An ageing population is not a disaster in itself, but it is a challenge that most economic systems are not designed to handle. Solving it requires massive changes to how society works—such as much larger government spending and wealth transfers—which are often difficult to achieve in a democratic/oligarhic society without a major crisis to force the issue.
While similar fears about an ageing population existed in the 1930s, the predicted "crisis" never happened back then for two specific, independent reasons:
The Great Depression: This massive economic collapse caused enough social damage to force governments to create the modern welfare state, which provided the necessary financial support for the elderly as well as others.
The Post-War Baby Boom: The sudden surge in births after World War II effectively "reset" the population clock, delaying the problem for several decades or a century until it became no issue.
If these two events hadn't occurred, we would have faced a severe societal crisis caused by demographics much sooner.
Claiming that population ageing isn't a problem today just because it didn't cause a disaster in the past is flawed logic. It is like saying that floods are not a threat simply because a past flood warning turned out to be wrong. Just because we avoided the "storm" once due to unexpected circumstances doesn't mean the danger has disappeared.
Our current economic system was built for a time when there were many young comfortable middle class workers (the "baby boom" era), and it is failing to adapt to an older population. This failure is already causing significant economic damage, creating two completely different paths to prosperity: one enjoyable retirement life for older generations and a much harder life for the young.
These "internal contradictions" are creating a deep sense of intergenerational unfairness. While the problems are getting worse quickly, our political system is unable to address them. History suggests it will likely take a major social crisis or collapse to force/enable the government to act, but by then, the damage to our society may be impossible to reverse.
While an ageing population doesn't threaten the survival of a society itself, it is a major threat to our current economic and social systems. Our modern problems, such as the housing crisis and the rising cost of living, are largely caused by an old economic model—designed for a world full of young workers—clashing with the new reality of an older population.
Changing demographics do have effects but they can be dealt with. Pension obligations exceed revenues? Change the formulas. [In the US I favor funding pensions, health insurance, unemployment insurance from a VAT not a tax on wages]
Falling proportion of young scientists and engineers to create new stuff? raise the denominator. And look at many obstacles to innovation.
And of course, Australia already does what the US should do: merit-based immigration.
All dependants are not created equal. A parent supporting their children until adulthood is virtuous. An old person taking resources from the young (by government mandate no less) is a degenerate. It's just that simple.
I think the comparison between children as dependents and publicly-funded retirees isn’t quite apples to apples.
The former involves families who willingly choose to bear children, and take on the expense of their raising.
The latter involves a tax then transfer payment, that some may agree to, and others may not have.
This system creates a public liability that only grows as more reach retirement age, and live longer into it.
It’s also subjected to the political whims of voters who always demand increases in spending on healthcare & welfare payments.
Nobody could ever politically dream of calling to cut any of that spending.
Right now Labor is mulling a new levy to fund a new spending program for pensioners.
Invariably, the recipients of new levies are working aged people, who right now are dealing with the cost of raising children, higher consumer prices, rising energy prices, tax cuts potentially ending, plus expensive housing & rents.
If course both parties want the easy way out: to broaden that tax base. They’re in the business of upsetting as few powerful voting blocs as possible.
What better way than to entice new people in, who have no choice but to accept these taxes if they “want in” to the lucky country?
… stridently criticising the gerontocracy, or the idea that more and more laws are written to shield our elders from economic pain.
And that thanks to this situation, the costs of the gerontocracy include loading heavier burdens on working-aged people, especially those with children, and losses in productivity at companies.
I think while his criticisms are US-centric, we see a similar gerontocracy in Australia.
And I am reading your substacks on ageing for your perspective on these criticisms.
So while we critics aren’t afraid of ageing per-se, we’re afraid of imposing more costs on the young.
An ageing population is not a disaster in itself, but it is a challenge that most economic systems are not designed to handle. Solving it requires massive changes to how society works—such as much larger government spending and wealth transfers—which are often difficult to achieve in a democratic/oligarhic society without a major crisis to force the issue.
While similar fears about an ageing population existed in the 1930s, the predicted "crisis" never happened back then for two specific, independent reasons:
The Great Depression: This massive economic collapse caused enough social damage to force governments to create the modern welfare state, which provided the necessary financial support for the elderly as well as others.
The Post-War Baby Boom: The sudden surge in births after World War II effectively "reset" the population clock, delaying the problem for several decades or a century until it became no issue.
If these two events hadn't occurred, we would have faced a severe societal crisis caused by demographics much sooner.
Claiming that population ageing isn't a problem today just because it didn't cause a disaster in the past is flawed logic. It is like saying that floods are not a threat simply because a past flood warning turned out to be wrong. Just because we avoided the "storm" once due to unexpected circumstances doesn't mean the danger has disappeared.
Our current economic system was built for a time when there were many young comfortable middle class workers (the "baby boom" era), and it is failing to adapt to an older population. This failure is already causing significant economic damage, creating two completely different paths to prosperity: one enjoyable retirement life for older generations and a much harder life for the young.
These "internal contradictions" are creating a deep sense of intergenerational unfairness. While the problems are getting worse quickly, our political system is unable to address them. History suggests it will likely take a major social crisis or collapse to force/enable the government to act, but by then, the damage to our society may be impossible to reverse.
While an ageing population doesn't threaten the survival of a society itself, it is a major threat to our current economic and social systems. Our modern problems, such as the housing crisis and the rising cost of living, are largely caused by an old economic model—designed for a world full of young workers—clashing with the new reality of an older population.
Changing demographics do have effects but they can be dealt with. Pension obligations exceed revenues? Change the formulas. [In the US I favor funding pensions, health insurance, unemployment insurance from a VAT not a tax on wages]
Falling proportion of young scientists and engineers to create new stuff? raise the denominator. And look at many obstacles to innovation.
And of course, Australia already does what the US should do: merit-based immigration.
All dependants are not created equal. A parent supporting their children until adulthood is virtuous. An old person taking resources from the young (by government mandate no less) is a degenerate. It's just that simple.
I think the comparison between children as dependents and publicly-funded retirees isn’t quite apples to apples.
The former involves families who willingly choose to bear children, and take on the expense of their raising.
The latter involves a tax then transfer payment, that some may agree to, and others may not have.
This system creates a public liability that only grows as more reach retirement age, and live longer into it.
It’s also subjected to the political whims of voters who always demand increases in spending on healthcare & welfare payments.
Nobody could ever politically dream of calling to cut any of that spending.
Right now Labor is mulling a new levy to fund a new spending program for pensioners.
Invariably, the recipients of new levies are working aged people, who right now are dealing with the cost of raising children, higher consumer prices, rising energy prices, tax cuts potentially ending, plus expensive housing & rents.
If course both parties want the easy way out: to broaden that tax base. They’re in the business of upsetting as few powerful voting blocs as possible.
What better way than to entice new people in, who have no choice but to accept these taxes if they “want in” to the lucky country?
Blogger Richard Hanania wrote a Substack...
(https://open.substack.com/pub/richardhanania/p/gerontocracy-versus-western-civilization)
… stridently criticising the gerontocracy, or the idea that more and more laws are written to shield our elders from economic pain.
And that thanks to this situation, the costs of the gerontocracy include loading heavier burdens on working-aged people, especially those with children, and losses in productivity at companies.
I think while his criticisms are US-centric, we see a similar gerontocracy in Australia.
And I am reading your substacks on ageing for your perspective on these criticisms.
So while we critics aren’t afraid of ageing per-se, we’re afraid of imposing more costs on the young.
Is it not the cost of supporting the ageing population though that is the issue rather than the fact that people are living longer?
I don't know what the numbers are but it seems like immigration is not a solution here while the current rules allow for free movement of capital?