The Elephant in the Room: the Aging Population Worldwide

I believe that no government is handling the glut of Baby Boomers and older people well, and there's no time in recorded history to use as a reference or teacher. This Pew graph has a clear representation:

http://www.pewglobal.org/2014/01/30/global-population/

The economic stagnation in Japan was the first warning shot across the bow for the world; other countries, including the USA, struggle to identify and implement solutions. China ended its one-child policy; Germany enacted a very liberal immigration philosophy; Russia and France offer financial incentives for couples to have children. In 2015, the World Bank reported 75 countries with fertility rates below 2.0, below amounts needed to replace the current population. http://data.worldbank.org/indicator/SP.DYN.TFRT.IN?year_high_desc=false 

These statistics have a clear implication for economic growth. GDP generally grows as long as the working population grows. If the population stagnates or ages to the point that consumers of resources exceed producers of resources, the economy stagnates or falls.

There are three ways to increase a country’s population: increase the births among current citizens, or transfer people in from other countries, legally or illegally, or simply conquer territory and seize its population. The last is unacceptable but may be one motivation for Russia (fertility rate 1.8) to seize eastern Ukraine, China (1.6) to increase its control of the South China Sea and Iran (1.7) to increase its influence in the Middle East. The Rand Corporation studied how Europe approaches its falling fertility rate and came to these observations and conclusion http://www.rand.org/pubs/research_briefs/RB9126/index1.html :

“The study found that:

• Immigration is not a feasible way of reversing population ageing or its consequences.

• National policies can slow fertility declines under the right circumstances.

• However, no single policy intervention necessarily works.

• And, what works in one country may not work in another. Social, economic, and political contexts influence the effect of policies.

• Policies designed to improve broader social and economic conditions may affect fertility, indirectly.

• Population policies take a long time to pay dividends — increases in fertility taking a generation to translate into an increased number of workers — making such policies politically unattractive.”

“Conclusion

This study showed that, under certain conditions, European governments can successfully confront the looming economic threats of declining fertility rates and ageing populations. Policies that remove workplace and career impediments to childrearing are a critical part of any solution. However, reversing long-term ageing and low fertility remains problematic, given that policies for doing so may not pay dividends until the next generation reaches working age. Prior to that time, millions of baby boomers will have retired. Hence, a solution will require long-term vision and political courage.”

In 2015, the USA fertility rate was 1.8 and its net migration rate for 2016 was 3.9, meaning that more people entered the USA legally and illegally than left the country. The census.gov chart of US Population by Age shows the gradual aging of our population despite slow steady growth in the total population.  

A Mix of Possible Solutions

1. Rethink GDP growth as a key measure of a country’s economic prosperity. Focus on measures of quality of life instead - income per capita from all sources, crime rates, homelessness rates, Happiness Index, etc. For publicly traded companies, rather than focusing on revenue growth, focus also on quality measures for the company’s good and services - number of complaints, employee turnover, patents received, research and development expenses.
2. Encourage technology and robotics that replace the strength, mobility, flexibility, vision and hearing decreases that occur with aging. Self-driving cars, drone deliveries, walkable communities near food and healthcare resources are some thoughts.
3. Simplify immigration law and processes. Reduce the number of types of visas from the current dozens to perhaps four. The State Department refugee process takes two years, impossibly long for anyone fleeing war, natural disaster or likely persecution. Develop and implement recommendations made in the International Rescue Committee’s Refugee Compacts report released April 18, 2017 https://www.rescue.org/report/refugee-compacts .
4. Encourage family friendly work situations through cost-beneficial ways such as
• Increasing availability of dependent care tax credits
• Encouraging telecommuting and flexible hours
• Restructure Social Security and Medicare benefits to encourage participants to work without loss of benefits, so that more have incentive to mentor the next generation of workers.