3 ms·

I agree with everything you said, except for the one axiom you state that everything else relies on: "But the cohort born in 1980 will be much less productive,

I agree with everything you said, except for the one axiom you state that everything else relies on: "But the cohort born in 1980 will be much less productive, because it is smaller than it should have been, and that shows up in 2000 as a loss of young workers (compared to predictions), not old workers." (Emphasis mine.) What defines what a group should have been? Predictions. But I've never heard of anyone calling a wrong prediction "losses" or "gains" before. If I'm predicted to sell a million units, and I only sell half that, did I "lose" half my sales? If a stock is predicted to go up a point, but goes down a point instead, did it "lose" two points? Comparing what materialized as reality with predictions is a perfectly fine thing to do. But differences between the two are just wrong predictions, not gains and losses. You just simply can't lose something you never had.

thaumasiotes 9y ago
You've gotten hung up on the word "losses" without understanding the perspective that shows them. We're talking about a decline in GDP related to a depression in the birth rate. Imagine a society in perfect stability. Every year there are 50 people in their 20s, 48 people in their 30s, 45 people in their 40s, 41 people in their 50s, and 15 people over 60 but not yet retired. Every year, people die, causing the kind of "population losses" you're worrying about in your comments to me, but this causes no population losses or shrinkage of the kind you're talking about in your earlier comments, because those deaths are balanced out by an appropriate birth rate, keeping the population constant. Now the birth rate drops. 30 years later, there are 30 people in their 20s, 48 people in their 30s, 45 people in their 40s, 41 people in their 50s, and 15 people over 60 but not yet retired. The economy has lost 40% of the age 20-30 worker demographic (it did this over a period of ten years, but still). It has lost 0% of the age 30+ worker demographic. We asked the question "are population losses randomly distributed over the population, meaning that GDP per capita should stay constant?" and we see that the answer is no. We also asked the question "are losses concentrated among older, unproductive retirees, meaning that GDP per capita should rise?" and we see that the answer to that question is also no. Losses are concentrated among the young, which means that GDP per capita should fall when those losses age into the productive segment of the workforce. (And then rise back to exactly where it once was when those losses have aged all the way through the population, including the population of retirees.) I must say again, if we want to explain (1) a loss in GDP (the number has gotten lower) by reference to (2) a loss in the population generating the GDP (again, the number ["population"] has gotten lower), which is (3) attributed to lowered birth rates, THEN (4) the loss in population (in the sense of point 2, where we said that the population declined) has occurred among the young, not among the old. It's not even necessary to use comparisons to a hypothetical reality to perceive the losses; the bare fact that the population was once larger than it is now is a perfectly conventional interpretation of "population loss".
- jdmichal 9y ago
  You keep attempting to avoid the fact that you must tie losses to a specific entity being lost. You lose productivity because a specific person is no longer being productive. It's as simple as that. In the case of low birth rates, you are getting productivity losses at the tail end. That's where specific productivity is being lost. Where you seem to be getting tied up is that normally that loss would be offset by gains of new productivity -- a 100% or greater population replacement rate, aka a growing population. Think of it like accounting for stock at tax time. You can't just "sell stock". You have to sell a specific stock that you bought at a specific time for a specific basis. And if you had a loss on that sale, it is immutably and forever a loss. You can, however, offset a loss by selling a different stock for a gain.
  - thaumasiotes 9y ago
    > You keep attempting to avoid the fact that you must tie losses to a specific entity being lost. You lose productivity because a specific person is no longer being productive. It's as simple as that. This is a delusion that exists only in your own mind. You don't have to account gains and losses separately; most of the time you want to net them out, because you only care about the difference. Net losses are still losses -- that's why they're called "losses". Think of it like accounting for mutual fund shares on an average cost basis.
    - jdmichal 9y ago
      It's fine to talk about net gains and losses. But you keep talking about those, while at the same time attributing the losses to a lack of young people. But that's not where the losses are coming from. There may have been gains predicted there that didn't materialize, but that's still not where the actual losses are coming from. You want to talk about average cost basis, but then you keep saying that you lost money because investment X only gained +$Y instead of +$(Y+Z). Which is wrong. You lost money because you had other investments that lost money. Investment X gained value; it just wasn't enough to offset those other losses.

thaumasiotes 9y ago

You've gotten hung up on the word "losses" without understanding the perspective that shows them. We're talking about a decline in GDP related to a depression in the birth rate. Imagine a society in perfect stability. Every year there are 50 people in their 20s, 48 people in their 30s, 45 people in their 40s, 41 people in their 50s, and 15 people over 60 but not yet retired. Every year, people die, causing the kind of "population losses" you're worrying about in your comments to me, but this causes no population losses or shrinkage of the kind you're talking about in your earlier comments, because those deaths are balanced out by an appropriate birth rate, keeping the population constant. Now the birth rate drops. 30 years later, there are 30 people in their 20s, 48 people in their 30s, 45 people in their 40s, 41 people in their 50s, and 15 people over 60 but not yet retired. The economy has lost 40% of the age 20-30 worker demographic (it did this over a period of ten years, but still). It has lost 0% of the age 30+ worker demographic. We asked the question "are population losses randomly distributed over the population, meaning that GDP per capita should stay constant?" and we see that the answer is no. We also asked the question "are losses concentrated among older, unproductive retirees, meaning that GDP per capita should rise?" and we see that the answer to that question is also no. Losses are concentrated among the young, which means that GDP per capita should fall when those losses age into the productive segment of the workforce. (And then rise back to exactly where it once was when those losses have aged all the way through the population, including the population of retirees.) I must say again, if we want to explain (1) a loss in GDP (the number has gotten lower) by reference to (2) a loss in the population generating the GDP (again, the number ["population"] has gotten lower), which is (3) attributed to lowered birth rates, THEN (4) the loss in population (in the sense of point 2, where we said that the population declined) has occurred among the young, not among the old. It's not even necessary to use comparisons to a hypothetical reality to perceive the losses; the bare fact that the population was once larger than it is now is a perfectly conventional interpretation of "population loss".

jdmichal 9y ago
You keep attempting to avoid the fact that you must tie losses to a specific entity being lost. You lose productivity because a specific person is no longer being productive. It's as simple as that. In the case of low birth rates, you are getting productivity losses at the tail end. That's where specific productivity is being lost. Where you seem to be getting tied up is that normally that loss would be offset by gains of new productivity -- a 100% or greater population replacement rate, aka a growing population. Think of it like accounting for stock at tax time. You can't just "sell stock". You have to sell a specific stock that you bought at a specific time for a specific basis. And if you had a loss on that sale, it is immutably and forever a loss. You can, however, offset a loss by selling a different stock for a gain.
- thaumasiotes 9y ago
  > You keep attempting to avoid the fact that you must tie losses to a specific entity being lost. You lose productivity because a specific person is no longer being productive. It's as simple as that. This is a delusion that exists only in your own mind. You don't have to account gains and losses separately; most of the time you want to net them out, because you only care about the difference. Net losses are still losses -- that's why they're called "losses". Think of it like accounting for mutual fund shares on an average cost basis.
  - jdmichal 9y ago
    It's fine to talk about net gains and losses. But you keep talking about those, while at the same time attributing the losses to a lack of young people. But that's not where the losses are coming from. There may have been gains predicted there that didn't materialize, but that's still not where the actual losses are coming from. You want to talk about average cost basis, but then you keep saying that you lost money because investment X only gained +$Y instead of +$(Y+Z). Which is wrong. You lost money because you had other investments that lost money. Investment X gained value; it just wasn't enough to offset those other losses.