Greying Economies

Continuing on with Global Aging and the Crisis of the 2020's by Neil Howe and Richard Jackson:

"Although population size alone does not confer geopolitical stature, no one disputes that population size and economic size together constitute a potent double engine of national power. The expectation that global aging will diminish the geopolitical stature of the developed world is thus based in part on simple arithmetic. Economic performance, in fact, is more likely to deteriorate than improve.

Economies with graying workforces are also likely to be less entrepreneurial. At the same time, savings rates in the developed world will decline as a larger share of the population moves into the retirement years. Even as economic growth slows, the developed countries will have to transfer a rising share of society's economic resources from working-age adults to nonworking elders. Yet the old-age benefit systems of most developed countries are already pushing the limits of fiscal and economic affordability.

Faced with the choice between economically ruinous tax hikes and politically impossible benefit cuts, many governments will choose a third option: cannibalizing other spending on everything from education and the environment to foreign assistance and national defense."

To be continued ....

GB