How Many Seniors Are Too Many Seniors?

By Harry S. Margolis

I happened to pick up an old issue of The Economist magazine which included an article on demography at the time that the UN announced that our globe now contained 7 billion people last October.  This was just 12 years after we surpassed the 6-billion person mark.

This, of course, raises Malthusian questions about whether this is just too many people for the planet to support.  Will we accelerate global warming, increase the number of famines, and see wars over scarce resources? 

The Economist, at least, is not so worried.  It points out that while population growth numbers are huge, the rate of growth is actually slowing.  In all of the world, except for Africa, population growth has either stopped or moderated significantly.  Further, modern, industrial society has so far proved itself able to increase food production faster than consumption — we are no longer hunter gatherers.  And while Africa has many challenges, it can be argued that population growth there is better for the planet than growth in the developed world, since Americans on average produce 20 times as much carbon dioxide as Africans do.

The Economist, however, predicted that the make up of each country’s population may have a greater effect on its welfare than the total numbers.  Having a large proportion of working-age adults can help a nation’s economy, while having a smaller proportion relative to children and seniors can hold it back.

Demography helped the world economy from 1970 to 2010 as the number of dependents for every 100 adults of working age dropped from 75 to 52.  Japan is already suffering from its low fertility and by 2050 is predicted to have almost as many dependents as workers.  Europe is following the same trend, though not as severely, and by 2050 is expected to have 75 dependents for every 100 workers.

The United States, because it has a higher fertility rate than Europe, is expected to have a dependency rate in 2050 of about 65 dependents for every worker, meaning that it will face some headwinds, but they won’t be as severe as in other parts of the developed world.

That said, our future depends in large part on what we do.  The decades of the Baby Boomers enlarging the workforce have been relatively prosperous, but not as successful as the demographics would have predicted.  The Baby Boomers have not done a good job of saving and investing, being more prone to spend and borrow.  They may have to alter the demographics by working longer, so that the cohort of working age adults includes older adults.

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