Economics of ageing societies

As birth rates improve following excessive breeding, older people’s proportion of a population will naturally increase. We are often warned that births must be encouraged to ensure a steady supply of new workers, despite unemployment rates proving the supply of workers already exceeds demand.

Articles in three categories below:
An ageing society is beneficial.
An ageing society may or may not be a problem.
An ageing society is detrimental if not disastrous.

An ageing society is beneficial

The demographic false alarm
May 10th, 2008
By Brian McGavin and Tim Murray
“The way we relieve the ‘burden’ of an ageing population is we use the money that would have been spent on the extra infrastructure for housing, schools and health services, trying to accommodate rising populations and immigration and spend more on new technology,“ says Canadian analyst Tim Murray. “Why we need to replace our current exploding population level is a question never asked,” says Murray. “This is in a world of 6.7 billion people and rising rapidly, where each new child will likely produce more than 20 metric tons of green house gases annually and where ‘civilisation’ everywhere, according to the International Panel on Climate Change, is in imminent peril as a result. All to serve a demographic Pyramid Scam that one day must collapse like a house of cards—our environment and any hope of a better life with it.“

Ageing and stable populations are not a threat
February 23rd, 2008
“The Western fear of ageing populations must be faced one day, and the sooner the better. The solution to an ageing population cannot be by increasing the younger population, because they in turn will age and need more younger populations—the situation will only get worse.”

An ageing society may or may not be a problem

Whose lost decade? Japan’s economy works better than pessimists think—at least for the elderly
Nov 19th 2011
In aggregate, Japan’s economy grew at half the pace of America’s between 2001 and 2010. Yet if judged by growth in GDP per person over the same period, then Japan has outperformed America and the euro zone. In part this is because its population has shrunk whereas America’s population has increased.

Population: Is the World Ready for 7 Billion People?
Time magazine’s Ecocentric blog
by Bryan Walsh
December 30, 2010
“... So here’s the planet we could have in 2050: an overpopulated, overstressed developing world and an aging, economically stagnant developed world, with inequality even larger than it is today. Is there any way to escape that fate? While development and education will be incredibly important (especially for women—literacy is one of the best ways to reduce fertility), the answer may end up being immigration. Think about it—in the future the developed world will lack young workers, and the developing world will have an excess of that resource. Immigration could be a way to balance demographics and economics—alleviating population pressure in the poorer parts of the world while jump starting aging developed nations. The U.S. already does this—immigration will provide most of American population growth. It would be a radical solution, given the political resistance to increased immigration in much of the rich world. (If you think it’s a hot topic in the U.S., try Japan, which steadfastly resists assimilating foreigners, despite the dire threat posed by an aging population.) But it might be the only way to save our overpopulated planet.” [How moving people around might save our overpopulated planet wasn’t specified].

Possible reforms to accomodate growing proportion of pensioners
The Brookings Institution
“To restore long-term solvency to public pensions, policymakers confront a choice among four reform alternatives. Three—cutting benefits, increasing contribution rates, or raising the age of retirement—can be implemented within the present pay-as-you-go framework. The fourth moves away from pay-as-you-go toward advance funding of retirement obligations—either within the public system or in privately owned and managed pension funds.”
[In this study, successful reforms require “The Key: Economic Growth.”]

An ageing society is detrimental if not disastrous

No way China can sustain its growth
February 6, 2012
U.S. Vice President Joe Biden warned on Monday that there is no way that China will be able to sustain its current level of economic growth...
“Because of that God-awful one-child policy they have, what happens now is in the next 20 years they’re going to have such an inverse proportion of the number of people working to the number of people retired that there is no way they can sustain that growth,” he said.

A Brief History of China's One-Child Policy
Laura Fitzpatrick
July 27, 2009
In 1979 they introduced a policy requiring couples from China's ethnic Han majority to have only one child (the law has largely exempted ethnic minorities). It has remained virtually the same ever since.
The total number of young people is a problem as well; factories have reported youth-labor shortages in recent years, a problem that will only get worse. In 2007 there were six adults of working age for every retiree, but by 2040 that ratio is expected to drop to 2 to 1. Analysts fear that with too few children to care for them, China's elderly people will suffer neglect.

How Declining Birth Rates Hurt Global Economies
“Around the world, there are more aging people and fewer young people to take care of them. A new study about the trend suggests this demographic shift could drag down the global economy. The report is called "The Sustainable Demographic Dividend." Co-author Phillip Longman, a senior research fellow with the New America Foundation, talks to Lynn Neary about the study.”

Voluntary human extinction in one country
by Daniel W. Drezner
January 3, 2011
“Back in the nineties, the Economist ran a very provocative end-of-year essay on voluntary human extinction, concluding with the notion that, ‘the tricky question is not whether to extinguish, but when.’ While I don’t think that this concept has gained much traction in most of the world, I’m beginning to wonder if the government of Japan is embracing it on the sly.”

The old and the older
The Economist online
Nov 19, 2010
Japan is ageing faster than any country in history
“For about 50 years after the second world war the combination of Japan’s fast-growing labour force and the rising productivity of its famously industrious workers created a growth miracle. Within two generations the number of people of working age increased by 37m and Japan went from ruins to the world’s second-largest economy. In the next 40 years that process will go into reverse. The working-age population will shrink so quickly that by 2050 it will be smaller than it was in 1950, and four out of ten Japanese will be over 65. Unless Japan’s productivity rises faster than its workforce declines, which seems unlikely, its economy will shrink.”

Asia’s baby shortage sets demographic timebomb ticking
Dec 23, 2010
By Frank Zeller
“TOKYO, (AFP) East Asia’s booming economies have for years been the envy of the world, but a shortfall in one crucial area—babies—threatens to render yesterday’s tigers toothless. Some of the world’s lowest birth rates look set to slash labour forces in Singapore, South Korea and Taiwan, where fewer workers will support more retirees and their ballooning health care and pension costs.”

As Populations Age, a Chance for Younger Nations
New York Times
by Ted C. Fishman
October 14, 2010
“You may know that the world’s population is aging—that the number of older people is expanding faster than the number of young—but you probably don’t realize how fast this is happening... This means profound change in nearly every important relationship we have — as family members, neighbors, citizens of nations and the world. Aging populations also alter how business is done everywhere. The globalization of the economy is accelerating because the world is rapidly aging, and at the same time the pace of global aging is quickened by the speed and scope of globalization. These intertwined dynamics also bear on the international competition for wealth and power. The high costs of keeping our aging population healthy and out of poverty has caused the United States and other rich democracies to lose their economic and political footing. Countries on the rise amass wealth and geopolitical clout by refusing to bear those costs. Older countries lose work to younger countries.”

Patricia Muir Oregon State University
“The primary force driving these low birth rates seems to be economic; economic systems often provide more ‘rewards’ for women not having children than the reverse. Shrinking populations, and large numbers of old people relative to fewer young persons, are of increasing concern to the governments of many of these nations, including the ZPG nations of the world. Who will comprise the work force? Who will take care of the elderly? A declining population rapidly acquires an age structure that establishes momentum for further population decline, which would (obviously) become unsustainable if it continued—and the longer it continues, the harder it is to reverse it. A variety of these nations, have in fact begun policies aimed at encouraging some population growth—including things like providing paid maternity and paternity leaves (in some cases for 2 - 3 years), providing free child care and family housing allowances, and even cash payments for raising a child. (Seems amazing, doesn’t it, that some parts of the world can be struggling to control population growth, while others are concerned about shrinking populations?)”

Elderly to Outnumber Children by 2050 in Most Parts of World
Nov. 27, 2010
“The fact that the world population is growing older will not only affect our pensions. In just a few decades there will be more elderly people than children in most parts of the world (with the exception of Africa)... The ban on families having more than one child was intended to last for 30 or 40 years. Now the Chinese authorities are saying that the policy will continue until 2015. But they are gradually allowing exceptions. A number of couples, in particular farmers, are permitted to have more than one child. The authorities now realise that the one-child policy will have significant negative ramifications, both economically and socially.”

Shrinking Societies: The Other Population Crisis
By Venessa Wong
August 12, 2010
“The earth’s population is growing at an alarming rate, but in some countries the lack of growth is the biggest problem. A Japanese woman’s role in society is to give birth, and ‘all we can do is ask them to do their best per head,’ said Hakuo Yanagisawa, Japan’s former health minister.”

A bigger country is inevitable
The Australian
by Jessica Brown
August 04, 2010
“Under every realistic scenario, population growth is going to happen. This is a certainty. Australia's history has been one of growth and this growth looks set to continue for the foreseeable future.
Another certainty is population ageing. While ageing has been conspicuously left out of the population debate, in many ways it will provide a greater challenge for policymakers than population growth.
While the median age of our population is now 37, it will probably rise to about 40 through the next four decades, or even as high as 45 if our fertility levels drop. Because of this, Treasury believes that by 2050 health care, aged care and the aged pension will cost us an extra $60 billion a year in today's terms. However, there will be proportionally fewer taxpayers to meet these costs. Taxes will have to rise dramatically to keep the budget afloat.”

Population Research Presents a Sobering Prognosis
New York Times
by Sam Roberts
July 29, 2010
“With 267 people being born every minute and 108 dying, the world’s population will top seven billion next year, a research group projects, while the ratio of working-age adults to support the elderly in developed countries declines precipitously because of lower birthrates and longer life spans.
In a sobering assessment of those two trends, William P. Butz, president of the Population Reference Bureau, said that ‘chronically low birthrates in developed countries are beginning to challenge the health and financial security of the elderly’ at the same time that ‘developing countries are adding over 80 million to the population each year and the poorest of those countries are adding 20 million, exacerbating poverty and threatening the environment.’”

World population nears 7 billion: Can we handle it?
Associated Press
David Crary
“...raising the question of who will pay the bills to support the elderly in the years ahead. It’s a question bedeviling many European countries which have grappled for years over how to cope with shrinking birth rates and aging populations—and are now faced with a financial crisis that has forced some to cut back on family-friendly government incentives.
Spain and Italy, both forced to enact painful austerity measures in a bid to narrow budget deficits, are battling common problems: Women have chosen to have their first child at a later age, and the difficulties of finding jobs and affordable housing are discouraging some couples from having any children at all.”
[Those “difficulties of finding jobs” reveal that creating more potential workers isn’t going to help: no job = no payroll taxes to “pay the bills to support the elderly.”]