To some extent, Japan‘s earthquake reconstruction program may be hindered by a fundamental problem; ageing population. Sometime 40 years ago, Japan’s elderly was supported by 43 people in workforce. The stories have changed, though. Now the ratio is far more worrying, standing at 1:3. Needs of growing number of elderly people and diminishing workforce means Japan workers have more burdens in their shoulders for rebuilding economy than they supposed to have.
However, Japan is not alone here. Most of developed countries are heading toward the same pattern; lower birth rate and worrying massive pension waves. USA is one of prominent examples in this case. Their post-war Baby Boomers are now reaching their pension age, and that means shrinking per capita productivity compared to 90’s. Take into accounts the other G8, Euro zone, and OECD countries, and you will get the pensioner’s figure piling up high.
The advent of modern healthcare, ironically, turns our rising numbers of senior citizens into series of complicated public problems. Advancing healthcare and medicine means pensioners may expect even longer lifespan, but that doesn’t come cheap. The mix of (most of) pensioner’s sedentary lifestyles (
thanks to blame technologies!) and profit-driven gerontological healthcare cost each pensioner several to tens of thousands dollars annually, just for health care.
Falling birth rate, combined with growing number of pensioners, sums up to perfect potential problem in the near future (and global burden in the far future). Ironically, this is caused by successful campaign of contraception. Lessening number of kids is not only the monopoly of developed countries. Mainland China, under the umbrella of “one child policy” has already facing the problems caused by shrinking family size, such as Little Emperor syndrome and potential hikes in workers’ salary in the near future. Other developing countries with such contraception policy, for example Indonesia, are going to face similar problems.
What will we face in the future is not that hard to predict. Falling outputs, productivity, and consumptions will be widespread globally; emerging and frontier markets are no exception. More and more money will be dedicated into healthcare system and pensioners’ care, meaning that those two industries will be one of few industries that can sustain breathtaking growth in the next decades.
Welfare states will be the worst victim of ageing demography, as falling number of people in workforce and rising number of dependants will leave nations with even higher deficit. States without elaborate welfare programs, although in smaller scale, will experience similar fiscal problems. Levying more taxes upon workers will raise concerns, if not protests, of public. Higher corporate taxes would be contra-productive either, as corporations can easily flee to countries with lower taxes and cheaper workforces. Issuing bonds won’t be a good choice at all, as high yields will be imposed on the concern of augmenting deficits, thus only serve as time bomb.
Lower productivity means a slowing GDP growth and easily saturated market. Pre-earthquake Japan is a prominent case in this sense. Fewer needs, low healthcare expenses, and high savings rate among elderly people translate to lower domestic consumption. The fact that there are fewer and fewer workers in Japan and already highly automated production have (in some way) contributed to Lost Decades of Japan, a long period of economic stagnation starting in early 90’s.
Despite its highly negative implications upon national growth and fiscal, those facts don’t necessarily affect quality of life. In fact, ageing population may bring low inflation and increasing government stability, as their subjects are less sensitive and active on political life. Stable population and decreasing mobility also lessen pollution and overexploitation of resources linked to overpopulation, allowing environment to be more sustainable on the long run.
The best way to overcome ageing population is to promote and apply sustainable demography, that is to bring birth rate and death rate to equilibrium and creating stable population. The fact that less young people on workforce (and shrinking GDP) than today may be hard to receive in economic standpoint, but letting population counts to achieve a plateau allows nations and world to be sustainable economically.
The world is heading toward the same direction; having less and less kids. The real question to every parent and government alike is whether we can sustain a stable population or we just allow the human race to diminish slowly yet surely, and leaving us and products of our civilization as a little remnant in the universe?