How to Read the News (#400)
/If you’ve been listening to this podcast for a while, you might recall that I like to step away from the usual accounting topics on every hundredth episode and talk about something else. I was wondering what to do with this episode when I received a request from a listener named Anna, who wanted more of episodes 226 and 268. In case you’re wondering what those were, Episode 226 was about the learning process – what to read, and what to do with that information. Episode 268 was about suggested readings, such as The Economist and Foreign Affairs magazine.
I like the request, so let’s continue down that path. First of all, I’ve broadened my news sources. My main newspaper used to be the Washington Post, but its owner – Jeff Bezos – laid off a massive number of its reporters, so I would say their production of articles is down by possibly two thirds. They use a lot of filler techniques, like ramping up the number of editorials and keeping articles posted for far too long on their home page. In short, it’s a shadow of what it used to be.
News Sources
Instead, my main news source is now The New York Times. It employs about 2,300 newsroom staff, who generate a lot of really in-depth articles. But that’s not all. I’ve not mentioned this before, but I’m one-quarter Canadian, through one of my grandfathers. Just because of the ancestry connection, I check the CBC Canada website every day for the latest Canadian news. If you have some sort of ancestral connection to another country, I think it’s a good idea to stay in touch, if only to see things from the perspective of another country.
There’s one other news organization that I check every day, which, believe it or not, is Al Jazeera. It’s main area of coverage is the Middle East, and it does a better job on this area than any other news organization that I’ve found. Pretty much every day, I find Al Jazeera breaking a story that everyone else reports on the next day – probably because they spotted the story on Al Jazeera first, and scrambled to catch up.
So, those are my news sources. And that’s where my sorting process begins. Over the years, I’ve learned to chuck out most stories, because they’re one-time events that won’t have any recurring effect on the planet as a whole. For example, earthquakes in Japan, floods in Nepal, rioting in Haiti. I’m sorry they’re happening, and that people are getting killed, but at a planetary scale, they don’t really have an impact. Those news stories constitute easily 95% of the news, if not more, so not letting them bug me is a good way to stay balanced.
Major Trends
Instead, I focus on just two major trends, which are impacting everyone, everywhere. They are demographics and debt.
When I see news stories on these topics, I’m much more likely to take a deep dive on the information. Let’s start with demographics. It’s the source of all kinds of issues. For example, there’s a direct link between pollution levels and the size of the population. Ditto for climate change, immigration problems, and land use issues. Population levels are declining all over the world, with the exception of Africa, due to higher education levels for women, increased cell phone usage, and a bunch of other causes. This is not necessarily a bad thing, despite what you may be reading about the working age population being too small to pay for the pensions of retired folks.
The interesting thing about demographic change is that there’s not really a whole lot that can be done about it. A bunch of countries have tried to pay women to have more kids, and pay for day care, and even cut the income taxes of large families, but the amount spent has turned out to be far too high in proportion to the number of additional kids born. It’s just not cost-effective. In short, I find that it’s just interesting to observe the trend. Consider this. The world population was around 1.6 billion people in 1900. It’s now about 8.2 billion, and it’s projected to peak somewhere around 2060 and then decline. Okay. It’s simply a trend.
I’m not going to worry about it much; instead, I compartmentalize it into reading about – for example – how Japan is abandoning towns in rural areas and moving the elderly into urban areas for easier access to medical care. Ditto for South Korea, where the population is declining really fast. What happens in these countries is likely to be copied elsewhere, so by focusing on these stories, I can predict what’s likely to happen here.
When it comes to demographics, the only actual policy issue to debate is the level of immigration your country wants to encourage, and exactly who you’re going to let in. If you let in more immigrants, then that offsets the decline in the population that’s otherwise going to occur. If you let in younger immigrants, they pay more taxes over their working lives, which helps to pay for the pensions of the elderly. These are decisions that have to be made at the national level. For example, Japan is letting in a few more immigrants, but the Japanese people seem to be uncomfortable with the concept of having a lot of foreigners living there, so immigration is not offsetting population declines in that country.
The U.S. is a very interesting example. According to a recent Gallup poll, the U.S. is still – despite everything – the most desired place for immigrants to permanently move to, so convincing people to come here is not a problem. From a demographic perspective, the U.S. is facing a declining population replacement rate, just like everyone else. Letting in more legal immigrants directly addresses the issue, especially if they have the right skill set and they’re relatively young. In short, the only demographics-related policy issue for the United States is how many more immigrants to bring in. The Trump administration is doing the exact reverse, by cutting off immigration and throwing people out. From a demographic analysis perspective, that is completely ass backwards, since it leads to a smaller population and a lower GDP.
The second major trend is debt. Debt levels are going up worldwide. The U.S. just passed $40 trillion of national debt, which is 123% of its GDP, Japan’s debt is at about 225% of its GDP, and China’s debt to GDP ratio is over 300%. This is a massive problem, because the debt markets will only take on so much debt. After that, there may be no takers for government bonds, or at least not unless the interest rate paid goes up by a massive amount. In short, the amount of debt that can be realistically issued may run up against a hard wall, and fairly soon.
Let’s focus on the U.S. It’s national debt has doubled in the past ten years, and will keep right on going unless the underlying payment obligations change. The problem is not the amount spent to operate the federal government, and it’s not even the cost of the military. The real problem is the cost of social programs. The social security and Medicare systems were originally set up on the assumption that retirees would live for seven years less than they now do, so payouts are extending far past the original assumptions. And on top of that, benefits have continued to escalate since the programs were created.
In short, the payouts being paid are far higher than the incoming amount of cash. There are all kinds of tweaks to fix the situation, like delaying the age at which you can receive social security and Medicare, or cutting back on selected benefits within those programs, or increasing payroll taxes. My concern is that there’s no serious talk about making any changes. This problem is not specific to one political party or the other. The national debt has gone up every year since the days of Bill Clinton, so both parties are responsible for doing nothing.
What’s going on in the U.S. is also occurring in other countries. This is a monster problem, because governments need debt space to deal with any number of future emergencies, and infrastructure maintenance, and climate change problems, and national defense. If debt levels are maxed out, then there’s no room to fund anything else. Since the only realistic solution to reducing debt levels is to cut back on social programs, then voters are going to be more and more pissed off at their governments. And if they get pissed off, there’s an increased risk that voters will elect extremist parties that will only make the situation worse.
To summarize, I suggest that you use a number of news sources to get alternative views on what’s happening in the world. I suggest that you throw out most news stories unless they address major issues. And, since there are elections coming up, I strongly suggest that you vote for anyone who advocates a sensible immigration policy, and is willing to cut down the national debt. Finally, don’t vote for anyone who promises to increase your benefits. We can’t afford it.