Musings on the Coast

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The Secret

By Michael Ray
By Michael Ray

My niece Mary (not her real name) and her husband John (not his real name) live in Maryland and work for companies that work exclusively for the CIA. Neither will tell me what they do except engage in “research.” We were sitting together at dinner at one of our big family reunions.  The year was 2015.  Since they would not tell me what they did for the CIA, my OCD personality had me keep digging and asking them more questions.

After a time, John got tired of my queries and said, “Ok, I will give you my opinion—and it is mine only—on President Obama.”

“Ok,” I replied.  Both John and Mary had attended elite universities, are fiercely intelligent, and in earlier days, were typical liberal students.

John said,  “On foreign policy, Obama sucks.  He’s a pussy.   He dilly dallies around, makes half decisions, backs up, changes direction. He just doesn’t get it.”

This took me aback. I thought Obama had done a pretty good job and started to defend him.

“Stop,” said John, “you don’t know what you’re talking about.  Obama supported The Arab Spring and it was a disaster; all it did was create more destabilization. His handling of Afghanistan is half-in, half-out; there is no direction; it is an endless war and he is making it worse.”    John went on for some time.

Then, he stopped himself short and said, “There is a study we did.  It is declassified.  I will print it for you.  Wait here.”  We were in a big hotel and he went to the business office and returned in a few moments with a document he had downloaded and printed.   “This paper is on competitive economic advantages.  Read it and tomorrow we’ll talk.”

So that night I read the report.  It was about 20 pages long.   It was about the aging workforce in the major economies.   Birth rates are low, there are fewer workers entering the workforce, fewer workers to support older people and fewer workers with the energy and drive to increase productivity.

At the top of the list was China.  Because of its single-children policy (to hold down the total population), China was rapidly aging.   In the last three decades China had become a major economic power.  But that would not last because its people are aging extremely rapidly.   In 20 years it would be in big trouble.

Then came Japan.  For every two people dying there, only about 1.25 are being born.  That is demographic disaster.   Japan had peaked out in the late 1980s and had been stuck in neutral every since.

Then came Western Europe and the European Union.   It was aging faster than anyone else.   Fewer children were being born and its expensive social support system is unsustainable.   Even in Germany, the economic powerhouse of the EU has an aging population.

The report went on to compare almost every major economy.   They all were in demographic decline.

Then came the United States.  Despite what many consider tight immigration controls, ours had been the least restrictive in the advanced world. Every new wave of immigrants brought new economic gains.

The next day, John and I talked more.  “Do you get it?” he asked. “Do you get it that our historically open immigration system is our secret power?”

Of course I said yes. Then he said, “that’s the biggest reason Obama is a disaster.   He’s deported more immigrants than any president in history. At the present rate, he will deport 2.8 million in eight years.  That is insanely stupid.”

“Now,” he said, “take President Reagan.  He was a stud.  He granted amnesty to 2.7 million and the economy took off.”

He shook his head. “I can’t believe people don’t understand something so simple about the world economy.  Especially you.  You say you understand the economy, but you’re looking through such a narrow lens you don’t get it.”

I tried to defend Obama.  I said we’d get more productive, get more work out of fewer people by making more efficient machines.   I said China, Japan, Germany and the EU all were doing that.

“It doesn’t matter.  Productivity growth goes up and down.  Right now, it is down in the U.S.   Europe is down, down.   Japan is down, down.   And China is faking it by so over-leveraging itself pretty soon its economy will crash.   And that one-child policy has got them behind a giant eight ball.  They’re in trouble and they know it.”

That night we had dinner again and drank enough to get into some really good economic arguments.   We were on a roll.

But by the end of the evening, I felt like a fool. I thought I knew my stuff and I didn’t.

By the way, Laguna Beach residents are getting older and older, too.

Michael Ray grew up in Corona del Mar and lives in Laguna Beach. He is a real estate entrepreneur involved in many non-profits.

 

 

 

 

 

 

 

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