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Home Publications Blogs Beat the Press The Davos Crew Is Worried That Aging Populations Will Lead to Higher Wages

The Davos Crew Is Worried That Aging Populations Will Lead to Higher Wages

Wednesday, 22 January 2014 06:08

Yep, that sounds like a true world crisis. And you can read about it right here in the NYT. The headline of the article tells readers that this year's meeting of the world's rich will focus on the aging of Asia's population. As the piece explains:

"Asia’s aging has big implications globally. It ultimately means fewer workers and higher wages, adding to the cost of goods manufactured in Asia. And it could mean less dynamic growth in a region that is increasingly important to the world economy."

Of course most of us value growth because it can increase living standards. This means things like higher wages, which translate into more income per person. Higher GDP that is simply due to more people, is not anything to be valued. (I'm open to a story if someone wants to give it.) And of course in a world where global warming is a huge problem facing the future, lower rates of population growth or population decline should be celebrated, not feared.

The piece also seems to get some of its basic numbers wrong. At one point it tells readers:

"Roughly 9 percent of Chinese, well over 110 million people, are now aged 65 or older. That percentage is only slightly below that in the United States. Moreover, it will rise to more than 16 percent by the end of the next decade, according to United Nations projections, meaning that by then China’s population will be roughly as old as Europe’s is now."

Let's see, 9 percent of China's population is over age 65 and this is only slightly below the ratio in the United States? That's not what the Social Security trustees say. The 2013 trustees report puts the total population in 2012 at 319.7 million. The over 65 population is listed at 43.6 million. This puts the share of the elderly at 13.6 percent. That's more than 50 percent higher than share of 9 percent given for China in this article.



Typo corrected, thanks Joe.

Comments (8)Add Comment
written by JSeydl, January 22, 2014 5:38
in a world where global is a huge problem

Missing the word "warming".
Sorry, No More Vacancies Available in the Davos Club Membership
written by Last Mover, January 22, 2014 6:14
"Asia’s aging has big implications globally. It ultimately means fewer workers and higher wages, adding to the cost of goods manufactured in Asia. And it could mean less dynamic growth in a region that is increasingly important to the world economy."

Other interpretations by anyone who has come within a mile of an Econ 101 textbook could include:

Fewer workers with higher wages means workers are more productive.

Higher wages means there is full employment.

The final cost of goods manufactured in Asia could go down.

Dynamic growth important to the world economy could increase due to lower export prices and new products.

Asia has decided to model its economy on American health care and other essential services through artificial shortages created by the private sector, which include fewer workers to create artificially high wages designed to collect economic rent with no added productive value.

None of the above. The real problem is "fewer workers with higher wages" sounds too much like "fewer ultra rich with higher wealth" doesn't it, so it's time to shut that door for good.

No one else allowed in the Davos Club are they. Can't be diluting those virtuous makers with parasite takers can we. Let the death panels take care of the aged.
written by dax, January 22, 2014 6:42
If you want wages to increase vs the rate of return of capital, then you want fewer workers.
How does one humanely decrease population without increasing the % elderly?
written by John Wright, January 22, 2014 8:21

These articles decrying the increasing percentage of elderly in a population do not seem to look at the underlying simple queue based population structure involved.

If society finds it desirable to decrease/stabilize population, discouraging people from having many children (decreasing the % youth in a population) is more humane than other population control options (euthanasia, encouraged suicide) to decrease the % elderly.

Having fewer young will of course, will lead to a "baby bust" and a relatively smaller percentage of young people in a population.

Ohe hears the same arguments about the need to grow the population to support social security. What exactly does the country do when THESE new workers age to retirement?

I recently read the late Garrett Hardin's 1998 book "The Ostrich Factor", and in the final summary he writes:

"In that sense, perpetual growth in a world of infinite and available material resources has been treated as an immemorial truth. Painful experiences will be required to banish this illusion from the intellectual argumentarium of humanity's leaders. Our ostriches will have to have their heads yanked out of the comforting sands of illusion."
written by Squeezed Turnip, January 22, 2014 8:55
Which is greater: the feces produced by billions of aging Asians, or the BS produced by the 85 or so economic dictators behind Davos?
Just so stupid
written by Jennifer, January 22, 2014 9:45
It is kind of amazing how quickly the Very Serious People go from insisting the old people are going to OVERTAKE US all, WHO WILL WORK, to telling us how robots are going to take all the jobs. As even the article suggested, businesses will adapt.
But really I think what it come down is nothing is worse then the idea they will have to pay more wages.
written by Matt, January 22, 2014 1:29
Shorter Davos crowd: "We're concerned that the people we're currently exploiting will start being able to demand more of a share, and there aren't many poor-but-stable-with-infrastructure countries left for us to jump to."
Demographics and Wages
written by Michael Epton, January 24, 2014 2:44
So, the Davos crew is worried, worried, worried about higher wages in Asia. I dearly hope that events drive them to apoplexy.

I hold the opinion that the Renaissance was a Very Good Idea. The revolution in art, the development of science: These have clearly improved the quality of life for everyone.

But of course we must remember that rising wages and falling rents made it all possible. Specifically, the 1/3 depopulation of Europe brought on by the Black Death, left those survivors in the 99% in a very good position: Rents fell, labor became more expensive, and culture -- no longer strangled by idiot princes -- blossomed. And the 1% bitched and moaned for two centuries. They did eventually scratch back a huge amount of wealth by means of the Enclosures. But by then, the cat was out of the bag, and Modern Civilization was on a roll. Feudalism was dead.

Let's keep it dead.

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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.