As Thirty Tomorrows explains, the aging of this country’s population threatens both the stability of the financial system and the economy’s growth potential. But it finds that contrary to the frightening conclusions drawn by most commentators, decline is far from a foregone conclusion. The country can protect its prosperity by yielding to the need for massive change across a broad front, in the orientation of production, in the nature of its workplace, in attitudes toward immigration, even in its educational establishment. It will not be easy. No change is easy. Perhaps most challenging of all are the psychological aspects of this effort. Such a huge transformation will demand that Americans do nothing less than alter their self-image.
Demographic pressure is evident and unavoidable. Decades of low birth rates have slowed the flow of young people into the workforce and will continue to do so for years, decades to come, even as the retirement of the baby boom creates an ever larger overhang of dependent retirees. The Census Bureau estimates that the relative number of working-age people available to support each retiree will fall from an already low 5.2 today to barely three by 2030. If nothing else changes, the implied relative worker shortage, despite today’s high unemployment, will weaken pension plans; limit resources available for capital spending, on both private facilities and public infrastructure; and sap the economy’s raw productive power.
Overcoming this burden will involve disparate ways in which firms, individuals, and government can supplement the shortfall of skilled workers, the taxes they pay, the pension contributions they make, and their output. Partial answers will emerge in efforts to keep older workers on the job longer, to bring more women into the workforce, and to target immigration better. The United States can also mitigate the demographic pain still further through heightened levels of globalization. By relying on youthful populations in emerging economies to produce simpler more labor-intrusive goods and services, this country can use its relatively limited but better-trained workforce more effectively, mostly by re-orienting it toward more sophisticated, high-value production.
To apply all these remedies, however, almost every aspect of economic life will have to undergo radical transformation. Bringing more women and older workers into the workforce will force employers to offer much more flexible hours and pay scales than now and almost surely also facilitate access to child care more liberally than they do now. Immigration policy will have to adopt a more rational, less demagogic tone to enable it to serve urgent economic needs. The re-orientation of production toward more complex, higher-value products will demand still more intense efforts at innovation and much greater attention to worker training, retraining, and education. And, as indicated, these practical efforts will require people, firms, and governments to completely retool the way they think about work, careers, production, themselves.
Forever, it seems, this country has viewed itself as youthful in every respect. Embracing the virtues of youth — energy, optimism, physical vitality, impulsiveness, even insouciance —Americans have put themselves forward to the world, and to themselves, as the quintessential mass producers, overwhelming the competition, in business and in war, too, with huge volumes of serviceable, standardized products, the economic equivalent of brute force. It was, after all, the United States that invented the assembly line and interchangeable parts. But such an approach, and the self-image that supports it, will become less effective over time. Mass production and standardization are poorly suited to the production of the more sophisticated, high-value goods and services to which this economy will increasingly have to turn. These are necessarily more specialized, customized, and in many cases, more refined. In a neat parallel to the demographic trend itself, this practical need will prompt the nation increasingly to embrace the virtues of age: prudence, patience, sensibility, composure, and care. The economy and its culture, in other words, will have to grow old gracefully. The picture seems almost un-American, but it is essential nonetheless.
A long-standing urban myth offers a sense of the direction the economy needs to go. As the story goes, American industrialists right after the First World War, though bigger, richer, and more powerful than their European rivals, chaffed at this nation’s reputation for producing volumes of crude, if serviceable products. A Connecticut copper mill challenged its British rival by sending over a length of tubing along with the dare to produce something as fine with a diameter as narrow and as consistent. When the response arrived back in Connecticut, the Americans at could first find only their original tube. It took a while for them to realize that the British had threaded inside it their much finer piece of tubing. Today, in matters much more complex and demanding than copper tubes, American producers must gear themselves to produce that finer work.