For the past two decades or so, some experts have warned that generational warfare will explode as the Boomers, Xers, and Millennials fight over a limited pool of resources. But we don’t see it that way.

The generational warfare scenario goes something like this: As the Boomers begin to retire, they simultaneously stop generating economic output and continue consuming resources — largely in the form of “transfer payments” from Xers and Millennials. With only three workers to support each retiree, Social Security taxes must either be increased or benefits curtailed.

At the same time, the increasing population of the older generation taxes the Medicare system to its limits, requiring either rationing of healthcare or dramatically higher taxes. Those Boomers who stay in the workforce are likely to be resented because they will occupy the most preferred positions. These business veterans will effectively block the career advancement of many ambitious Xers and even Millennials.

While extrapolating past patterns into the future lends some credence to these fears, this line of reasoning is too simplistic. These doomsayers remind the Trends editors of Karl Marx, whose 19th century assumptions implied the collapse of capitalism and the rise of communism. Instead, the reality has been the collapse of communism and the global triumph of capitalism.

What neither the “generational warfare pundits” nor the Marxists understood was the non-linear transformational power of human ingenuity and technology. If we’re afraid to take bold steps to reform programs like Social Security, Medicare, and retirement itself, the pessimists could still be right, but many factors are converging to provide effective ways to resolve these problems before they reach critical mass.

Let’s start with Social Security. The key to the solvency of this program, as well as to the broader health of the economy, is to keep the Boomers working. As we discussed in Trend #3, this is entirely realistic.

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