In the next few decades, the world as we know it will change, a lot.
This will of course bring many opportunities... but also many challenges.
More precisely, most developed countries are facing such a large threat that their response
may determine, in economic, political and social terms, which countries succeed and
which fail.
Folks, I'm talking about... population aging, of the demographic pyramid’s 180-degree
turn.
Yes, I’m sure this isn’t news, that most of you have already heard about this subject…
however...
Have you stopped to think about this process’s consequences?
Are your governments doing something about it?
Have they come up with something like a contingency plan to face the risks that lie ahead?
Listen up.
(THE WORLD FACING A NEW STAGE)
In about 100 years, our world will have changed a lot.
It has changed so much that if we could get a time machine, say for example, Doc's Delorean,
and travel 2 or 3 centuries back in time for a season… sooner rather than later most
of us, if not all, would want to rush back home.
We’d be missing loads of things; we’d be horrified by the day to day; we’d be
forced to work intensely to survive; we’d be afraid of getting sick, even of not being
able to eat, etc., etc.
But... let's stay on the subject…
The fact is that at the end of the 19th century; the world’s population surpassed the 1.5
billion person barrier.
And yet… only 100 years later, during the 20th century, the world population had multiplied
by 4 and surpassed 6 billion people.
And of course, considering the enormous speed with which the world population grew, we can’t
be surprised by the fact that many experts began to worry about overpopulation.
And don’t think this was just a thing among mediocre experts, scientists and politicians.
In 1974, a report by the Secretary of State, Henry Kissinger, urged Richard Nixon’s government
to consider birth control in countries such as Brazil, India, Mexico, Colombia, Ethiopia
and Thailand as a top priority.
According to the report, the “demographic explosion” that was taking place posed a
serious threat to the very security of the United States.
Sure, with so many people consuming resources...
Kissinger thought we were heading towards a world of scarcity and fierce struggles for
resources.
Have you noticed how Malthusian arguments come up again and again even though they never
actually happen?
The fact is that while guys like Kissinger tried to think about how to control the world
population and “influence” their decisions... a change was already taking place, such a
huge change that it would turn into an entirely new point in the debate.
In the last 50 years, world fertility has halved, so much so that nowadays Western governments
no longer think about overpopulation... but about aging.
Today European countries and even the United States tend to lose native inhabitants.
Check this out:
In Germany, for example, since 1972 there have been 5 million more deaths than births.
However, the most extreme case has been that of Russia, where in just 20 years, between
1991 and 2011, there were 13.13 million more deaths than births.
Future projections show that in the next 50 years, Europe’s native population will decrease
by around 100 million people.
And not only that... the other effect of this entire process... is that the world population,
especially that of the most developed countries is aging at full speed... and that, my friends,
is posing many, many challenges.
Pensions, health care expenses, dependence... and the question is, how on earth can we finance
this gigantic expense?
To give you an idea of what we’re talking about, it’s estimated that in many European
countries, the percentage of the population over 65 years will be of around 40% by the
year 2050.
And one of those most affected countries is, precisely...
Spain.
Listen up.
(A COUNTRY OF RETIRED PEOPLE?)
Here’s an exercise…
Let’s assume that fertility in Spain and in the European Union remained within the
rates that they’ve had since the year 2000 and that, in addition, no immigrants arrive.
Do you want to know what would happen?
Well, check out the following graph.
As you can see, the population aged between 18 and 40 years, which is the population that
works the most and the population that has children, would take a huge dip.
Of course… the number of inhabitants just a decade later, would follow the same trend.
Folks, Spain is one of the countries that’s beginning to suffer the most from this demographic
crisis.
( "The demographic crisis is getting worse: Spain suffers its biggest population loss
in 2017".)
If we take a look at the average number of children per woman, we can truly understand
what’s going on.
And this is taking into account that the arrival of immigrants in the last 20 years has boosted
birth rates.
Nowadays 23% of all children born in Spain, almost 1 in 4, have a foreign mother.
But perhaps... the most important data to predict what’s going to happen will come
from looking at how the number of people of working age will evolve.
They, after all, are the ones who generate the vast majority of resources, both public
and private.
Well, if we assume that there’s no immigration... in just 30 years the working-age Spanish population
would decrease by 10 million people.... and according to the projections of the Institute
of Statistics of the Government of Spain...
Spaniards will face this panorama by 2050:
19 million people of working age – of whom of course not all would work – and almost
22 million children and retirees...
That is, the dependent population would be greater than the working age population.
We’re talking about Spain, but this scenario is very similar for most developed countries.
And, as you can imagine, all this has many consequences.
(THE CONSEQUENCES)
In recent times, there’s been a lot of talk about the risk of robotization... but perhaps
the most imminent risk that developed economies have to face is their quick aging process.
At the end of the day, it’s clear that an aging population has several consequences.
For one, it’s foreseeable that if nothing changes, public spending will skyrocket to
pay pensions, health care expenses, assistance and care for the elderly, etc., etc.
("Pension spending increases by 50% in Spain in ten years".)
And no doubt… this will be very clear to politicians: the hegemony of retired voters
will be overwhelming.
It’s a matter of votes.
But... at the same time, as we’ve seen, there are going to be far fewer working-age
people... so the question is: How on earth are we going to pay for this huge expense?
Will the already high taxes be raised even more, further damaging the competitiveness
of countries with as many economic problems as Spain or Italy?
Well... that recipe never works.
Now, at this point I think we need to answer a mandatory question: what the hell can we
do?
(WE NEED A PLAN)
I know, politicians don’t usually like to think about the future, especially future
problems
What?
I need to think about problems that will happen 20 years from now and risk losing votes?
No no no.
Let someone else take care of that.
Well, if we don’t want to see headlines like this, developed countries are going to
need a plan:
("Japan's finance minister tells elderly they should 'hurry up and die' to help reduce country's
rising welfare bill”.
Daily Mail.
The time to make decisions is now, and countries that decide to look the other way and do nothing
will face many, many problems in the future.
See, lately, here on VISUALPOLITIK, we've talked a lot about immigration.
Well, experience tells us that this is a good way to stop population aging and buy time
to make new reforms.
(“As Australia, Hong Kong, New Zealand and Singapore have shown, immigration can soften
the blow from rapid aging.”
Changyong Rhee, Director of the Asia-Pacific Department at the International Monetary)
Yes, despite many politicians’ discourse, the truth is that developed countries will
need many people to arrive from abroad.
So, folks, instead of thinking about building walls and closing borders, it would be much
more advisable to start a system that manages to attract people from outside in an orderly
fashion and facilitates their integration.
Of course, that’s not all.
As public pension systems will almost certainly become much less generous – because they
won’t have much of a budget -, governments should also be promoting savings... both from
the governments themselves and from families.
( "Is any Spanish political party warning citizens of the inexorable cut in their pensions?
No, they’re all silent about our true future, giving a false impression that one doesn’t
need to save to guarantee a fairly dignified retirement."
Juan Ramón Rallo, Economist and Director of the Juan de Mariana Institute)
And along with all this, of course, governments should promote policies that attract companies,
that promote entrepreneurship and above all, that favor productivity, investment in machines
and technology, and in research and development.
Yes, I think robots will greatly help us with this problem.
Unfortunately, in many of the affected countries, including Spain, nothing is being done.
And, finally, before we finish, I’d like to throw out an idea.
See, the effect of aging is accompanied by a longevity effect.
Allow me to explain this: thanks to medical advances, better nutrition and a higher quality
of life, mortality rates for all ages have decreased.
That is, people are younger for longer.
See, in the United States, for example, a 75-year-old person has the same mortality
rate today as a 65-year-old in the 1950s.
In Japan, 80 is the new 65.
And also, thanks to medical and technological advances, this evolution continues to grow
and grow.
Which is fantastic.
Therefore... if people now have a longer and more productive life, wouldn’t it be wise
to encourage them to continue working for longer, even partially or in more comfortable
roles?
I’ll leave that there.
But now it's your turn...
Would you be in favor of increasing your country’s retirement age?
Leave your answer in the comments as well as in the survey.
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