Thursday, October 11, 2012

Open the gates

Conservative economist Casey Mulligan points out on the New York Times econ blog that many worried labor market analysts overlook the impact of the retirement of the baby boomers on our labor force. All things being equal, the percentage of our population that hold jobs will decline as the Woodstock generation tunes out. To that, I say:

It is surprising that all these eyes on the employment situation don't see the rather obvious, and it's equally surprising that many who do don't extend the thought to consider the implications, namely the profound drag on growth a graying population represents. Fewer taxpayers covering the needs of more retirees.  

This to me is the central argument for liberalizing immigration. Simply put, our economy acts in some ways like a gigantic Ponzi scheme and we're at a point where we need some new investors to cover the folks cashing out. We also need to figure out how make our economy less Ponzi-like (e.g., improve the efficiency of our healthcare spending), but the least painful way to avoid the real fiscal cliff we all should be worried about is to import more younger people.