#181 Long Life & Economics

People are living longer, and it's shaking up the world of money. A Wall Street Journal piece shows that as we age, we stack up more cash. But, with longer lives come bigger economic questions. “You will have a long life on the earth.” This promise which accompanies the fifth commandment about honoring your father and mother is becoming more true all the time.  AND, there are economic implications. Richard McKenzie, writing in the Wall Street Journal recently, made the point that, as folks live longer, they accumulate more money.  That kind of makes sense.  The title of Mr. McKenzie’s article is Americans are Living Longer and Prospering, and the subtitle “Longer Lifespans are an underappreciated cause of the increase in wealth concentration”  really gets under the skin of the Thomas Piketty crowd.  He’s the French economist who has pointed out economic inequalities in his books The Economics of Inequality and his latest Time for Socialism.   Like our current President Joe Biden, Piketty likes to complain about the concentration of wealth among a smaller population. Certainly, you WANT people to live longer, don’t you?  Who would ever be FOR shorter lifespans?  The death crowd, I guess.  More on that later.  Oh, there is something of a statistical anomaly going on here.  In 2019, lifespans became shorter, but that was probably a one-time consequence of Covid.  The trend line of longer life spans is expected to continue, after the dip. Older workers are making a greater contribution to the economy, compared to previous generations.  Firms have begun to offer “grand-turnity” leave to retain grandparents in the workforce.   The Poor Are Getting Richer Through Economics Here’s what the Socialists really dislike, and it’s where McKenzie explains that the wealth of the bottom half of the US population increased in real dollars between 1989 and 2022.  He goes on to explain that the bottom half’s share of total wealth decreased from 3.8% to 3.1% during those years.  You see, Christians care about the poor, not the distance between the rich and the poor.  Those who care about distance are violating the tenth commandment, about avoiding covetousness.  Let me repeat the first half of Mr. McKenzie’s explanation about the wealth of the bottom half increasing in real dollars.  My sophomores at Dallas Baptist University know that “real” means after inflation.  So, even though the current administration has thrown an inflation party that has harmed them, the poor have still managed to get richer.  Christians celebrate that. But Socialists concentrate on the second half explanation from the WSJ article, about the share of wealth of the poor declining from 3.8% to 3.1%.  Mr. McKenzie notes in his article, “Sen. Bernie Sanders denounces today’s wealth-concentration as “morally obscene.” President Biden seeks to temper the growing wealth accumulation by imposing a “billionaires’ tax.” Of course, the rich are getting richer at a faster rate.  That’s just the rules of the road.  If a rich guy starts with $1 million and the poor guy starts with $1 thousand, as the economy lifts all boats, it’s going to lift the big boat further.  The only time I can find when the poor got rich at a faster rate than the wealthy was during the Trump administration, and that’s because his economic policies aligned with growth in the lower classes. And, Marian Tupy and Gale Pooley point out in the book Superabundance, that, when measured by “time price” that is: How long a person has to work to buy products and services, today’s poor are getting richer all the time.   Consumer surplus Socialists are good at demand, but terrible at supply.  They start at the point where a person has money and proceed from there.  They want the government to get that money, with no consideration for the supply that produced it.  In economics, we call it “consumer surplus.”  In a competitive environment, every time you buy something, you get richer.