Download James Dahl -- Ageing, Economy and National Defense

AGING, ECONOMY &
NATIONAL
DEFENSE
*the Pax Geriatrica
Range: 0 - 21
Population Age 65+ (%)
Afghanistan 2
Saudi Arabia 2
Yemen
2
Jordan
3
Iraq
3
Iran
5
Egypt
5
China
8
United States 12
Russia
14
Japan
21
Source: PRB 2007 World Population Data Sheet
• Except for Japan, the world’s 15 oldest countries are all in
Europe.
• The U.S. population is relatively “young” by European
standards, with less than 13 percent age 65 or older, ranking
as the 38th oldest country.
• The aging of the baby-boom generation in the United States
will push the proportion of older Americans to 20 percent by
2030; it will still be lower than in most Western European
countries.
• The older share of the population is expected to more than
double between 2000 and 2030 in Asia and Latin America and
the Caribbean. Aging is occurring more slowly in sub-Saharan
Africa, where relatively high birth rates are keeping the
population “young.”
Speed of Population Aging in Selected Countries
Number of Years for Percent of Population Age 65 or Older to Rise
from 7% to 14%
More developed countries
France
1865-1980
Sweden
1890-1975
Australia
1938-2011
United States
1944-2013
Canada
1944-2009
Hungary
1941-1994
Poland
1966-2013
United Kingdom
Less developed countries
115
41
Azerbaijan 2000-2041
Chile 1998-2025
27
China 2000-2026
26
Jamaica 2008-2033
25
Tunisia 2008-2032
24
Sri Lanka 2004-2027
23
47
Thailand 2003-2025
22
1930-1975
45
Brazil 2011-2032
21
Spain
1947-1995
45
Colombia 2017-2037
20
Japan
1970-1996
Singapore 2000-2019
19
85
73
69
65
53
26
Why is the Developed World
Growing Older?
• Decreased birthrates
• Increased life expectancy
Fertility Rate
• United States
–
–
–
–
–
2.46 in 1968
2.05 in 1992
2.04 in 2004
2.09 in 2007
2.19 in 2050
• China
–
–
–
–
–
6.38 in 1968
1.92 in 1992
1.85 in 2004
1.75 in 2007
1.70 in 2050
Life Expectancy (US)
• The age for social security (65) was set in
1935
• 12 years was the average life expectancy
after retirement. (77 male)
• 1997 life expectancy 80/84
• 2070 life expectancy 83/89
• Retirement age would be 72 if life expectancy
was indexed based on 1935
Aging in China
Percent of Elderly (65+) in China’s Population, 1950-2050
25
20
15
10
5
0
1950
1960
1970
1980
1990
2000
2010
Source: World Population Prospects: The 2004 Revision (2005).
2020
2030
2040
2050
Costs of Aging
• When workforce shrinks so does GDP
– Japan & Russia workforce will decline 34% by
2050
– China 3%
• Elderly tend to be more conservative
– Less entrepreneurship?
• Reduced productivity
– Reduced savings?
• Higher interest rates
Costs of aging (cont)
• Pressure on Government resources
– Retirement/health care costs
• Pay as you go retirement systems
– Current workers support current retirees
• By 2050 the US will spend 20% GDP on
social programs for the elderly
– Government Revenues (tax) only supply 18%
GDP
Implications of Aging
• The United States will experience a
significant increase in population over age 65.
• The United States will still be in better shape
than most of the world (including our chief
rival China)
• Aging populations will necessitate massive
outlays of government funds.
• Funding this outlay will likely result in
retrenchment of overseas obligations.
• Elder care will shift the paradigm from
compassion to national security
United States
•
•
•
•
Youngest of all G-8 nations
Highest fertility rate
Highest immigration rate
Working age populations are on the
decline except for US which predicted to
increase 31% by 2050.
China
• 2050 the median age will be 45
• Dependency rate rises from 10:1 to 2.5:1 in
2050
• Unprepared to pay the bill
– 80% of households have less than 1 year of
savings
– 75% of workers have no pension coverage
• One child law and urbanization have
destroyed traditional elder care structures
PAX AMERICANA
GERIATRICA
• Population aging will ensure American
dominance into the 21st century
– Massive costs of elder care combined with
economic slowdown will inhibit increased military
spending
– Military will have to choose between personnel
and R&D costs
– US is aging to lesser a extent and is better
prepared to absorb the shock
• States will have to crowd out military
spending for elder care
– This is already happening in Japan
Some bad news
• No great power can overtake us but
crowding out of military spending will
possibly mean the end of coalition
actions
• Rising costs will not allow to maintain
our current level of power projection
The War on Terror
• In 2000 45% of all citizens in middle
east were 15-29 years old
– Unemployment higher than 26%
• By 2030 these youth bulges should
subside and help bring stability.
• Aging is the key to victory?
DEMOGRAPHIC ISSUES
WILL BE THE KEY DRIVERS
OF THE ECONOMY AND
NATIONAL DEFENSE
Questions?