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Demographic change in the old world

Demographic change in the old world

The baby boom that many societies enjoyed it the years after World War II now creates the prospects of a 'grey bust'. Whilst this is by no means confined to the industrial nations - China, for example, has a major demographic problem to face - this section focuses on the industrial world. It is, however, notable that the population expansion in the currently-poor nations took place in the 1960-80 period, and a corresponding (but even more poorly financed) age bulge will be working its way through the poor countries by 2020.

The industrial nations face a gray future. This will have a direct impact on growth. It may require economic migrants. This may be offset by atypical behaviour in the 'new old', by in home technologies, geriatric care and advances in biotechnology. Ageing itself may be partly arrestable. However, despite the possible contribution to added value by the elderly, the cost of maintaining this cadre will be high. Many nations have failed to make provision for this, and these will have to face a mixture of political agitation, increased borrowing and slowed growth. All will see changed spending priorities, an intolerance of instability and a general cultural shift to reflect the population's concerns.

This section is divided into three parts. The demographic patterns are explored in the first section, immediately below. The economic implications are developed in the second. Finally, we consider the political consequences of this, and the measures which may evolved to ameliorate a difficult situation.

Patterns of demographic change.

The average age in the industrial world will be around 37 by 2020. If current birth rates continue to fall, children will a relatively unusual sight. They will, no doubt, be spoiled, in the manner of China's Little Jewels or Italy's Mamacinos. Nations have different demographic profiles, as suggested by Figure 1. Some nations have particularly acute problems: Japan and Italy being prime examples of this.

Figure 1: the general rise of the dependent elderly in the industrial nations.

There may be mitigating factors to take into account. Many diseases of ageing may be eliminated: we forget how much infectious diseases such as measles, polio and smallpox hampered the lives of our forebearers and how completely these have been controlled in many areas. Figure 2 contrasts contemporary sources of mortality in the world - heavily weighted of the poor nations - and Europe.

Figure 2: how the world dies, and patterns of European mortality.

The progress which Europe has made in the management of disease will continue to be reflected elsewhere, with people in the wealthy nations living longer and wealthy people living longest. Wealth buys health, in actuarial terms. However, science makes health cheaper to buy, and offers quite new possibilities. Cloned organs, treatments individually tailored to regenerate mutation-speckled genomes and neural regeneration will be feasible. The biochemistry of neoplasms will be deeply understood. Genome profiling will tell us what weaknesses to watch for, and will prescribe regimes which avoid challenge to this weakness. We may get our medical retaliation in first.

Many convergent features may enable better, longer lives. We shall live embedded amongst intelligent gadgetry. The machinery of delivering care will be streamlined and integrated with this monitoring, diagnostic telematics. We may be able to socialise from home, shop from home, be entertained as a group from our home. Urban densification - discussed elsewhere - may rebuild tighter physical communities and ensure security. A technology-using, self-confident cadre of the elderly will deploy their considerable wealth and ingenuity in making things better for themselves.

The growth in the elderly implies a scarcity of the young. Wages may well rise, taking up the cost of care. The scarcity of affordable hands may well be met in one of two ways. Older, confident people may settle in warmer climates for a while, often where services are cheaper. North Africa may well play a significant role for Europe, and Mexico for the USA. IT will make such distancing of oneself from ones roots more acceptable than hitherto. Second, the level of migratory workers may well increase, a phenomenon already well in train. Such measures both increase social coupling across nations and create security issues and co-dependency which may be of significant proportions.

The economic implications of ageing.

These optimistic thoughts need to be tempered by some real doubts. First, a major aged cadge will be an economic drain. The OECD has attempted to estimate the scale of this, and have arrived at the following central estimates

Figure 3: the impact of ageing on economic performance and on the growth of income per capita.

These estimates note the absence of workers, the greater cost of those who remain and the need to fund dependency and, independently, medical care. Half the spending on public health goes to those over 60. Public and private care is already around 13% of US GDP, and set to rise. This creates a likely benchmark that other nations will eventually attain, driven not least by the costly new possibilities which have already discussed. Outlay on US Medicare is currently 3% of GDP, estimated to rise to 8% by 2030 even without 'treatment inflation'

The other aspect of this is, of course, pensions and other ways of funding age. Nations make provision for age from different sources. Japan, notoriously, has relied on personal saving and capital growth in the stock market to support the elderly, This regime has failed and there is limited provision in place in the state sector. Indeed, the hugely-indebted Japanese state will be hard-pressed to fund the situation which it faces. Elsewhere, the situation is frequently difficult.

Figure 4: Public pension commitment that is funded, expressed as a percentage of 1999 GDP.

The figure shows the situation for a range of countries. Broadly, a figure of 100% is 'safe', whilst figures significantly below this amount to significant sums. Germany, for example, is estimated to need to borrow 3.5% compound to 2050 in order to fund its commitment gap. Figures on this scale challenge the "Euro" enterprise and are thought to explain some of its long-term weakness, not least as many other European nations have a similar problem. One would not wish to grow old without personal savings in Austria. The US position may require significant borrowing or tax rises: the existing fund could be exhausted by 2020.

The consequences of all of these forces are summarised in Figure 5, which shows net changes in tax based on current commitments to fund dependency, with and without the impact of demographic change.

Figure 5: Demographic change has a major impact on the welfare bill.

The assumption in the figure is that increased outlay is met by equivalent tax rises. The scale of what is in train is evident. The implications to other forms of state spending is discussed elsewhere.

The political consequences of an ageing population.

Some nations - as with Austria, above - may face major political upheaval, populism and shrill complaint. Others, where balances are more strongly in place, such as the Netherlands, may see less of this. Countries where the family has broken down as a fundamental unit may see greater economic impact than those where it retains its strength. The issue of unpaid care is discussed elsewhere.

There are, however, a large number of consequences of such a fundamental social change. The elderly have tended to display a characteristic set of attitudes, and there seems limited reason not to suppose that this will continue. Despite media attacks on stereotypes, the number of motor-cycle riding pensioners is limited. The elderly are, however, the main private users of the internet and of advanced telecoms. They are the mainstay of charities, political parties and pressure groups. The 'new' elderly will be articulate, often wealthy, readily able to use the political and economic levers open to them.

They may be expected to use their skills and time to lobby for their fundamental interests, which include are freedom from threat and for the assurance of economic and social tranquillity. Those living on savings are particularly keen to eliminate inflation. The will be worried by crime, and particularly worried by economic crime, such as savings swindles and remote e-crime. They will lobby for more public provision towards care and support. They will lobby against anything which is viewed as dangerous and, perhaps, against the challenging. As discussed elsewhere, there is much which will be challenging.

The new elderly may be less inclined to seek communal values than is characteristic of the currently-old. They may embrace technologies which extend life in highly intrusive ways. With little to lose, everything can appear to be an upside risk. There may be groups which are offended by insults to the natural world who wholeheartedly support extreme experimental biotechnology. Elderly greens may be a heterogeneous group.

Fundamentally, however, age-related claimancy may prove the and organising political pole, where other forms of clustering fail. We discuss the limits to political representation elsewhere. Gray power may be a complex thing, but there can be no doubt that in at least some countries, it will be a dominant force in politics. It may not be a force for liberal, open economies, which relishes flexible economic systems or which supports adaptive change. It may be protectionist, directive and concerned to regulate away all sources of risk. This may be unrealistic, but single issue groups do not expect realism, they expect action.

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