The aging Baby Boom generation, generally believed to be the Godzilla that will ravage the economy when its members retire, may have a kinder, gentler side.
Brad Edmondson, the former editor of American Demographics magazine, writes in the latest issue of The Milken Institute Review that while the U.S. population is aging, "the way it ages may turn out far less costly than has been so widely assumed."
With changes in diet, habits and medical care, many aging Baby Boomers are expected to live far healthier and more productive lives than previously anticipated, Edmondson says. Studies already show, for instance, that disability is declining faster than longevity is increasing.
"People like me are paid to say impressive things like 'demography is destiny,′ but that isn′t always true," Edmondson writes. "Every so often, discontinuities in economics, technology and politics converge to alter conditions for millions of individuals in a brief span of time, leaving demographers with egg of their faces."
Also in this issue of the Institute′s quarterly journal of economic policy, Ian Parry, a senior fellow at the Washington, D.C.-based Resources for the Future, looks at a recurring idea for weaning us from oil′s grip: increase taxes on gasoline.
Parry argues that this approach will actually do little to solve the myriad problems of pollution, congestion and geopolitical security linked to America′s huge appetite for oil.
"Vehicle fuel taxes offer little chance for progress with respect to climate change and oil dependence," he writes. "Indeed, they are a diversion from what might work — namely, broad-based carbon emissions deterrence and technological change that reduces demand for hydrocarbon fuels."
Other highlights from the new Review:
- Two scholars debate the value of expanding pre-school education to all children. Lynn Karoly, a senior economist at the RAND Corporation, says the return on such an investment will far outweigh the costs. But Ron Haskins, a senior fellow in economic studies at the Brookings Institute, responds that bigger isn′t necessarily better, and that the result could be expensive and ineffective programs.
- Online competition is stirring up the real estate brokerage business, and Robert Hahn, Robert Litan and Jesse Gurman of the AEI-Brookings Joint Center for Regulatory Studies argue that web-based brokerage needs to be defended against the big boys. "It′s not surprising that the traditional bricks-and-mortar industry is trying to protect its turf. But policymakers should focus on what′s best for consumers," they write.
- Things-You-May-Not-Know Dept.: More than 90 percent of paper money in New York, Miami and London contains physical traces of drugs. That′s just the beginning of an in-depth look at the extent of global money laundering in an article by Raymond Baker, a senior fellow at the Center for International Policy in Washington, D.C. "Summing up conservative estimates of criminal, corruption and tax-evasion activities puts the global total of dirty money at $1 trillion a year," he writes.
- What will it take to make global banking safer? James Barth, a senior fellow at the Milken Institute, Gerard Caprio, a director at the World Bank, and Ross Levine, a professor at Brown University, argue that strong rules are better than strong rule makers.
- Radha Chaurushiya of the University of Chicago Graduate School of Business offers a reality check for India′s economy. "Economic growth has been concentrated in only a few industries — in particular, in skilled services industries — and has not been accompanied by strong job creation. By no coincidence, the pace of poverty reduction has been disappointing."
This issue′s book excerpt comes from The Competition Solution, by Paul London of the American Enterprise Institute, who concludes that U.S. economic growth in the 1990s was in large part to the result of a bipartisan political effort to rid the economy of regulation that protected established businesses and their workers. Also in this issue: a Charticle by Institute Senior Fellow William Frey exploring the demographic impact of Hurricane Katrina; the return of Research F.Y.I., a feature highlighting provocative new research in economics; and yet another offbeat, end-of-book "Lists."
The Milken Institute Review is sent quarterly to the world′s leading business and financial executives, senior policy makers and journalists. Its editor is Peter Passell, former economics columnist for The New York Times.