Chrystia Freeland

The West is getting old

Chrystia Freeland
Jul 28, 2011 22:08 UTC

It’s the demography, stupid.

There are a lot of different reasons this is turning out to be such a politically hot summer in so much of the Western world. But one way to understand this season’s acrimony — from the protests of the indignati in Spain and Greece, to the budget deadlock in Washington and even to the tragedy in Norway — is as diverse symptoms of a shared condition: The West is getting old. That demographic fact is becoming a generational war, and there is every reason to believe that in the coming decades it will get worse.

The heart of the problem is arithmetical: The post-World War II social welfare state, created at a moment when the baby boom was still gestating, is built on a generational Ponzi scheme. As life expectancy increases and fertility declines, that population pyramid is being inverted — and in some countries, that is causing the entire economy to topple.

That’s true in Greece and Spain, where the young are taking to the streets partly because state pension commitments have become so heavy they are suffocating the economy and depriving the seniors’ grandchildren of any chance of a job. Likewise in the United States, where, notwithstanding the national self-image as a laissez-faire land that has eschewed Europe’s lavish social safety net, the budget battle is really a fight about the old: Programs for the elderly constitute almost half of non-interest government spending, about $1.6 trillion in 2010, of a $3.3 trillion total. That figure will swell as the baby boomers retire.

According to a paper by political economist Nicholas Eberstadt, who has done extensive research on the issue, “costs associated with population aging are estimated to account for about half the public-debt run-up of the O.E.C.D. economies over the past 20 years.”

It is not just at home that graying societies are creating wrenching political and economic tensions: The demographic squeeze may be contributing to one of today’s biggest dangers in international finance: the threat of sovereign default. Ali Alichi, an economist at the International Monetary Fund, argues in an essay published by the fund last month that “old folks may be less willing to repay sovereign debt.” According to Alichi, “As the number of older voters relative to younger ones increases around the globe, the creditworthiness of borrowing countries could decline — resulting in less external lending and more sovereign debt defaults.”

Scenes from the Tea Party

Peter Rudegeair
Jul 11, 2011 22:00 UTC

Theda Skocpol, Vanessa Williamson, and John Coggin’s great paper “The Tea Party and the Remaking of Republican Conservatism” formed the basis of Chrystia’s most recent column. As part of their research, Skocpol and her team embedded themselves in the Greater Boston Tea Party, the thirty-third largest Tea Party organization in the country, as measured by membership in the social-networking website MeetUp. The trio of scholars attended the group’s local rallies and conducted an extensive survey with 79 of the group’s members. The portrait of Tea Partiers that emerged from their fact-finding reinforced what many had observed anecdotally: Tea-Party members tend to be older, white males who are avid viewers of Fox News and have a history of political activism.

Like their fellow Tea Partiers across the United States, those in Massachusetts are older, white, and predominately male. 97 percent are white; 57 percent are males; and 83 percent are over forty-six years old (with more than half are older than age fifty-six). In addition, Bay State Tea Party activists envelop themselves with the same conservative news sources used by other Tea Party participants. When we asked Massachusetts Tea Party activists an open-ended question about their preferred news sources, 51 out of 69 respondents reported being Fox News watchers. As has also been found in national studies, few Massachusetts Tea Partiers are seeking out neutral or left-leaning sources of information. Only 11 of 69 respondents claim to read the Boston Globe, and only seven Massachusetts Tea Party activists report getting their news from ABC, NBC or CBS News. Like Tea Partiers nationally, many in Massachusetts are campaign veterans. In our Boston sample, 37 out of 79 respondents claimed to have previously volunteered on behalf of a candidate or political organization.

Fox News viewership in particular seemed to be an animating force for the Party and a prime topic of their conversation:

The winner-take-all economy

Peter Rudegeair
Jul 8, 2011 20:10 UTC

Cornell University economist Robert H. Frank sat down with Chrystia at the Aspen Ideas Festival to chat about the earnings potential of superstar dentists and world-class sopranos, the unlikelihood of an Atlas Shrugged-esque strike of the elites and Charles Darwin’s contributions to economic thought. Here’s a transcript of some of the highlights of their conversation.

On the upsides and downsides of the winner-take-all phenomenon

CHRYSTIA FREELAND: If the super-talented are getting super rewards, maybe in the past they were not getting the appropriate rewards. I mean, maybe this is really American capitalism working the way most Americans want it to work.

ROBERT H. FRANK: Well there are two things in your question. One is the upside of the whole phenomenon is that we now get to listen to the best soprano rather than the hundredth best.  In 1890 there were 1,300 opera houses in the state of Iowa alone. You had to listen to music live and in-person. You couldn’t hear the best soprano because she couldn’t be everywhere at once. Now there’s a contest to see who the best soprano is.  That winner then records the master disc and get’s stamped out onto CD’s at virtually no cost so we could all listen to the best soprano.

Only hard-working Americans need apply

Chrystia Freeland
Jul 8, 2011 14:16 UTC

What does the Tea Party want? As the debt ceiling debate rages in Washington, that should be the central question in U.S. political discourse. After all, it is the rise of the Tea Party that revitalized the Republican Party in 2009 and gave it the muscle to deliver a “shellacking” to the Democrats in the 2010 midterm elections. And it is the radicalism of the Tea Party and the freshman legislators it elected that is often blamed for the uncompromising stance of the Republicans in the current budget negotiations.

That’s why “The Tea Party and the Remaking of Republican Conservatism,” a recent study of the Tea Party by Theda Skocpol, a Harvard political scientist, and Vanessa Williamson and John Coggin, two graduate students, is so important. An expanded version of the paper, which appeared this spring in the journal Perspectives on Politics, will be published as a book by the Oxford University Press later this year.

Ms. Skocpol is an unashamed progressive, but what is striking about her team’s work is its respect for the Tea Party and its members. “Commentators have sometimes noted the irony that these same Tea Partiers who oppose ‘government spending’ are themselves recipients of Social Security,” the paper notes. “Don’t they know these are ‘big government’ programs?”

The future of power

Peter Rudegeair
Jul 6, 2011 18:48 UTC


At the Aspen Ideas Festival last week, Chrystia’s discussion of war, economics and America’s role in the world featured a who’s who of leading voices: Robert Hormats, the Undersecretary of State for Economic, Business, and Agricultural Affairs; Joseph Nye, a professor at Harvard’s Kennedy School of Government; and Liaquat Ahamed, the Pulitzer-prize winning author of Lords of Finance: The Bankers Who Broke the World. Here’s a transcript of some of the highlights of their conversation.

How the deficit debate affects U.S. diplomacy:

JOSEPH NYE: In congressional discussions we get the short-, the medium-, and long-term mixed up. Here we have a problem often estimated as a $2 trillion problem about getting the debt under control, or the deficit under control, related to the debt. And what did Congress do in April when they were trying to balance the budget? They cut $8 billion out of the State Department budget and thought that that was doing something about the deficit. That is absolute nonsense. It’s like a drop in the wind that’s gone immediately. But from the point of view of the State Department where you have a $50 billion budget, that’s a huge hit.

CHRYSTIA FREELAND: Did Bob take you out to supper last night to ask you to say that?

Guns vs. butter, Afghanistan edition

Peter Rudegeair
Jul 6, 2011 18:48 UTC

Steve Clemons, Washington editor at large for The Atlantic, chatted with Chrystia at the Aspen Ideas Festival about the politics of the deficit debate, the 2012 presidential race, and whether the U.S. is in a trap in Afghanistan. Here’s a transcript of some of the highlights of their conversation:

STEVE CLEMONS: When you’re in a country whose GDP is $14 billion, and we are in this next fiscal year spending $119 billion in Afghanistan — that’s only our dollars; that’s not our allies; that’s not non-military aid.  This is the military expenditure for what we’re doing. You can buy and sell Afghanistan eight times over for what we’re spending. So I’ve been, with Afghanistan Study Group which I helped create, putting on the table that there are better ways to chase al-Qaeda and to keep it from becoming a safe haven–

CHRYSTIA FREELAND: Well, hasn’t the hunt for al-Qaeda worked? Osama bin Laden has been killed, so there you go.

Pulitzer-winner David Rohde’s hostage experience

Peter Rudegeair
Jul 1, 2011 19:57 UTC

David Rohde, the two-time Pulitzer-Prize winning foreign correspondent, is the newest member of the Reuters digital family.  He and his wife Kristen Mulvihill sat down with Chrystia at the Aspen Ideas Festival to discuss A Rope and a Prayer: A Kidnapping from Two Sides, their book about the seven months David spent in captivity Afghanistan and Pakistan.  Here’s a transcript of some of the highlights of their conversation:

On the interview he did with a Taliban commander that led to his kidnapping:

DAVID ROHDE: This young commander, he had done two interviews with other journalists. They were Europeans; he didn’t kidnap them.  In hindsight–

CHRYSTIA FREELAND: So an American guy is better?

DAVID ROHDE: Yes. I think he was gaining the trust, a good reputation among journalists that he didn’t kidnap journalists.  And then I came along and he grabbed me.  I did the interview just outside of Kabul, the Afghan capital.  I thought it would be safer there.  Again, I thought there was a safe track record.  I met with a journalist who had done two interviews with him the night before I went to my interview. She said, “You’re in more danger as an American, but I don’t think he’ll kidnap you.”  And what this young guy did was grab me and take me over the border to Pakistan to this very powerful group, the Haqqani network.  And he wanted to get money but also wanted to boost his reputation among other Taliban.

Ending poverty via urban planning

Peter Rudegeair
Jul 1, 2011 16:10 UTC

NYU economist Paul Romer is what Chrystia calls an “ideas entrepreneur.” He revolutionized the study of economic growth with his research on the power of ideas. He shook up the field of higher education with his company that offered online homework problems that were graded by computer. Now Romer has set out to alleviate world poverty. For his new project, Romer set up a nonprofit organization dedicated to convincing governments across the developing world that they should cede a portion of their territory to an external authority in order to create a “charter city” in which new rules would make it attractive for skilled immigrants, unskilled migrants and businesses to come and settle.

This radical idea is slowly catching on. Honduras is poised to be the first country in the world to host a charter city after its Congress approved a constitutional amendment enabling such a plan in January.

He talked with Chrystia at the Aspen Ideas Festival about the Charter Cities project. Here’s a transcript of some of the highlights of their conversation.

Winners and losers in the Apple economy

Chrystia Freeland
Jul 1, 2011 14:16 UTC

ASPEN, COLORADO — Once upon a time, the car was the key to understanding the U.S. economy. Then it was the family home. Nowadays, it is any device created by Steven P. Jobs. Call it the Apple economy, and if you can figure out how it works, you will have a good handle on how technology and globalization are redistributing money and jobs around the world.

That was the epiphany of Greg Linden, Jason Dedrick and Kenneth L. Kraemer, a troika of scholars who have made a careful study in a pair of recent papers of how the iPod has created jobs and profits around the world. The latest paper, “Innovation and Job Creation in a Global Economy: The Case of Apple’s iPod,” was published last month in The Journal of International Commerce and Economics.

One of their findings is that in 2006 the iPod employed nearly twice as many people outside the United States as it did in the country where it was invented — 13,920 in the United States, and 27,250 abroad.