Sunday, February 12, 2012

Peak People?

Doug Saunders at The Globe and Mail tackles an issue that has been steadily increasing in exposure over the last ten years: the rise in the world's elderly population. As he notes, the percentage of people over the age of sixty in populations around the world is growing rapidly, if not alarmingly, even in some less-than-expected places:
About 11 per cent of the world’s people are over 60 at the moment. In the next 25 years that will double, to almost a fifth, and one in six of those people will be over 80, according to a forthcoming book, Global Aging in the 21st Century, by sociologists Susan McDaniel of the University of Lethbridge and Zachary Zimmer of the University of California. 
While this is affecting every country and region – even sub-Saharan Africa is now seeing a very fast rise in its proportion of seniors – some countries are being hit very hard. While 12 per cent of Chinese are now over 60, in two decades, there will be more than 28 per cent. Brazil faces a similar blow.
The situation--from a policy perspective--can easily be viewed through an economic prism, along the lines of determining how many workers there are whose incomes can be used--via taxation--to pay for the costs associated with caring for the retired population. According to Saunders, there are five workers for every retiree in Canada right now, but in the near future the ratio will be down to three to one.

Many European nations are already dealing with that kind of ratio and it only looks to get worse. In the United States--where the current demographics are actually far more favorable in this regard than in Europe and many other places--the trend has nonetheless led to the Social Security Administration paying out more in benefits than it takes in. And of course, the current payroll tax holiday isn't helping matters in that regard at all.

Given the global impact of aging populations, Saunders coins what I think is a great term: Peak People. Peak oil theories hold that we've reached the halfway point of the usable oil supply on the planet, that we're now headed downhill and oil will become more and more scarce, even as we use it at a faster and faster rate. Peak people is the idea that the world's population--thanks to increased longevity and lower birthrates--will continue to increase in average age, but we've hit a tipping point with regard to paying the costs for those no longer working, as--per the Canada example--the ratio of workers to retirees is now decreasing and will continue to do so at an increasing rate.

This idea makes for some interesting speculation and modeling. And it raises the question of when--exactly--do the costs become too large to manage, when would the costs for the retired population be so large as to prevent the working population from--on average--caring for themselves. They need to eat too, after all.

But note the underlying cause for all of this: the expectation that it is up to the working population--via taxes and government programs--to bear most of, if not all of, these costs. Given the expectations that we have allowed to be created, that's the current reality. And it's this reality that needs to be changed.

Cheers, all.

3 comments:

  1. As one of the over 60 crowd, I'd like to apologize for my existence. It's totally unfair that currently working stiffs must fork over significant funds via payroll deductions to fulfill government's promise to us old farts, even as we did for our elders. But it's different now, I hear. There are just so damn many of you. True, that. And it's a damn shame nobody was aware of the size of the Baby Boom generation until recently. I mean, if they'd have known, the politicians would never have let this situation reach the crisis stage. Right?

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  2. Well personally, I think that promises made should be kept. But the point is, governments have to think very carefully about making more promises into the distant future.

    Part of the point of the peak oil comparison is that it's easy to play the fear-mongering game on the issue, even though there's really not some sort of imminent collapse in the near the future.

    Still, there's little question that that Social Security--as currently structured--cannot survive forever. So changes will have to be made. Likely, this will include extensions of the retirement age, which means that younger people now will get to work 'til they are seventy or more, unless they are able to plan for their own retirement. And the latter should be encouraged by the govenment--all governments, really--but alas, it is not.

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  3. As one of those "entitlement" people..my personal viewpoint: After 52 years of working..and being forced to pay Social Security..."for my own good..to 'protect' my aging requirements", payments that if I'd not made..I would have gone to jail; the government - without vote or concensus of approval - decided to steal my money and use it for something else. Now if O'Bamit and his organization would like to actually DO something worthwhile with their stimulus money..they can return OUR money..only what we were forced to pay into the government and a fair interest rate of 6%..you know, to all of us "entitlement" people..and they can take SS and Medicare and shove...well, you get the picture.

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