Printed 1999, the book, Gray Dawn sums why slashing social security benefits may actually be quite necessary.
Hat tip: Amazon.com
The greatest demographic event to happen this century was the baby boom. From 1946 to 1965, 76 million live births were recorded in the United States alone, a phenomenon that’s been responsible for everything from the surge in baby-food products in the ’50s and early ’60s to the roaring stock market of today, fueled in part by boomers investing for retirement. Peter Peterson, author of Gray Dawn, looks ahead at the implications of the baby boom, and what he sees is not the bliss that many of us imagine for our golden years but rather an iceberg that threatens to sink the economy and disenfranchise subsequent generations.
As former chairman of Lehman Brothers and founding president of the Concord Coalition, Peterson, whose previous books include Will America Grow Up Before It Grows Old?, is no stranger to this topic. In Gray Dawn, he takes a worldview of “global aging,” and considers countries such as Japan and Italy, where the problem of an aging population coupled with declining fertility are creating particularly acute and, in some cases, unsustainable generational disparities. Peterson writes that “We must make aging both more secure for older generations and less burdensome for younger generations.” To this end he offers several solutions, among them encouraging longer working lives and requiring people to save for their own retirement. But avoiding the iceberg means turning the wheel now, before it’s too late. Thoughtful, well-researched, and full of charts and statistics that do well to underscore Peterson’s main arguments. If you’ve ever wondered what retirement might look like, you’ll find this a provocative read. –Harry C. Edwards
The elderly constitute an increasingly larger share of the population, particularly in the most industrialized countries. Peterson (When the Boomers Retire, LJ 9/1/96), cofounder of the Concord Coalition and adviser to governments at various levels, warns that steps must be taken now to avert the crises, primarily financial, that demographic changes could bring. The near future will see each elderly person supported by fewer workers. Social programs differ around the world, as do current and future demographics, but none of the industrialized countries seems prepared for the upcoming demographic changes. Peterson also reflects on the world’s political and financial power and how both might shift to countries with younger populations. He calls on leaders around the world to convene an Agency on Global Aging to discuss the issues and find global solutions, offering few answers but doing a tremendous service in keeping the issues open. Recommended for all public and academic libraries.
~A.J. Sobczak, formerly with California State Univ., Northridge
Copyright 1999 Reed Business Information, Inc.
The Numbers Tell All — International Bankruptcy, November 21, 2000
Review By Gary North (West Fork, AR USA)
This review is from: Gray Dawn: How the Coming Age Wave Will Transform America–and the World
Pete Peterson has written several books on the looming bankruptcy of the Social Security system. In this book, he covers the G-7 nations, which are in worse shape than the United States is.
On page 72, he makes a point that I should have seen sometime over the last 41 years, when I first began looking into this problem. An unfunded liability must be amortized, just like a home mortgage. As of 1999, the unfunded liability of Social Security was $10 trillion. The unfunded liability of Medicare was also $10 trillion. The yearly amortization payment that the U.S. government must set aside each year to fund these two programs over the next 30 years at 6% interest is $1.4 trillion per year. You can verify this on any amortization calculator on the Web. Just take off 9 zeros when you enter 20,000, and stick them back on when you derive the yearly amortization figure.
The estimated U.S. government budget for fiscal 2000 is $2 trillion. This means that, in order to fund these two off-budget programs, the government must spend 75% of its budget.
Peterson might also have made this point: If (if!!!!) the government does not do this, then this year’s $1.4 trillion shortfall must be added to the total unfunded liability. And if the government refuses to fund next year’s amortization schedule, it will add another $1.5 trillion. And so on, until…. “Sorry, gramps: no more payments to you.” I’m age 58. That’s me.
The Federal Reserve System will create the money, thereby creating mass inflation, or else Congress will move up the retirement age, year by year, stiffing the geezers. The government-guaranteed retirement myth will end.
The book shows that Japan will hit the actuarial brick wall in 2003. Italy will hit it in 2005. The G-7 dominoes will topple.
This is a great book. When the chairman of the Council on Foreign Relations says a crisis is looming, you had better believe it.