World Economic Forum Report - Demographic Gaia
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According to Wikipedia, the Gaia Hypothesis refers to an ecology that inextricably ties together elements of Earth and the biosphere. With respect to world population trends, the World Economic Forum embraces the notion that "We Are in This Together" as one possible scenario. Other scenarios put forth include "The Winners and the Rest" and "You Are On Your Own."
In its new report entitled "The Future of Pensions and Healthcare in a Rapidly Ageing World - Scenarios to 2030," authors cite UN projections that, by 2050, "one-third of the populations in developed countries and one-fifth of those in developing countries will be aged 60 or older." Authors Bernd Jan Sikken, Nicholas Davis, Chiemi Hayashi and Heli Olkkonen center on the likely outcomes associated with a radical increase in retirees. Why is this important? As more people leave the workforce, fewer wage-earners remain. This in turn means that fewer dollars (Euros, yen, etc) are deposited into the employee benefits pot to fund promises made to others.
This blog has oft-commented on the potentially dire consequences of "out of control" obligations. World Economic Forum researchers offer that population shifts will no doubt change the political and economic landscape in many countries. Their list of challenges includes, but is not limited to:
- "Growing expectations that the private sector will come to the rescue"
- Financial illiteracy on the part of individuals
- Less than robust private-pension and health insurance mechanisms
- Mounting pressures on "pay as you go" public safety net programs
- Waning support from younger family members to care for elders
- Shortage of skilled healthcare workers
- No safety net programs for some 80% of those who live in less-developed countries.
The report is chock full of graphs and statistics and includes a comprehensive bibliography. Case studies about China and Italy are worthwhile as their problems mirror those of other countries.
I personally am a believer in the "together" theory, no matter how much we save as individuals and irregardless of employer largesse (for whom that applies).
As we've seen in the last few weeks, global capital markets are kissing cousins. Someone sneezes in one country and we all get a cold. In a similar sense, increasing numbers of impoverished persons likely affect us all in the form of (a) increased taxes on working individuals (b) drag on economic growth as monies are diverted from the business sector to support government programs and the (c) human element of not wanting to see others suffer because they cannot afford everyday basics.
Email your thoughts. Do you think we are in this together as relates to a benefits crisis?
Sue, the problem isn't rapid aging, its rapid declines in fertility. Before the "smart" ideas of pensions (Bismarck, Germany, 1870) and Social Security (FDR), people's "pensions" were productive children. When the government tried to become the safety net, the incentive to build a flexible, productive, human pension withered. Now we try to shuffle financial assets around to plug the whole, when really what we need is more human ingenuity.
So we're all in this together against the government's unfulfilled and unfulfill-able promises that it will take care of us.
Read Mark Steyn's America Alone for more.