Overview
Population ageing due to longevity is one of the greatest successes of the modern era. However, it is widely thought to dramatically reduce workforce participation and overall output resulting in significant economic costs.
This widely held view is wrong. Ageing countries have higher economic growth and the improved health and longevity of older people increases their economic contribution.
High immigration is also thought to combat population ageing and be a remedy for these non-existent costs of ageing.
This is wrong. Low immigration can affect the age structure by helping to stabilise the population, but high immigration has almost no long-run effect besides increasing the total population level. This creates bigger problems in the future.
It is also widely thought that simply investing in infrastructure will accommodate high immigration and population growth at little cost.
This too is wrong.
Fresh Economic Thinking
8 comments:
"... high immigration has almost no long-run effect besides increasing the total population."
You don't say. Anyone with a grasp of maths up to the standard of that posessed by the average ten year old tumbled to that obvious mathematical truism decades ago. But the latter idea is "anti-immigration" which means that if you express the idea on social media you might get banned...:-)
Ageing countries have higher economic growth and the improved health and longevity of older people increases their economic contribution.
That's a clever way of re-framing an unpalatable thing: oldsters will have to work longer, maybe even a lot longer -- assuming they find a job -- past their current retirement age.
Oh, so much happiness!
It all comes back to people wondering where to find "the munnie". They don't look at it in terms of resources.
Do the resources exist and is the working population productive enough to support themselves and the non-working population? That's the only pertinent question.
An ageing population also means there should be low unemployment among the working population. This should work in working people's favor.
Re Magpie’s claim that there is something “unpalatable” about older people working till an older age than they used to, I see nothing remotely unpalatable about that.
The standard retirement age for men in the UK (i.e. the age at which the state pension starts) has been 65 for a long time. That was presumably because the average age at which men became pretty much incapable of work used to be 65. But with improved health care and nutrition, that “incapable” age is probably now nearer 75. Thus I see nothing wrong at all in men working more years than they used to.
Re women, they used to be able to get the state pension at 60, but that’s now been raised to 65. Quite right, given that equality between the sexes is all the rage nowadays.
As for Magpie’s “assuming they can find a job” point, there is absolutely no reason someone aged 70 shouldn’t be able to find a job if they are fit, any more than someone aged 40 shouldn’t be able to find a job if they are fit. The crucial factor here is fitness, not age.
I took it that automation and robotics would reduce denand for labour. Also, if work is less strenuous and more enjoyable many people would want to do some part time work for extra income and especially for social reasons.
Then the West can start to reduce its populations and so can the rest of the world when it catches up with us. Less pollution, less demand for water, leaving it in the rivers for the wildlife, and cheaper houses, which means a higher standard of living, etc.
In the olden days every extra child was someone who could work on the farm gathering more than he could eat, but in the modern world and extra child is an extra expense as we don't expect them to work but to get an education instead. For this reason the first world has less children.
Also, in poor economies people have children to provide for their security and care in old age, but with welfare systems, state health care and pensions, this is not so important.
Men's retirement age used to be 65, Ralph Musgrave explains, "because the average age at which men became pretty much incapable of work used to be 65". Health improvements, however, allow them to live probably up to 75.
So, after spending a lifetime working, instead of allowing those men enjoy those extra 10 years retired and in health, doing things they enjoy, let's postpone their retirement age. Aren't they are able to work?
God forbid people have a single second of healthy life away from work. They must work either until they die or until they simply cannot work anymore, whatever happens first.
What's the difference between that and a life sentence to forced labour? It beats me.
Incidentally, kids, think about it: when you are approaching the big 6 Oh you'll have spent at least forty years -- the best ones in your life -- taking crap from the boss, with your mouth hermetically shut, lest you lose your job. Forty years worrying about how to pay the bills. A whole life cursing Mondays and longing for Fridays.
By that time (unless Fate has mercy of you and sends dementia, aggressive prostate cancer or a heart attack), if life expectancy keeps increasing, you may have to wait for another 20-25 years until you can finally say enough is enough.
And that' not it. You'll have to compete with youngsters, who -- just like you are today -- will be eager to out-compete their elders.
Makes one wish life expectancy keeps increasing, doesn't it?
You do have a point there, Magpie.
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