While catching up on some reading over the weekend, I found two articles that both dealt with large issues that we’ll have to face over the next few decades. Predicting the future is always difficult, but sometimes the numbers can seem very compelling.
Oil & Commodities
Jeremy Grantham is co-founder of GMO, an investment management firm with $107B in assets. That doesn’t mean he necessarily knows the future. But in his April 2011 quarterly letter titled Time to Wake Up: Days of Abundant Resources and Falling Prices Are Over Forever, he does manage to put together a convincing argument that we are using up our natural resources very quickly, and we can’t continue on at this rate. It’s mathematically impossible.
Will we find other energy sources to replace cheap oil? Will technology allow us to do more with less? Probably, but I doubt the transition will be a smooth one. I think learning to be less dependent on natural resources (read: be frugal, efficient, and less wasteful) will even more important financially than it is now.
Medicare & Taxes
Paul Krugman is a Nobel-winning economist with a popular blog at the NY Times. In a recent Op-Ed titled Seniors, Guns and Money, if you strip out all the political stuff, you’ll find this: In the coming years, there will be either significant cuts in Medicare, or tax increases to pay for the rising heath care costs.
One, our population is aging, with more retired seniors being supported by fewer workers. Two, health care costs keeps rising on their own. As he says, “It’s just a matter of arithmetic.” Either the government will raises taxes to pay for all this, or there will be major cuts in benefits. My guess is both.
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“more seniors being supported by less (younger) workers”
I thin you meant “more seniors being supported by fewer (younger) workers”
Lol! I messed up my own comment above. Argh! Pardon my annoyance.
Just as Krugman says that he used to be considered a moderate conservative 20 or so years ago, now labeled as far liberal, the public was completely sold out over those years on the idea that unregulated markets based on the infinite growth idea are axioms of human success.
There is a related article in today’s WSJ called “facing up to the end of easy oil”. If you search for the title in Google News, you should be able to read the full article.
Fixed my wording. 🙂
Notice how no body talks about the high cost of medical professionals? The fact is they are over paid. 80% of the cost of medical care is labor. A lot of that labor is way over priced. If you want good medical care at a very low price you have to travel to a foreign country. That’s a real solution that will become common in the near future.
I think what is often overlooked is the standard of care. We have a situation where medical advances have far outpaced what the average person could afford to pay, yet the average person demands those services. I agree with you Jonathan that taxes will go up and benefits will decrease but also quality of care and research & development will as well. Those go hand in hand with a free market.
OK….I was recently talking to a professor from India. He says they have so many trained (trained) doctors with medical degrees that they set up numerous “sidewalk” clinics and there is no waiting for patients. One of the goals of the AMA is restrict access to medical training by reducing the number of medical schools as well as the number of new students.
It doesn’t take a rocket scientist to be a doctor.
In order to reduce the cost of care to Americans, the cost of salaries paid to medical professionals needs to be reduced. Such a step would help to reduce the cost of medical care in America. I believe this can be done without a reduction in quality….ask the people who have gone overseas for procedures that they cannot afford here in the States.
Didn’t the largest single day drop in oil register at the end of April right after Grantham’s statement? Silly guy… speculating on oil is a shady business and one that is most certainly going to fall under more government scrutiny in the coming years.