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Amazon review of Coming Generational Storm

Editorial Reviews
 
Review
"The Coming Generational Storm lays out the problems in understandable language and compelling detail."
-- The Washington Post

"excellent and scary"
-- Nicholas Kristof, New York Times

"...Kotlikoff and Burns proffer plenty of evidence to back up their claims."
-- Anne Wagner, National Journal

"This is a book any serious investor should absorb and act upon."
-- Jonathan Chevreau, National Post

"... Filled with advice on protecting what you've got and making it grow before and during retirement."
-- Chris Tucker, Dallas Morning News

"This may be the year's most important book. Essential."
-- R. M. Whaples, CHOICE

"The policy solutions of Kotlikoff and Burns are specific and ingenious..."
-- Michael Mandel, Business Week

"...[A] serious attempt to look at a problem that most people are trying to ignore."
-- Alan Beattie, Financial Times

"Having painted a fiscal picture as awful as 'Guernica,' the authors unveil two bold plans....[An] engaging book."
-- Todd G. Buchholz, The Wall Street Journal

"This is a sobering look at an impending crisis with implications for all of us. Recommended for all collections."
-- Stacey Marien, Library Journal

"There's a lot of frivolous criticism of our politicians, but this book hits the mark, convincingly documenting their biggest sin: the failure to account for the magnitude of a huge government deficit crisis. The accounting scandals of Enron, WorldCom, and Parmalat pale by comparison. Read this book so you can start preparing for much higher taxes in the future for you and your children."
-- Robert J. Shiller, Yale University, author of Irrational Exuberance and The New Financial Order

"I lie awake nights worrying about the fiscal crisis described in The Coming Generational Storm. This is by far the single most important problem in U.S. economic policy. Every American should read this fabulous book."
-- George Akerlof, University of California, Berkeley, Nobel Laureate in Economic Sciences (2001)

"Among academic experts, Larry Kotlikoff has earned the title 'Mr. Generational Accounting.' His unfuzzy arithmetic decisively rebuts the Bush tax cuts, which are based on the delusion that 5 - 4 = 6, not 1. Read and judge for yourself the spectre of our future: too many retirees dependent on too few working-age people. Fiscal imprudence now mandates broken promises later."
-- Paul A. Samuelson, Massachusetts Institute of Technology, Nobel Laureate in Economic Sciences (1970)

"Brilliant insights on the me generation versus the next generation. Better still, smart advice on equally vexing questions like whether to invest in a 401(k) or a second mortgage."
-- Sylvia Nasar, author of A Beautiful Mind

"Between a rock and a hard place. We must all too soon realize that we want to spend more on transfers (Social Security, Medicare, Medicaid) than we are willing to pay in taxes. And the prospective $44 trillion shortfall is, almost literally, beyond ordinary comprehension. Documented diagnosis, along with suggested reforms, are first steps toward constructive dialogue."
-- James M. Buchanan, Distinguished Professor Emeritus, George Mason University and Virginia Polytechnic Institute, Nobel Laureate in Economic Sciences (1986)

"No economist has thought more clearly or spoken more resolutely about our long-term fiscal challenges than Larry Kotlikoff. In plain talk backed by economic rigor and the powerful models that he and his colleagues have pioneered, Kotlikoff and co-author Scott Burns expose the shoddy thinking and false premises that lie at the heart of U.S. fiscal policy and that risk the economic well-being of future generations. They show how reckless George W. Bush has been with our economic future, but also show that the evasions from fiscal honesty extend well beyond the irresponsibility of this administration. And they offer solutions that are clear, bold, and controversial. You may not accept them in full, but you will understand better than ever before the real choices that we face. This book is a must-read for a country adrift in fiscal short-sightedness and political spin."
-- Jeffrey D. Sachs, Director of the Earth Institute, Columbia University

"Kotlikoff has been one of the pioneers of the new economics of generational accounting. If anyone foresaw the deterioration of the U.S. government's fiscal health, he did. Now, with journalist Scott Burns, he has written a book that spells out, in crystal-clear layman's terms, the disturbing truth about the rising tide of red ink."
-- Niall Ferguson, Stern School of Business, New York University, and author of Empire and The Cash Nexus

"The Coming Generational Storm is a well written summary of an impressive and important body of carefully documented research. The book demonstrates clearly the folly of existing tax and transfer policies in the face of the impending retirement of the baby boom generation. Anyone interested in the future economic viability of American society and the economic problems we are bequeathing to our children should read this study."
-- James J. Heckman, The University of Chicago, Nobel Laureate in Economic Sciences (2000)

"The Coming Generational Storm is one of the most important (and refreshingly irreverent) policy analyses of recent years. Laurence Kotlikoff and Scott Burns ask what will happen to our economy and way of life when the baby boomers meet the current Medicare and Social Security systems. Their answers, using the innovative techniques of 'generational accounting' developed by Kotlikoff and others, demonstrate how close we are to a genuine fiscal precipice and the hard landing that awaits us. For our current presidential aspirants, the authors also provide some provocative ideas for how to ameliorate the damage this storm will certainly leave in its wake."
-- Robert J. Shapiro, Senior Fellow of the Brookings Institution and the Progressive Policy Institute, and former Under Secretary of Commerce for Economic Affairs

"The Coming Generational Storm documents in frightening detail America's reckless fiscal trajectory as it barrels toward bankruptcy. The need to revamp Medicare and Social Security is urgent. This book is a must-read for anyone who cares about our nation's future."
-- Janet Yellen, University of California, Berkeley, Member, Federal Reserve Board (1994-1997), and Chair, Council of Economic Advisers (1997-1999)

"If Stephen King wrote about economics it would look like this. Kotlikoff and Burns have gazed into our future and seen a nightmare. The authors describe that nightmare vividly and identify why our elected officials on both sides of the political aisle are too cowardly to save us. Every U.S. citizen should read and digest this book before it is too late."
-- Kevin A. Hassett, Director of Economic Policy Studies, American Enterprise Institute, and co-author of Dow 36,000

Book Description
In 2030, as 77 million baby boomers hobble into old age, walkers will outnumber strollers; there will be twice as many retirees as there are today but only 18 percent more workers. How will America handle this demographic overload? How will Social Security and Medicare function with fewer working taxpayers to support these programs? According to Laurence Kotlikoff and Scott Burns, if our government continues on the course it has set, we'll see skyrocketing tax rates, drastically lower retirement and health benefits, high inflation, a rapidly depreciating dollar, unemployment, and political instability. The government has lost its compass, say Kotlikoff and Burns, and the current administration is heading straight into the coming generational storm.

But don't panic. To solve a problem you must first understand it. Kotlikoff and Burns take us on a guided tour of our generational imbalance, first introducing us to the baby boomers -- their long retirement years and "the protracted delay in their departure to the next world." Then there's the "fiscal child abuse" that will double the taxes paid by the next generation. There's also the "deficit delusion" of the under-reported national debt. And none of this, they say, will be solved by any of the popularly touted remedies: cutting taxes, technological progress, immigration, foreign investment, or the elimination of wasteful government spending.

So how can the United States avoid this demographic/fiscal collision? Kotlikoff and Burns propose bold new policies, including meaningful reforms of Social Security, and Medicare. Their proposals are simple, straightforward, and geared to attract support from both political parties. But just in case politicians won't take the political risk to chart a new direction, Kotlikoff and Burns also offer a "life jacket" -- guidelines for individuals to protect their financial health and retirement.

 
Citations (learn more)
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Most Helpful Customer Reviews

 
 
218 of 264 people found the following review helpful:
Let them eat cake, June 29, 2004
By  Dennis Littrell (SoCal) - See all my reviews
(TOP 50 REVIEWER)    (REAL NAME)    (COMMUNITY FORUM 04)   
This is about the "big whammy," as the authors term it, a $51-trillion debt that America is piling up that will come home to roost upon the heads of our children and grandchildren. They will not be pleased.

The really scary thing about this story is that, although Kotlikoff and Burns wax hopeful near the end of the book, and indeed present a possible way out of the crisis, one gets the sense that they believe that there will be no remedial action and certainly no cure until the pain sets in, and then it will be too late.

Personally I won't be around to experience any of this, but my grandsons will. According to the authors, my grandsons will be burdened with tax obligations of unprecedented weight and/or runaway inflation of the banana republic variety, or the collapse of the American economy as we know it. It's even possible that they'll have all three, probably in that order.

The main culprits are Social Security, Medicare and Medicaid. Quite simply we are incurring transfer payment obligations to our elderly so enormous that the working population will not be able to pay for them. And the terrible thing is that our government knows this--there have been many studies--but has neither the will nor the desire to do anything about it. Call it the crisis of representative democracy. No one in Congress or in the White House has the guts to tell the American people that we are going bankrupt. Everybody seems to think that the future will take care of itself, or, at any rate, that's THEIR problem.


It is important to note that the present incumbent in the White House has greatly exacerbated the problem by recklessly cutting taxes while going on a wild spending spree so that his friends at Raytheon, Halliburton, Big Oil and Big Pharma will have full capitalization. As the authors note, politicians care almost exclusively about maintaining themselves in office. Consequently they are seldom able to address problems beyond the short horizon of the next election.

In a larger sense, the crisis so vividly and exhaustively described in this strangely readable book isn't about economics at all. It is about demographics. With increasingly ageing populations, thanks to modern sanitation, cradle to grave health care, plenty of food and safe water, etc., the highly developed countries now have to figure out who is going to pay for keeping the old folks alive and well. The authors present some solutions: make them work longer, print money so that inflation will dilute the financial obligations, massively tax the working generations, etc. What they do NOT propose is that the elderly be left to fend for themselves, nor do they suggest a modest proposal of the Jonathan Swift variety, say massive euthanasia. Instead they propose a 12% national sales tax. This would be on top of all the other taxes. Imagine in my state (California), where we already have an eight and a quarter percent sales tax, what it would be like adding over twenty percent to the cost of products and services. Guess what? This would put a damper on spending and would greatly increase black market traffic, and probably wouldn't work--which is why Republican think-tankers are scheming to "privatize" Social Security, Medicare and Medicaid, a venture that the authors rightly call "eliminating" Social Security, Medicare and Medicaid.

Well, that's not going to happen. "I'm old and I vote," will say the AARP, and politicians will take notice. And no politician is going to vote for the authors' proposed 12% national sales tax. Read my lips. So what IS going to happen?

Nobody knows. The problem is unprecedented in human history, because never before has the ratio of the old and retired to the young and working been so high.

Historically when governments overspend, they reach for the printing press and flood the market with cheap money. This is what I predict will happened. The US, Japan, and Europe will all go massively under the flood of inflation and will, after horrendous suffering, re-emerge to restructure their transfers so that all of the suggestions of the authors are put in place including later retirement, responsible taxation, controlled medical costs, and a more modest lifestyle for all. That is, if we don't have revolutions and a return to some sort of absolute state control.

Some examples of the engaging prose spun out by Kotlikoff (who is an economist) and Burns (who is a journalist):

(After documenting the progressive ageing of our populations): "This will not be a phase. We will be older forever." (p. 36)

Perhaps the most important truth in the book is this from page 83:

[What is really happening is] a massive redistribution [of wealth] from young and future Americans to currently living adults. Our de facto generational policy has been to indulge the present at the expense of children living and unborn. This gives new meaning to "no taxation without representation."

They really rub it in a few paragraphs later:

[The AARP] has dropped the word "retired" to attract members in their 50s who aren't yet retired but have the same interest as current retirees: ripping off the next generation.

The book ends with tips on how to protect yourself from the meltdown. Interesting enough, the most important tips are on how to stay healthy, since health is the most important capital one can have. But here's a nice economic tip from page 134: "The government is going to need the budgetary resources that only high inflation can provide. Hence, high inflation is going to occur. Indeed, it's likely to occur sooner than later."


 
 
By  Arthur Gould (Alameda, CA USA) - See all my reviews
(REAL NAME)   
With luck and good living I might live to 2050. My children and their children will see the second half of the 21st century and maybe beyond. Laurence and Scott woke me up to the future that my progeny might have to live in.

A summary of the book is included below, but the important things about this book are:
- it is meticulously researched and well written
- it will make you think about government accounting in a new and fundamentally different way
- it will make you question whether you yourself are behaving fairly toward your own children
- after scaring you (and rightfully so) Laurence and Scott will give you hope that the future is not yet written, and suggest practical strategies that you can adopt to improve your own financial future.

Book Summary:

Kotlikoff and Burns have constructed a new way of understanding (primarily U.S.) government economics and forecast a demographically driven economic collision between old and young.

The authors dedicate this work to their 10 grandchildren who are identified by name. They predict that their grandchildren - and ours - will encounter a country whose collective population is older than the current population of Florida. That this situation will be prevalent throughout much of the industrialized world, including China; that we will have a population age profile that reflects "the greatest demographic change in human history"; changing from forever young to forever old; that a new segment has emerged which is the fastest growing population segment; people over 85 years of age. They rely on Bureau of the Census figures that forecast growth of the 85+ segment - from 4,259,000 in year 2000 to 13,552,000. in year 2040. This, and other population trends, will change the ratio of gold-ages to "kids" from 1.8 to 3.0, with all the consequences of supporting an ageing population with fewer workers contributing to social programs that were built on a completely different set of assumptions.

The U.S. social programs we have today are largely a creation of a time when "old people" were expected to die shortly after retirement. The basic assumption was a high ratio of working people to retired people. This high ratio made possible a transfer system where each working generation supported the retirement of prior generations. Kotlikoff and Burns report on the reduction in the ratio of workers to beneficiaries: 16.5 to 1 in 1950 down to 3.4 to 1 in 2000. By 2030, they project, there will be only two workers for each beneficiary.

The authors have constructed an intergenerational accounting equation by which they express - and we can understand - the economic pain we are inflicting on our children and our children's children. This equation, they claim, can be used to test all the currently popular proposals for 'easy fixes' as well as a "menu of pain" they themselves propose. As a formula the equation is A = C + D + V - T - H. or....

(A) The burden of debt on future generations =
(C) The present value of government purchases plus
(D) Official debt plus
(V) Implicit debt minus
(T) The present value of taxes paid by current generations minus
(H) The value of Government financial assets.

To change the future the authors present a "menu of pain" (created under the direction of the U.S. treasury secretary) by which the current generation can generate revenues and cut expenditures sufficiently to avoid the coming generational storm. The menu includes

* 69% increase in federal income taxes
* 95% increase in payroll taxes
* 106% reduction in federal purchases (admittedly infeasible)
* 45% reduction in Social Security and Medicare benefits

But all is not lost, the authors claim, and cite the United Kingdom as an example, explaining that policies adopted in the 1980s under Margaret Thatcher have put the UK in the best long-term fiscal shape of any major European Union nation. Finally, the authors propose actions that individuals can take now to protect ourselves and secure our future.
 

 

 http://en.wikipedia.org/wiki/The_Coming_Generational_Storm