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Home Publications Blogs Beat the Press Wealthy Countries May Become Less Crowded and the NYT Wants Us to Be Scared

Wealthy Countries May Become Less Crowded and the NYT Wants Us to Be Scared

Saturday, 31 July 2010 08:24

The NYT reported on new projections from the Population Reference Bureau showing continuing increases in population in the developing world and slow or negative growth in wealthy countries. Low birth rates in the wealthy countries are projected to lead to a rise in the ratio of retirees to workers. The NYT described this prospect as "sobering."

There is no obvious reason that people in wealthy countries should be concerned about the prospect of a rising ratio of retirees to workers. This ratio has been increasing for a century. The projected increase in the elderly dependency ratio is largely offset by a decline in the number of dependent children. At the worst, the rise in the dependency ratio will offset some of the gains in wage growth associated with rising productivity, as has been the case in prior decades. So, it is not clear what the NYT wants readers to find "sobering" about this news.

The article also implied that a large jump in the share of GDP going to Social Security and Medicare is due to the aging of the population. Much of the cause of the projected increase in spending on these programs is the projected increase in per person health care costs. If per person health care costs in the United States fell to the levels in Germany or Canada, the share of GDP devoted to these programs in 2050 would be little different from what it is at present.

Comments (6)Add Comment
boomers will hit the fan
written by frankenduf, July 31, 2010 8:52
sorry, but i find this post disingenuous- it says there is "no obvious reason" for concern with aging, but then goes on to infer an obvious concern is healthcare cost!?- it then goes on to imply that this is a subjunctive problem because if we were progressive, the problem would be less worrisome!?- no need for the mental gymnastics one needs to follow the logic of this post, ill put it bluntly: when the boomers hit the age when chronic disease becomes symptomatic, our public heatlthcare system will go bankrupt- this is a ridiculously obvious reason to become sober (contextual pun intended) about the aging population and to instantiate single payer, or else we risk the current system disintegratiing into healthcare for those who can afford, and suffering for those who can't
written by foosion, July 31, 2010 9:18
The underlying problem is healthcare costs, not aging.

If we can fix the healthcare problem, that is, bring costs down to the level of the rest of the world, we won't have a cost problem. If we can't do this, we will have a major cost problem.

The issue of who pays masks the problem. If govt doesn't pay, individuals will have to. This just brings us back to the question of costs.
written by skeptonomist, July 31, 2010 10:07
For those really concerned about dropping birth rates in the U.S. there is an instant solution; increased immigration. This is an instant solution because it bypasses the child-rearing years and puts willing workers into the economy immediately. The birth rate among immigrants also tends to be higher. If the immigrants are illegal and use phony or stolen SS numbers, so much the better for citizens; payroll taxes will be deducted and the money will not be paid back to the illegals. They can't avoid paying sales taxes and real estate taxes (through rents) which are what actually pay for schools and other local services.
written by izzatzo, July 31, 2010 10:37
Wealthy countries, desparate for solutions to problems of declining population growth, have taken a cue from Arizona and declared all immigrants, illegal or otherwise, to be luxury goods on the same level as economists have defined children everywhere in wealthy countries as high cost additions to the population.

As for health care, it has been declared a Giffen Good, a luxury good of such high order that more of it is consumed as price increases, like potatoes in the Irish food famine, which produces an upward sloping demand curve that explodes economic models.

Combining the two is the win-win solution said one economist. It's like third world countries that have lots of children to support the family. Now the wealthy countries can use their own children or substitute immigrant children to provide them with homemade health care.
written by skeptonomist, July 31, 2010 10:38
Actually the rate of population growth in the U.S. decreased steadily until the 30's when it reached a minimum, then kicked up just before WW II, dropped during the war, then picked up again and dropped in the 70's. The rate at the time Social Security began was only a little higher than it is today, so the the current rate is not a new problem, and the baby boom has already been taken care of with the Trust Fund. What has changed drastically since the late 30's is the rate of wage growth:


It is this wage growth which will really determine the level of SS payments in the future, and to some extent public healthcare expenditures. Assuming immigration levels remain the same, the demographics involved are fairly predictable for 20 years or so and wages are the significant variable. Wage growth is not just a matter of total GDP, but of other aspects of public policy, and as Dean has been saying for a long time, public policy has been captured by those who want to keep wages down.
Military Service For Seniors
written by Union Member, July 31, 2010 1:42

Wouldn't compulsory military service for those over 65 shift the cost burden away from entitlements to defense (an expense that always seems necessary), while improve the age retiree to worker ratio?

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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.