Have you heard of the ‘ageing population problem’? The ‘aging population’ is often presented as a key pillar to support arguments that a nation must keep increasing the national population, or to support . “We need to keep growing our population to minimise the ageing population!”. But does continually increasing the population actually address any proposed resulting from an ‘ageing population’, and is there a real problem to be solved anyway? The reality is that the ‘ageing population’ is one of ultimate ‘opportune arguments’ that sounds convincing until further inspection, and is raised to support an alternate agenda. I mean, ageing sounds like a negative already correct? It just must be better if the population was getting younger, surely.
Why do we have an ‘aging population’?
There are two reasons most countries are having an ageing population. Population growth is slowing due to smaller families, as widely discussed elsewhere on this blog. In a rapidly increasing population, each new generation has a greater population than the previous generation. In this expanding population, the older generation is much smaller than the younger, and with a small number of the older generation, the average age of the entire population is much lower. Contrast this todays’ relatively stable population, and the generations are of a similar size, so without the ever increasing numbers of younger people, the average age is older.
The second factor generating this ‘on average older’ population is that people are also living longer. Generally, those considering the ‘aging population’ a problem are not suggesting to stop people living longer, but rather the argument is that to increase immigration, or move back to having more children and return to a rapidly expanding global population.
What is the resulting ‘problem’?
The theory is that people reach an age where they can no longer work, and therefore can no longer contribute towards the production of the wealth of the society. The wealth produced by ‘productive’ people, ‘breadwinners’, must be shared by all: wealth producers (breadwinners) and those who can no longer produce wealth(dependants) alike. In economic terminology, the “Gross Domestic Product” or economy is produced only by those “breadwinners” in the workforce. GDP per capita, one measure of the wealth of society, is determined by dividing the “Gross Domesitc Product” by the number of people in the population. Therefore greater ratio of people who do not produce wealth, the greater the burden on those producing the wealth to produce a high level for the entire population.
This is of course all based on the assumption that the elderly have a much greater ratio of “dependants” than the rest of society.
Immigration is at best a questionable solution.
Every country benefits from the highest possible GDP per capita, and suffers hardship when GPD per capita falls, not just countries seeking to address this ‘aging population problem’. To increase the ratio of ‘working population’ through immigration, a country must have an immigrant intake with selected to maximise the ratio ‘of working age’ among immigrants. The effect of such a policy is to selectively extract ‘breadwinners’ these people from other countries. Immigration does not change the global ration of old to young, or the global ratio of “breadwinners” to dependants, immigration only changes who lives where. One countries gain in this equation is another countries loss.
Since it is the richer countries who are in the best position to attract immigrants, this solution is generally about the richer countries trying to improve their ratio of “breadwinners” by luring these breadwinners from poorer countries. While these immigrant “breadwinners” may send part of their income back home to support dependants back home, all their income still counts as GDP for their new country and they boost taxation revenue of the new country. From a government point of view, such a strategy helps rich countries and is a problem for poorer countries.
Returning to “growth age” birth rates as a solution?
The growth age featured larger families, with a far greater ratio of younger people. Whereas the trend of todays more stable population yields a similar number of people in each age group, the peak growth age had far more children and far fewer elderly. ‘Aging population’ solved? Except that the proposed problem, less dependants, is not solved at all. It turns out that children are also dependants! And high birth rates mean far more of them. In fact, with children now spending longer in education, and then the higher rates of unemployment among young people, the reality is higher birth rates does not reduce dependants, or the cost of dependants, nor increase the ratio of breadwinners at all. Reality is there are far more ‘self funding retirees’ than self funded children. The only impact is that the dependants are younger, and perhaps we feel happier about young people being a cost to society?
There entire ‘ageing population’ problem, is a great argument to justify plans and actions by government where the real motivations are less attractive to promote. I will follow with more posts on these real motivations.