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Panel Detail:

Wednesday, April 26, 2006
7:45 AM - 9:00 AM

Baby Boom — Baby Bomb? A Jeremy Siegel-Michael Milken Debate

Moderator:

Paul Gigot, Editorial Page Editor, The Wall Street Journal

Paul Gigot, editorial page editor of The Wall Street Journal, moderated a lively debate between Jeremy Siegel of the University of Pennsylvania's Wharton School of Business and Michael Milken, chairman of the Milken Institute. Ranging from asset prices to individual behavior, the panelists discussed the economic and social impacts of the retirement of the "baby boomers," those born between 1946 and 1964.

Siegel, addressing the aging trends in demographics, posed two questions: "Who will produce the goods?" and "Who will buy the assets?" He argued that productivity and immigration alone would not be enough to prevent both the retirement age from rising dramatically and a large downturn in the asset market.

He suggested that a natural and healthy trend would be for younger nations, such the BRICs (Brazil, Russia, India and China), to provide the goods in exchange for assets in the developed world, i.e., maintaining or expanding the current account deficit and capital account surplus.

Milken emphasized the impact of technological development and deployment on wealth creation. He predicted that the deployment of financial technology on the developing world would unlock a large amount of dead capital and propel growth. He also argued for the importance of medical advances and their impact on the quality of life, longevity and wealth, estimating that the cure of cancer alone could add four years to U.S. life expectancy and $50 trillion to the current stock of wealth.

The debate evolved into a discussion of extended life expectancy, more specifically, the question of how long individuals would be willing to work before retiring. Siegel maintained that recent increases in life expectancy have not been followed by increases in the retirement age. Milken suggested that new technologies, such as distance learning, could lead to different types of work and extend the effective retirement age.

Both panelists were emphatic on the negative effects of protectionism to both the developed and the developing worlds. The free flow of capital, goods and ideas, they stated, would play an important role in balancing the different demographic trends.

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