AGING, ECONOMY & NATIONAL DEFENSE

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AGING, ECONOMY NATIONAL DEFENSE

• the Pax Geriatrica

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Range 0 - 21 Population Age 65 ()
Afghanistan 2 Saudi Arabia 2 Yemen 2 Jordan 3
Iraq 3 Iran 5 Egypt 5 China 8 United
States 12 Russia 14 Japan 21 Source PRB 2007
World Population Data Sheet
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• Except for Japan, the worlds 15 oldest
  countries are all in Europe.
• The U.S. population is relatively young by
  European standards, with less than 13 percent age
  65 or older, ranking as the 38th oldest country.
• The aging of the baby-boom generation in the
  United States will push the proportion of older
  Americans to 20 percent by 2030 it will still be
  lower than in most Western European countries.
• The older share of the population is expected to
  more than double between 2000 and 2030 in Asia
  and Latin America and the Caribbean. Aging is
  occurring more slowly in sub-Saharan Africa,
  where relatively high birth rates are keeping the
  population young.

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Speed of Population Aging in Selected Countries
Number of Years for Percent of Population Age 65
or Older to Rise from 7 to 14
More developed countries
Less developed countries
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Why is the Developed World Growing Older?

• Decreased birthrates
• Increased life expectancy

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Fertility Rate

• China
• 6.38 in 1968
• 1.92 in 1992
• 1.85 in 2004
• 1.75 in 2007
• 1.70 in 2050

• United States
• 2.46 in 1968
• 2.05 in 1992
• 2.04 in 2004
• 2.09 in 2007
• 2.19 in 2050

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Life Expectancy (US)

• The age for social security (65) was set in 1935
• 12 years was the average life expectancy after
  retirement. (77 male)
• 1997 life expectancy 80/84
• 2070 life expectancy 83/89
• Retirement age would be 72 if life expectancy was
  indexed based on 1935

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Aging in China
Percent of Elderly (65) in Chinas Population,
1950-2050
Source World Population Prospects The 2004
Revision (2005).
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Costs of Aging

• When workforce shrinks so does GDP
• Japan Russia workforce will decline 34 by 2050
• China 3
• Elderly tend to be more conservative
• Less entrepreneurship?
• Reduced productivity
• Reduced savings?
• Higher interest rates

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Costs of aging (cont)

• Pressure on Government resources
• Retirement/health care costs
• Pay as you go retirement systems
• Current workers support current retirees
• By 2050 the US will spend 20 GDP on social
  programs for the elderly
• Government Revenues (tax) only supply 18 GDP

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Implications of Aging

• The United States will experience a significant
  increase in population over age 65.
• The United States will still be in better shape
  than most of the world (including our chief rival
  China)
• Aging populations will necessitate massive
  outlays of government funds.
• Funding this outlay will likely result in
  retrenchment of overseas obligations.
• Elder care will shift the paradigm from
  compassion to national security

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United States

• Youngest of all G-8 nations
• Highest fertility rate
• Highest immigration rate
• Working age populations are on the decline except
  for US which predicted to increase 31 by 2050.

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China

• 2050 the median age will be 45
• Dependency rate rises from 101 to 2.51 in 2050
• Unprepared to pay the bill
• 80 of households have less than 1 year of
  savings
• 75 of workers have no pension coverage
• One child law and urbanization have destroyed
  traditional elder care structures

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PAX AMERICANA GERIATRICA

• Population aging will ensure American dominance
  into the 21st century
• Massive costs of elder care combined with
  economic slowdown will inhibit increased military
  spending
• Military will have to choose between personnel
  and RD costs
• US is aging to lesser a extent and is better
  prepared to absorb the shock
• States will have to crowd out military spending
  for elder care
• This is already happening in Japan

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Some bad news

• No great power can overtake us but crowding out
  of military spending will possibly mean the end
  of coalition actions
• Rising costs will not allow to maintain our
  current level of power projection

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The War on Terror

• In 2000 45 of all citizens in middle east were
  15-29 years old
• Unemployment higher than 26
• By 2030 these youth bulges should subside and
  help bring stability.
• Aging is the key to victory?

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DEMOGRAPHIC ISSUES WILL BE THE KEY DRIVERS OF THE
ECONOMY AND NATIONAL DEFENSE
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Questions?