“In the 20th century the planet’s population doubled twice. It will not double even once in the current century,” states The Economist in a lengthy article on how the world’s aging population is going to affect economic growth.
One of the most overlooked aspects of modern day economics is the changing demographics of the developed world, the aging army of baby boomers has been effectively ignored by policy makers and voters alike and now we’re about the see the consequences.
Japan is the case study as the country is well ahead of the pack with an rapidly aging population and the indicators aren’t good.
Amlan Roy, an economist at Credit Suisse, has calculated that the shrinking working-age population dragged down Japan’s GDP growth by an average of just over 0.6 percentage points a year between 2000 and 2013, and that over the next four years that will increase to 1 percentage point a year.
Despite that drag on growth, the Japanese are still living quite well and could be showing that an economy can grow old gracefully and productively.
The key to doing that is to have a well educated, skilled and productive workforce. An efficient health system that ensures older workers stay fit enough to work doesn’t hurt either.
What The Economist illustrates in its story is that some countries are going to perform better than others as their workforces age. Those who’ve neglected their education systems and workforce skill bases are not going to do well.
One can’t help but think the ideologies that gripped the Anglo-Saxon countries in the 1980s that saw skills being discarded, investment neglected and education cut are going to have a high cost on those nations over the next twenty years.