While this is positive from the perspective of distributing limited resources – in the mid-twentieth century many viewed the rate of population growth as liable to continue indefinitely – the challenges presented by societal ageing are, if anything, even greater.
That much was clear in a 2013 simulation conducted by the credit ratings agency Standard & Poor’s which found that, as a result of ageing demographics, 60 per cent of the countries analysed were predicted to see their credit status reduced to junk within a generation. Their subsequent conclusion, unsurprisingly, was that the status quo was unsustainable and that major reforms, from increasing the pension age to shrinking the public sector, were necessary. A larger study published three years later revealed less pressing problems, concluding only a quarter of countries seemed destined for trouble as people lived longer and fertility rates continued to fall. Yet perhaps most notable about that second report’s findings was the geographical spread of the countries it identified with the Ukraine, Brazil, China and Saudi Arabia all facing major problems ahead. It appears the prospective crisis of elderly care is bigger than any single economic model or set of cultural values.
What is more, ageing will diminish growth. In 2016 the research division of the US Federal Reserve published a paper detailing how changed demographics will render central banks powerless to raise long-term interest rates. Citing an example based on the changing demographics of the United States it concluded, ‘low investment, low interest rates and low output growth are here to stay … the US economy has entered a new normal’. These trends are observable across the Americas, Europe and Asia. While the default policy response in recent decades has been calls for greater immigration (with a few exceptions such as Japan), given ageing is one of the inevitable consequences of the Second Disruption – an experience that has and will continue to visit every society – that is clearly inadequate. As Africa and Asia experience the same trends that Europe and America did before them, the call for economic migrants to make up labour shortages will increasingly be met with the response, ‘from where?’
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