Alan Reynolds

 One of Washington's best secrets is a classy quarterly magazine called The International Economy. Founded in 1987 by David Smick and Manuel Johnson, The International Economy really is, as they say, "read by central bankers, politicians, and bank officials as well as members of the financial community."  The eclectic advisory board ranges from George Soros and Paul Krugman to me -- a broad spectrum by any standard. And a list of contributing authors reads like an international Who's Who.

 International Economy often invites diverse specialists to comment on some major, long-term issue of enormous international significance. The last issue, for example, had 20 comments on the question: "Is the Aging of the Developed World a Ticking Time Bomb?" 

 The introduction was appropriately ominous: "The developed-world populations are aging and shrinking, producing huge fiscal, economic, political and social stresses given the unfunded liabilities of public entitlement programs. Does this phenomenon represent a global crisis? If a crisis looms, what kind of crisis is likely, when will it unfold, who faces the greatest risk and what if anything can be done?" 

 All 20 answers are well worth reading (at

 The following sample, however, is just my own, relatively upbeat thoughts on this vital subject:

 In some parts of the world, such as China, India and Mexico, labor will be relatively abundant and capital scarce. In other parts of the world, such as Japan, Europe and the United States, capital will be relatively abundant -- at least in comparison with an increasingly scarce supply of willing and able workers. How willing and able those workers will be, however, is more a matter of incentives than demographics.

 Demographics alone present no fundamental economic problems for free and open economies. Nations relatively short of labor can either import workers through open immigration policies or they can import labor-intensive goods and services through open trade, including electronic imports of services. Nations relatively short of capital can either import financial capital by providing secure property rights and competitive taxation, or they can import capital-intensive goods and knowledge-intensive skills through open trade.

Alan Reynolds

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