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Thursday, August 17, 2017

Can capitalism cope with success?

Population aging is certainly a significant human achievement, the result of smaller family sizes, lower mortality rates and increased longevity.

In the past century, for example, the percent elderly, those aged 65 years and older, averaged around five percent. In striking contrast, the proportion elderly will more than triple during the 21st century, reaching close to one-quarter of the world’s population.  Nearly all the G20 countries are expected to have no less than one-quarter of their populations aged 65 years and older by 2100. And eight of those countries, including China, Germany, Italy and Japan, are projected to have one-third or more of their population elderly by the close of the century.  

In countries such as Japan, Portugal, Singapore and South Korea, the proportion of the female population aged 65 years and older is expected to reach 40 percent during the 21st century. Given that women typically survive their partners, many elderly women will need care and assistance, especially the growing numbers living alone.

Another clear indicator of the unprecedented population aging underway worldwide is the Historic Reversal or the demographic turning point when children (0 to 14 years) in a population become fewer than its elderly (65 years and older). The Historic Reversal first occurred in 1995 in Italy. Today some 30 countries have experienced the Historic Reversal, including Canada, France, Germany, Greece, Japan, Spain and the United Kingdom.  In 2075, and for the first time in human history, the world’s population will go through the Historic Reversal with the elderly increasingly outnumbering children.
Lower mortality rates and living longer increase the numbers of elderly. But the primary driver of population aging is fertility. Low fertility results in age structures having relatively fewer children, a growing concern of many governments, and comparatively more elderly. In addition, the faster the decline from high to low fertility levels, such as has taken place in China, the more rapid the transition to older population age structures. Fertility rates below the replacement level of about two births per woman also mean declining populations for many countries, especially those with limited immigration. Today more than 80 countries, accounting for nearly half of the world’s population, have fertility levels below replacement, including China, United States, Brazil, Russia, Japan, Viet Nam, Germany, Iran, Thailand and the United Kingdom.
 Increased longevity and growing proportions of elderly are raising serious economic questions and fiscal concerns within many countries. In particular, population aging is resulting in growing financial stresses on government-sponsored retirement, pension and healthcare programs. Governments with extensive social programs for the elderly, such as income support, healthcare services and social benefits, are experiencing escalating costs as the numbers of elderly grow rapidly and the duration of support lengthens. Loathe to raising taxes, governmental attempts to address the escalating costs of those programs have by and large focused on adjustments in retirement ages, benefits, contribution rates and savings plans.

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