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Week in Review


In May, we previewed five critical challenges the US faces in the 21st century. A previous set of essays looked at the first of the five challenges—the problem of jobs as America transitions to an information economy. Now we’ve turned our attention to America’s demographic problem, the next of these challenges. How will we reimagine and reorganize our society as population growth slows and life expectancies grow? We took on this next challenge in this week’s essay:

The old population model looked something like an Egyptian pyramid, with a very broad base rising to a small peak. Today’s populations look a little more like a Russian cathedral with an onion shaped dome. Higher retirement and elder-care costs are being handed off to a smaller group of payers. […]

Even as the Boomers take a massive hit (and, given their lack of leadership, foresight and self discipline on this issue, a well-deserved one), society will have to address the needs of younger generations to prepare for retirement. Their need is going to be greater in some ways; the Boomers will do their best (and their best is very good indeed) to drain the Social Security and Medicare trust funds dry, so the next generation will have a harder time taking more out of the system than it puts in. Indeed, the next generations will probably on balance get less out of the system than they pay in. Their contributions to the system will have to be higher to replace what the Boomers take out—and their benefits will have to be lower to put the system on a stable basis.

This much is math, but there is more to the demographic transition than the retirement numbers and the deficit projections. Values and attitudes shaped by the Fordist society of the 20th century helped lay the foundations for the retirement trap whose jaws are closing on so many Boomers; many of those values and the social patterns constructed on them will have to change as the world of the blue social model continues to fail.

China, a country with its own demographic problem, was in the news for a lot of other reasons this week. Chinese factory workers kidnapped their American boss, upset over planned layoffs and severance packages. In a refreshing change of pace, Beijing rolled out the red carpet for South Korea’s President. And while the media—ourselves included—wondered over how serious Xi Jinping is about rooting out corruption in his party leadership, the Chinese public was still overwhelmingly supportive of its government. Beijing is no stranger to stoking the fires of nationalism to keep that support high, and told its neighbors on Friday that resistance in the South China Sea was “futile.” But a worrying sign for Beijing’s leadership: the United States surpassed China to become the world’s most favorable destination for foreign direct investment.

In the Middle East, Egypt continued its death spiral. Mohamed ElBaradei, the self-appointed leader of the regime counter-elite during the Arab Spring, sharply critiqued Morsi’s government. Morsi, for his part, tightened the screws on Egypt’s blockade of the Gaza Strip—a move that would have the world awash in rage and grief had Israel done it. Elsewhere Syria hit a grisly milestone, passing 100,000 deaths in the 27 month conflict, while Susan Rice called the West’s inaction “a moral and strategic disgrace that history will judge harshly.”

Europe’s poorly conceived energy policies continued to take their toll, as we learned that the continent can’t even get fossil fuels right. Germany told the EU to stuff its new auto emissions standards, preferring to protect domestic industry rather than meeting arbitrary emissions goals. The UK discovered its shale gas deposits might be double previous estimates, though they’ve got their work cut out for them to extract the resource. And we were reminded why France didn’t make the top-ten list of favorable FDI destinations: French labor law won’t allow a tire factory to close, despite the fact that the plant is hemorrhaging money.

Obama’s climate change speech made plenty of headlines this week, in which he outlined a series of mostly sensible steps, though (as always) the devil will be in the details. The speech revived hopes for a global climate treaty, but that green unicorn is still as fictional as ever. The most surprising news of that speech was a hint that the controversial Keystone XL pipeline will be approved by the administration later this year. All of America’s recent shale success could be for naught if it can’t be brought to market; thankfully, we’re seeing signs that we’re building out our pipeline infrastructure to keep up with the growing oil and gas supply.

The impending rise in student loan interest rates was on many students’ minds this week.  But doubled rates or not, the price of college is still too high, and poor students are getting hosed by the student loan bubble. MOOCs, frequently the only bright spot in education news these days, got a boost this week with Moody’s making bullish predictions on early adopters of the new way of teaching. Obamacare is still in a perilous position, and its success could ride on the number of healthy people who choose to drop out of the insurance pool. But there were two encouraging signs for health care’s future: first, the rise of Accountable Care Organizations (ACOs), and second, the advances in technologies like gene sequencing that will allow doctors to provide better care.

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