The Real Doomsday: Less Bang, More Whimper

“I still love high heels and fashion, but I am also thinking… is there anything I can conceal a weapon in?”
—Megan, a Doomsday Prepper

Is this a great country, or what? Instead of just letting us wallow in our personal worry about the future, the National Geographic Channel has created “Doomsday Preppers” to show all of us how other ordinary Americans are preparing for an apocalyptic future. Good preparation generally involves learning how to use a gun since it is assumed that we will all be less than civil when the big day comes.

The source of that apocalyptic future is generally blamed on runaway government debt, hyperinflation and the resulting chaos. This, I believe, is an indication that Doomsday Preppers have a lot in common with you and me. In my 35 years of writing a personal finance column reader letters have never been more worried about the Big Picture future. Worries about our personal Little Picture future are being crowded out by frustration with the economy of the last decade.

My bet is that our future will have more whimper and less bang. That will make it less dramatic than anything most of the Doomsday Preppers are preparing for. But it may not make it much less difficult.

At least, that’s what I think when I go to McDonald’s.

There, I compare my Social Security check with the pay of those who work there. As I have pointed out in other columns, the average monthly Social Security check is now $1,230. It is not subject to the employment tax and at age 65 you also get great health insurance for only $99.90 a month.

Workers at McDonald’s, which is hiring, earn about $8 an hour, pay the employment tax and, most often, don’t get health insurance. Just as some once asked how many cars $60 an hour workers in Detroit could expect to sell to $8 an hour workers in Peoria, we need to start worrying about whether millions of uninsured low wage workers will be capable of supporting the growing millions of well insured retirees who no longer work.

Some older readers will quake when they read this; so let me assure you that I’m not writing about this to beat up on seniors. I’m writing about it because the growing imbalance between the young and old is a big issue. It’s so big it won’t be solved by such reliable cures as “eliminating waste, fraud and abuse,” cutting defense spending, or building a modern Maginot line along our border with Mexico.

Here’s the problem: The largest single part of government spending is Social Security. Add Medicare, Medicaid (most of which is spent on the elderly) and government pensions and about half of all government spending is a transfer from people who are young and (mostly) working to people who are old and (mostly) not working.

In itself, this isn’t a bad thing. Fifty years ago there was no Medicare. Back then retirement, for most people, was synonymous with poverty. We needed to change that, and did.

Today, things are different. For starters, only 10 percent of the elderly live in poverty today, but 21 percent of all children live in poverty. Now consider a few other facts:

  • Student debt now exceeds consumer debt. The young are having trouble finding jobs, in part because so many older people need to hold on to their jobs.
  • The young pay twice as much, as a multiple of income, as today’s retirees paid for their houses when they were young, if they can buy a house at all.
  • A growing number of states now spend as much on jails and prisons as they spend on education.

What’s coming our way, very rapidly, is a clash of generations. That’s why I believe our future will have more whimpers than bangs. The young don’t want to kill the old and the old don’t want to oppress and enslave their children. But if we’re going to avoid that fate, we’re going to have to understand how current policies are not working. Then we’ll need to make changes.

Want to know more? Good.

I’ve written a lot more. If you’ll forgive a craven plug, you can read “The Clash of Generations: Saving Ourselves, Our Kids, and Our Economy.” Co-authored with economist (and presidential candidate) Laurence J. Kotlikoff, my new book lays out the problem, the policy solutions… and how to protect yourself if the policy solutions don’t happen.