Kevin Hassett has an interesting take on U. S. consumption data compiled by professors at the Universities of California and Hawaii. It seems that total consumption increases dramatically with age, so that a 25-year old spends about $26K per annum and an 80-year old $40K. Why the big difference? Mostly because of government spending on health care, which for a 25-year old is zero and for the 80-year olds averages $11K! Now do the math on life expectancy and we learn that in 2050, 8% of us will be 80, compared to 3.6% today. Further, among people 75 years and older, 66% voted in the 2004 election. Hassett’s challenge is that, unless voting patterns and the relative political strength of the age groups shift, which is unlikely unless the AARP surrenders, Tocqueville’s predicted threat of the “tyranny of democracy” may play out as the dictatorship of the grandmothers financed by taxing their grandchildren.
