The Economist's survey of global ageing


If you want a short, sharp introduction
to the topic of global ageing, the latest issue of The Economist is just the ticket. It covers the demography and economics of ageing
(in the developed world) and concludes that "the consequences
will be scary". Finally the message is beginning to sink in. You
can download a PDF if you sign up for a free account.It's worth it.

Some highlights:

end of retirement
-- in its leader for the special issue, The
points out that Otto von Bismarck created the modern
pension system in Prussia in 1889. Workers over 70 would receive a
government payment -- but their life expectancy was only 45, so it
was a good deal for the government. Nowadays the average American
retires at 64 and can expect to live for another 16 years. The
financial pressure of paying pensions to 20% of the population is
going to force us back to "the pre-Bismarckian world where work
had no formal stopping point".

slow-burning fuse:
why the world is getting older explained in
simple language. The financial effects will be severe: a declining
workforce, a possible asset meltdown, stingier governments.

"People in
rich countries will have to be weaned off the expectation that
pensions will become ever more generous and health care ever more
all-encompassing. Since they now live so much longer, and mostly in
good health, they will have to accept that they must also work for
longer and that their pensions will be smaller."

the little children: most of the rich world is short of babies
But it is remarkably difficult to persuade women to have more.
Flexible labour markets help, but they are not a panacea.

"... having
children is a personal choice, and if people really do not want them
there is nothing governments can do. The UN expects fertility in
developed countries to recover somewhat by 2050, to 1.8 children per
woman, but many experts think that forecast is too optimistic."

world of Methuselahs: the benefits, and the costs, of living longer
This section reviews the age-old dream of eternal youth, or at least,
a very long and healthy life. The problem faced by modern economies
is that people are living much longer and are healthier for longer.
But older people inevitably require more health care. Who will manage
it? How will it be paid for?

and save: pensions will have to become far less generous.
for the elderly was good in the 1980s, when there were only 20 people
of retirement age for every 100 people of working age. But
governments cannot afford to support the elderly of 2050 in the same
cushy lifestyle because there will be 45 old codgers for every 100

"So if state
pensions are having to be reined back, private pensions are getting
meaner, riskier and less predictable, and money saved for retirement
is threatened by financial crises, what is the man in the street to
do to make ends meet? The only thing for it, say all the experts in
unison, is to carry on working."

predicament: getting old before you get rich
. Because of the
one-child policy, China is ageing extraordinary fast. In fact, in
some areas there are already labour shortages because there are not
enough young workers.

The conclusion
of the survey
is sobering. The world is moving into unknown
territory. Ageing will affect the world in profound and unpredictable
ways, ranging from the economy to geopolitics. Every country with ZPG
will pay the consequences for not having children. With one
significant exception:

America’s population will still be growing when that of most other
developed countries is shrinking, America will be the only developed
country that still matters geopolitically."


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