Are "graying populations" really a problem?

[BrainGlutton]

In the 1970s Paul Ehrlich predicted a Malthusian crisis, a disastrous global population explosion leading to mass starvation. Well, that hasn’t happened. Population has indeed increased massively since then but, in the developed world, at least, population growth seems to be leveling off. People get richer and more comfortable, and they only want to have one or two children, not the huge families of previous and poorer generations. Partly this is because they want to make a really good life for their children – have just one or two, and buy them top-notch educations. Partly it’s because people no longer worry that half their children will, in the natural course of things, die before reaching adulthood. Partly it’s because birth control is now widely available and couples actually have options, other than sexual abstinence or big families. As a result, in Europe and Japan – not in the U.S. – people are actually complaining about a “birth dearth.” Meanwhile, public health and medical science have allowed many more people to live longer – decades past what used to be thought of as retirement age. Which is a good thing, but presents its own problems: How can a diminished population of younger, working people support a growing population of nonworking seniors? That’s considered a problem even here in the U.S., where the massive demographic pig-in-the-python, the Baby Boom generation, will begin to retire in a few years.

But is it really a problem? Old people might not produce anything, but they do something almost as important to a healthy economy: they consume. Just by being there, they keep the money flowing and the wheels turning. Depressions happen when there’s too much stuff on the market and not enough people to buy it. The decline in the younger working force does mean a potential labor shortage, which, again, presents its own problems – but at least it prevents the problem of unemployment. And if we get shorthanded, we people in the industrialized world can always lower our immigration barriers – plenty of young Third Worlders will jump at the chance to come here and work.

I live in Florida, America’s most popular retirement destination. Except when we get stuck behind a slow elderly driver on the road, nobody really complains about having all those retirees here. When they come to Florida, they don’t bring any social problems with them. The don’t commit crimes. They don’t have young children who need to be educated at public expense. They don’t need jobs. In fact, they create jobs. They draw their retirement pensions, and they spend them on goods and services just like everybody else. They also spend on specialized goods and services for the elderly, such as nursing care. All that money finds its way into the pockets of younger people who are working and earning. You could even make a case that the rest of the country is being taxed, through the Social Security payroll deduction, to subsidize Florida’s economic health. Who wants to meddle with that? (Who in Florida, I mean.)

So where’s the problem?

[erislover]

In general there isn’t a very large problem unless you are concerned about rapid cultural changes. The birth rate in America, which is generally negative, is offset by immigration. So long as our immigration policy is relatively flexible, and so long as opportunities exist here in America, we won’t really have a problem.

There are plenty of population centers, though, that have suffered a decline in birthrates to the point of it being a little scary. Women need to average just over two children in order to stabilize a population. I believe Italy, or at least some areas of Italy, have fallen down to 0.7. :eek: Western economies are generally geared towards the young supporting the old. Whether old people consume or not, we still need a vast pool of resource to redistribute to these old people in order for them to consume, and if there’s not enough people to generate the resources, you do have a medium-term problem. True, demand should drive growth, which should drive security, which should raise (in principle) the birthrate, but I think this argument is not entirely sound, because it is not strictly security which drives the birth rate (if so, immigration from poor areas couldn’t be the short-term solution!).

It is a perplexing problem, not something that can be easily dismissed, I think.

[eponymous]

@BrainGlutton

Which is a good thing, but presents its own problems: How can a diminished population of younger, working people support a growing population of nonworking seniors? That’s considered a problem even here in the U.S., where the massive demographic pig-in-the-python, the Baby Boom generation, will begin to retire in a few years.

This is the crux of the issue. Over time, with no changes made to the system in place, the system cannot sustain itself. This, of course, ignores certain factors such as immigration.

But is it really a problem? Old people might not produce anything, but they do something almost as important to a healthy economy: they consume.

It will become a problem if nothing is done to reflect the demographic shift in the population at large. While it’s true that older/retired people still consume, it’s what they consume that’s at issue. A retired person’s needs/wants are, in many cases, much different from someone who is in their 20’s, 30’s, & 40’s. And increasingly, medical and health related issues are at the forefront of what older people are consuming. I’m sure you are well aware of the rapidly growing cost of medical care and the growing need for workers in the health/medical related professions.

Just by being there, they keep the money flowing and the wheels turning. Depressions happen when there’s too much stuff on the market and not enough people to buy it.

But older people aren’t spending a disportunate amount of their income/money on “stuff” (i.e goods). They are spending a larger portion of their incomes on “services” (i.e medical/health). It would be different if older people were still spending a good chunk of their incomes on consumer goods. Some do, but not at the same level as they had done when they are younger. Many of them own their homes; their homes are furnished; they don’t have to worry about kids (all all of the expense in raising/taking care of them).

The decline in the younger working force does mean a potential labor shortage, which, again, presents its own problems – but at least it prevents the problem of unemployment. And if we get shorthanded, we people in the industrialized world can always lower our immigration barriers – plenty of young Third Worlders will jump at the chance to come here and work.

It’s not so much unemployment, but rather a shift in the demand for certain types of employment. With a much older population, resources are now being channeled into supporting this group. More services, less manufacturing. You are correct that immigration will help lessen the shift entirely.

I live in Florida, America’s most popular retirement destination. Except when we get stuck behind a slow elderly driver on the road, nobody really complains about having all those retirees here. When they come to Florida, they don’t bring any social problems with them. The don’t commit crimes. They don’t have young children who need to be educated at public expense. They don’t need jobs. In fact, they create jobs.

A key here is - if they do create jobs, what kind of jobs are they? I would be interested in seeing whether the retirees help create manufacturing jobs. In fact, I suspect that many retirment communities are attractive to retirees because they wanted to get away from places that had a much more diversified economic base (ag, manufacturing, and services).

I would venture to say that most of the jobs they create are service related. And I would venture to say that many of these service related jobs are not high-paying, high-skilled positions. Many are probably geared to the demands of the retirement community.

They draw their retirement pensions, and they spend them on goods and services just like everybody else. They also spend on specialized goods and services for the elderly, such as nursing care. All that money finds its way into the pockets of younger people who are working and earning. You could even make a case that the rest of the country is being taxed, through the Social Security payroll deduction, to subsidize Florida’s economic health. Who wants to meddle with that? (Who in Florida, I mean.)

So where’s the problem?

In and of itself, it’s not a problem. It’s simply a matter of suplly and demand, and the market adjusting itself to that demand. However, keep in mind that what’s occuring is a shift in emphasis in supporting an older population relative to the rest of the population. In other words, do we, as a country, want a continued shift in the allocation of resources geared towards the elderly? Or do we want to try to strike some balanace between meeting the needs of the elderly, but not at the expense of those younger supporting them?

[erislover]

@eponymous

It would be different if older people were still spending a good chunk of their incomes on consumer goods. Some do, but not at the same level as they had done when they are younger. Many of them own their homes; their homes are furnished; they don’t have to worry about kids (all all of the expense in raising/taking care of them).

This is an interesting point. Do retirees consume less or more than younger people? Intuitively it seems like it’d have to be less. Have to be. Plus, in every case, a retired person’s income is not due to their contributing to the economy, they produce no goods or services.

[dangermom]

if they do create jobs, what kind of jobs are they?

This is actually a problem in my community. We are getting a lot of wealthy retirees moving in. The result has been that housing prices have shot up, making it difficult for young families to buy homes. There are plenty of retail/service jobs, but they are low-paying and not something parents can make a real living doing. As wages drop, the cost of living rises. We want more ‘real’ jobs–computer/software firms, some manufactuing, and so on–but they aren’t moving in fast enough. If this continues long enough, there will be a lot of older people, and very few younger people left to sell them services.

In addition, there is the taxation problem. In countries where the government gives out pensions, the taxes are going to become debilitating to the working population once it gets to a certain ratio of workers to pensioners. (I believe that this is already a problem in France.) So, do we let the pension system collapse, or tax workers into poverty?

In Asian countries like Japan, where the elderly population expects to be cared for by their children, the younger generation no longer wants to perform that duty, particularly when the wife is working. There is no pension system to speak of, but the children aren’t doing it either. The solution is frequently to bring in a Filipina (or other nationality) nurse–but she’s often leaving children behind and working for a pittance, which is another problem.