To Solve Long-Term Inflation, America Needs More Babies and Immigrants - TIME

[question everything]

(snip)

But the simplest explanation may be this: because of long-term demographic shifts, the U.S., like many other countries, simply doesn’t have enough workers to make and move all the things that people want to buy anymore. Too many older people have dropped out of the workforce, never to return, and too few young people and immigrants are coming to replace them. There are 11 million job openings in the U.S. economy right now, yet there are only 6.5 million people who are unemployed.

(snip)

The demographic shift is driving prices up in industries including transportation, manufacturing, and construction, to name a few. Consumer packaged goods company Post Holdings, Inc., which owns brands like Raisin Bran, said in an earnings call on Feb. 4 that internal and external labor shortages had driven up the cost of its products last quarter. United Airlines said in January that because of a pilot shortage, it was cutting services to around 20 U.S. communities—like many airlines, United saw retirements accelerate during the pandemic. And Albertsons, the grocery chain, said in a January earnings call that because of labor shortages, it was paying workers more overtime, which led to some price increases.

The worrying part of demographic-driven inflation is that it’s not going away anytime soon. Last year, the U.S. population grew at 0.1%, its slowest rate since the nation’s founding, according to Census Data. And still the population continues to age as the fertility rate declines. By 2034, older adults will outnumber children for the first time in U.S. history. The share of the population that is under 20 years old has been steadily declining, from 27% in 2007 to 25% in 2020.

(snip)

But instead, when the pandemic hit, Boomers took stock of their finances and decided to retire. Over the last few years their homes had only gotten more valuable and their stock market portfolios had grown, so they decided to take a step back and not risk contracting COVID-19. The average expected likelihood of working beyond age 62 declined to a new low of 49.3% in November, according to a survey from the Federal Reserve Bank of New York.

This might not have been a problem if workers were coming from other parts of the population to fill the gap. Historically, immigration has helped shore up the labor force when demographic trends lead to worker shortages. But immigration, too, has been falling since 2016. Net international migration in 2021 was just 247,000, the lowest number in at least a decade and about one-quarter of what it was in 2016.

More..

https://time.com/6151471/inflation-aging-population/

[SCantiGOP]

1. Exactly

I was reading 20 years ago, during the Clinton and Bush administrations, that America would be facing a labor shortage in the coming decades, and that political consensus needed to be developed on allowing more immigrants in to work both highly paid jobs like high tech and those at the other end of the scale in agriculture.
That is why Bush, and a group of GOP reps led by Graham and McCain, were strong advocates of immigration reform.

Then, a guy named Trump came along and screwed up everything because he wanted to convince white rural voters in the Midwest that the reason their small towns were declining was because Mexicans were picking produce in California.

[Collimator]

2. As a counterpoint. . .

. . . I have read opinion pieces stating that Boomers who were staying in the work force longer were stifling opportunities for younger workers.

[Chakaconcarne]

3. or increased automation

[lagomorph777]

7. Yes, and this is happening regardless.

Last thing this planet needs is more human infestation.

[ampm]

4. Truest word I've ever seen

I remembered that we were running into this shortage of people too. So my question is, is that they are doing everything they can to force women into childbirth any way they can? It's way too late. the youth of today are weary about their future, and all the problems of just surviving. Our generation had industry, and a way to make what we needed here in this country. When they started sending our job overseas, I believe that was the downfall of our country. Wages went down, and people were working for peanuts. People started to lose their homes, the kids saw that they don't want any part of it, and now they're in debt to schools trying to go in a different direction and hitting that stone wall

[IbogaProject]

5. We have to make sure there is enough money

We have to make sure that someone working can afford to raise a family. We need single payer insurance. We have to reverse the bad changes to social security that Regan did, so the rate starts lower for the first 20 or 30 thousand and greatly raise the limit. Frankly I'm in favor of having it part of the standard income tax and have a progressively increasing rate as income goes up, have all active earnings taxed as payroll not just wages.

[HariSeldon]

6. This article is neo-liberal economic trash

There are much more direct ways to make inflation go away. The very most direct is for the government to raise taxes without concomitant additional spending. A sense of humanity says these taxes should fall on the wealthy, who can afford them without becoming desperate (a situation into which I may be edging, so I say this contra my own economic gain). If that method is simply too unpalatable, then the federal government can tax the wealthy (whose economic activity multiplier is less than 1.0) and spend money on the poor (whose economic multiplier is greater than 1.0); the economic multiplier shows the marginal economic activity generated by a person per additional dollar earned, so shifting the dollars from low- to high-multiplier populations will ease inflation. This is how the Manchin/Sinema-defeated BBB was going to help on the inflation front.

Now, I freely admit that many economists will disagree with this analysis. The basis of my argument -- the MMT argument -- is that inflation means that there are more dollars in circulation than we want there to be. The simple solution, therefore, is for the federal government (which is monetarily sovereign) to make there be fewer dollars (via additional taxes) without significantly reducing economic activity (by taxing those who will not change their economic behavior because of it).

[lagomorph777]

8. I agree the analysis is trash.

I also agree with making the wealthy begin to pay their share.

Are you saying that by paying down the debt, we could reduce inflation? I'm no economist, but I can sorta see that.

[HariSeldon]

9. Paying down the debt is a side-effect

There is a certain amount of "economic value" and a certain number of dollars. Inflation means that the number of dollars needed to purchase the desired amount of economic value is rising. But if the federal government makes the dollars more scarce, then the economic value available has to be divided among fewer dollars, creating deflationary pressure.

The explanation above assumes that actual production remains stable, that the same amount of "economic value" continues to be produced. Taxes can have an effect of reducing productivity, so they must be enacted carefully to avoid that or be paired with spending that increases economic activity as much as the taxes decrease it.

TL; DR: Paying down the national debt could be a side effect of fighting inflation, but be careful about cause and effect.