This excellent article uses graphics effectively to show how today’s largest economies benefited from large working-age populations over the past 40 years or so. But large parts of their populations are reaching retirement age. Japan and China enjoy long life expectancy and 40% of their populations will be over age 65 by 2050. There will be three adults age 65 or older for every four working-age adults in South Korea in 2050. Most of the oldest places will be in Asia and Europe.
Populations with large, young cohorts include Africa and the Middle East. They have the opportunity to rev up their economies if the right public policies are in operation. But without the right policies, a huge working-age population can backfire rather than lead to economic growth. If large numbers of young adults don’t have access to jobs or education, widespread youth unemployment can even threaten stability as frustrated young people turn to criminal or armed groups for better opportunities. (A cohort of highly educated population without commensurate opportunities is what Peter Turchin calls “excess elites” who have fomented revolutions in the past.)
The U.S. is aging but not as fast as other large economies due to immigration of young people.
As investors, we need to decide how much of our investments should be kept in the relatively safe but aging first world economies and how much should be invested in emerging markets which have historically been plagued by corruption, inefficiency and political unrest.
Declining populations on the other side of things perhaps 40 years from now will enrich the major nations. The use of resources will decline. The production methods will only improve.
There is huge upside to this process.
Anyone procreation, and instinctually that might be all of us, will feel very threatened. That makes for great headline attraction but it is not necessarily reality based.
The huge consumer bases will still exist. If Japan has 80 million, China perhaps 800 million etc…those are huge consumer based economies.
Older populations don’t consume much compared to young populations building out their families.
While there may be some increased travel and increased medical care for older populations, there isn’t much home, furniture, clothes and car buying. Along with not buying much for children, except for minor doting on grandkids.
Rob
He is no fool who gives what he cannot keep to gain what he cannot lose.
Not to worry, humanoid robots will replace the shrinking population of working age people. There is only one problem, humanoid robots won’t be consuming all the junk the economy relies on to keep growing. There is a Nobel Prize in the wings for whoever finds a way to get robots to consume.
Seriously, do we really need a growing economy? Or is it only the capitalist class that needs it?
Agreed! Clearly getting out of the dark ages and into the modern world was a good thing but when progress means an obesity epidemic maybe that’s too much progress. Contentment has to be more than more material goods.
Portugal is supposed to be a poor country, it was the first of the PIIGS, yet people are happy and there are fewer homeless and beggars in Porto than in Berlin or Madrid.
True, but stagnation leads to failure. We see it even today. People look for ways to “make things better”, not static. There was a story about a static society. “Men Like Gods” was a book, but this story was about how everyone was tested at age 8 (from memory) to see how they would fit into present/future society (after all, it is a “static” society, wo that means they can test to see if the kids “fit” into it). The kids who were generally smart and curious (but were not top leadership material or genius level) were killed at that point. That prevented the existence of a significant discontented group of people in the society who saw no future for themselves–except by revolution. And that was the plan–to kill off those people before they could disrupt that society.
The dystopia you cite presumes that everyone has to be identical excepting the people who decide who to kill. Does everyone have to be identical for global contentment? I don’t think so. In my perfect world everyone would mind his own business. No Gods, No Masters.
I used to think that by standing still one falls behind. This thinking leads to the rat race. Why would such wonderful anti-stagnation advancement be called a rat race?
First of all, that was I’m guessing, science fiction. It’s one persons story. One view of a possible future with near infinite possibilities. How hard do we want to worry about it???
Secondly, and I see all sides doing this so I’m not dumping on anybody here but, whatever happened to um… aaah… solving problems? Just because the non-sustainable, fairytale-esque unlimited growth as the minimum for success gets superseded and replaced with whatever you want to call it, “enough”, sufficiency" whatever, why then does that mean" OK people we’re all doomed! If there’s a problem we’ll do what we always do: Solve it. Now, sure somebody in a book and real life could come up with a “final solution” type of solution but it doesn’t have to be that either.
There was a saying from the Old West. On poker night at the saloon the host/dealer would say to the players: Gentlemen, if we play our cards right, we can all leave here winners. Das Kapitalism requires a “Loser Class.” What did Voltaire say? "The comforts of The Rich depend on an abundant supply of The Poor. Of course any overage would have to be killed.
This is why I’m not too worried about this. Worried some, but not panicked. Why? Because people are talking about this problem. Why was Y2K not a disaster? Because lots of people saw the hurricane approach and did things to survive the storm. People are seeing this demographic collapse as a big deal. And it is. But because it’s seen people are going to think about what to do and find some way to solve the problem or mitigate the bad outcomes in some manner.
That’s zero sum thinking and the progress of humanity most clearly shows it’s wrong. The distribution of wealth is everywhere a function of the Power Law or Pareto distribution. I have made a little model to show the effect of pure chance on the distribution of wealth
It starts with a population with equal wealth and they play a game like poker but in the marketGame there is no strategy, it’s pure chance. A large universe is reduced to a smaller one that is fairly steady state. Please give it a try! Use ‘Time Lapse’ for an animated view.
For a long time I have been trying to show that there is a lot that is out of our control such as the Pareto Distribution. Artifacts like progressive taxation are proposed solutions but they cannot overcome these laws of nature. Killing people seems to be one favored solution except it does not kill the killers fast enough.
Show me one totally egalitarian society. Not even the kibbutzim worked.
I didn’t imply there is, was or could be a truly egalitarian society. Don’t know why’d you answer with the post you did. I just quoted Voltair who was not incorrect, btw, despite your poker game. Additionally, yeah, I agree. You’re not going to overcome these apparently natural law.
Was Voltaire right or wrong? I think wrong because labor, by itself, is not very productive. Combine it with capital and you get exponential growth. Look at American farms, it’s all that labor saving machinery. If it were just labor then peasants would be rich. What really accelerated the economy a few centuries ago were the Joint Stock Laws that allowed capital to be put to work by everybody, not just the filth rich.
Maybe Voltaire lived before these laws were enacted…
Dutch West India Company 1621 (private joint stock corporation)
Voltaire 1694 - 1778
The Joint Stock Companies Act 1844
Which means nobody has ambition or the desire to move up, do something new, etc. NEW = CHANGE = NOT a static society. Which contradicts the original basis of that society.
Actually, the older population (for generations) has spent a portion of their assets assisting their children/grandchildren by making relatively large, but infrequent, asset transfers by buying (or helping to buy) things their now-grown children (with relatively young families) can’t afford–but the new/young families need. Thus, the consumption exists, it is just not direct consumption by the older population. Better examples would be ALL schools, universities, etc.
One thing that older populations do seem to consume much more than younger populations: health care. Health Care is about 1/6 of gdp so that is not insignificant.
