (society as a whole) would be irresponsible if we did NOT plan for the future—at least 75 years out. On the other hand it would be a waste of time to plan beyond 75 years.

Discuss.

I would dismiss Kunstler as a quack, but for one thing.

I know the history of Easter Island.

Neal Stephenson, 1992:

As a result, this country has one of the worst economies in the world. When it gets down to it—talking trade balances here…once we’ve brain-drained all our technology into other countries, once things have evened out, they’re making cars in Bolivia and microwave ovens in Tadzhikistan and selling them here—once our edge in natural resources has been made irrelevant by giant Hong Kong ships and dirigibles that can ship North Dakota all the way to New Zealand for a nickel—once the Invisible Hand has taken all the historical inequities and smeared them out into a broad global layer of what a Pakistani brickmaker would consider to be prosperity—y’know what? There’s only four things we do better than anyone else
music
movies
microcode (software)
high-speed pizza delivery

13 years later:

Thomas Friedman, 2005:

It is this convergence — of new players, on a new playing field, developing new processes for horizontal collaboration — that I believe is the most important force shaping global economics and politics in the early 21st century. Sure, not all three billion can collaborate and compete. In fact, for most people the world is not yet flat at all. But even if we’re talking about only 10 percent, that’s 300 million people — about twice the size of the American work force. And be advised: the Indians and Chinese are not racing us to the bottom. They are racing us to the top. What China’s leaders really want is that the next generation of underwear and airplane wings not just be ”made in China” but also be ”designed in China.” And that is where things are heading. So in 30 years we will have gone from ”sold in China” to ”made in China” to ”designed in China” to ”dreamed up in China” — or from China as collaborator with the worldwide manufacturers on nothing to China as a low-cost, high-quality, hyperefficient collaborator with worldwide manufacturers on everything. Ditto India. Said Craig Barrett, the C.E.O. of Intel, ”You don’t bring three billion people into the world economy overnight without huge consequences, especially from three societies” — like India, China and Russia — ”with rich educational heritages.”

That is why there is nothing that guarantees that Americans or Western Europeans will continue leading the way.
[...]
Instead of complaining about outsourcing, Rao said, Americans and Western Europeans would ”be better off thinking about how you can raise your bar and raise yourselves into doing something better. Americans have consistently led in innovation over the last century. Americans whining — we have never seen that before.”

One more thing about how the dollar’s decline will effect us: Stephen Roach has a column,
“When Weakness Is a Strength”
in todays Times. It discusses two possible outcomes: a market crash or a managed correction.

I’ve been worrying about the federal buget deficit and its effect on the value of the dollar. Here’s what Tresury has to say:

At 3.6 percent of GDP, the 2004 deficit is up from the 2003 level of 3.5 percent of GDP and is the highest level since 1993.

The deficit increased in 2004 even though the recession officially ended in November 2001. This is the first time since before the Depression of the 1930s that the deficit has continued to increase this far into a recovery.

Nations in the eurozone are required to keep their deficits under 3% GDP. They don’t always meet this goal, but it is a real goal for them.

The administration here has shown no desire to keep deficits in check. They will not cut military spending and they will not fail to cut more taxes, so theoreticaly, they will have to cut non-military spending (another conservative goal). I don’t see that happening, because as soon as they start to gut those parts of the buget in quantities large enough to make a difference, they will lose the significant percentage of republican voters who believe that the gop can deliver a free lunch. There is an election in a only two years away.

So the dollar will gradually slide against the euro. But it’s not as bad as it could be. It’s only the difference between 3.6% and 3.0%.