Demographic movements accentuate the fact that current and future trends in the social, political, and economic fronts are directly affected by the issue of an aging population. It is a reality for people regardless of race or culture. However, the rate at which demographic shifts differs in countries worldwide will have significant effects on developed and developing countries when saddled by a high number of ageing population. This is because in a typical developing country, baby boomers opt to delay having babies or starting their own families as they focus more on themselves and career advancement. The same problem poses a huge concern for less-developed countries especially when the elder population outnumbers the younger ones. Women typically comprise the elderly population. They live in urban centers, but are still generally poor.
Howe & Jackson (2009) boldly claimed that the 2020s could be “a decade of hyperaging and population decline” (p. 1) as countries begin to experience the results of their decisions. Many countries will experience economic crisis or stagnation as the younger population increases and whose interests their own political economies cannot sustain. Furthermore, the authors affirmed that many rich nations have been aging since years ago considering the falling birth rates. When the baby boomers were born in the 1970s, there was rapid growth in population all over the world. However, when it was time for them to have their own babies, most of those born in the 1970s opted to remain single or delay having babies (Smith, 2014). Thus, as the baby boomers move into retirement, “there will be more people in their 70s than in their 20s” (Howe & Jackson, 2009, p. 1).
This is the result of the phenomenon called “graying”, which means “paying – more for pensions, more for health care, more for nursing homes for the frail elderly” (Howe & Jackson, 2009, p. 1). The United States does not suffer alone in this predicament of having to care for more elderly people, which equates to a country’s economy being affected by having to provide for the needs of the elderly (Fishman, n.d., p. 12). On one side of the equation are the youths who have no choice but to live with their aging parents as there is no one to take care of them while they, the young ones, work. As a result, their resources are easily depleted not only because of their personal purchases, but also in consideration of the many expenses associated with having to live with an aging relative (Howe & Jackson, 2009, p. 1).
Other super countries such as Japan and China also undergo the same predicament especially after their own government systems implemented policies that changed the peoples’ way of thinking when it comes to having children. In Japan, for instance, authors Farrel & Greenberg (2005) acknowledged that the rapid aging population in the country will contribute to the reduction of savings and wealth in Japan (p. 1). The financial wealth of most Japanese households will decline as compared in the previous years when their living standards were at the peak. The authors pointed out that this is because Japan is getting old as a country, thus, by 2024, the authors surmised that about one third of the Japanese population will be over the age of 65. This means “retired households will outnumber households in their prime saving years” (Farrel & Greenberg, 2005, p. 2). In 2006, for the first time in the history of Japan, the falling birthrate and rising mortality rate exceeded the actual birthrate, which marked the beginning of the decline of Japan’s population.
Japan was also known as a country where people are frugal and are money-saver, thus, helping the Japanese economy increase. But changing demographics again influenced this trend because those who used to save money belonged to the now older generation. The young people do not save much of their money. While the younger generation now has higher disposable income, they also spend a lot resulting to a huge decline in the number of savers in the banks. With this trend, the more there will be a dip in the Japanese economy because of the small number of new accounts being opened. As households consume more, the lesser their efforts to save money and consequently, these people eventually become the elders of their generation. In time, they will need to use up their money for health maintenance and for other purposes (Farrel & Greenberg, 2005, p. 3).
Farrel & Greenberg (2005) further stressed that Japan was a nation known for having households that build wealth by saving money in the banks instead of through asset appreciation. Considering that lesser people see the value of saving, the Japanese living standards will soon suffer. The change will also be felt in the international economic front because historically, Japan is among the countries that “run large current-account surpluses and exported savings to other nations, such as the United States. As the world’s savers retire, the United States in particular will feel the pinch” (p. 2).
In China, demographic changes are also transforming the parameters of the country’s potentials. China has long been “old” before its time. It is an aging society where the population of the older generation outnumbers the younger generation. Wang (2012) attributed these changes to “a substantial decline in the supply of young labor, the escalating financial burden of caring for the elderly, and an aging society with a severely weakened family support system, caused largely by China’s three-decade one-child policy” (Wang, 2012). The repercussions of these earlier decisions are now being felt by the current generation and poses huge and grave risks to the country’s growth in economy, political stability, and social accord.
With China’s 1 child policy, it placed itself below the developed-world average of 1.7 children per family. Additionally, the imposition of this policy changed the younger generations’ view when it comes to raising families because the youth tended to concentrate more on their careers. The population of the elders rose, including mortality rate, but the numbers are not being replaced by new births (Wang, 2012). This demographic trend is expected to bring in concerns when it comes to China’s manufacturing sector considering the decline in the number of available laborers as well.
Wang (2012) emphasized two crucial points to explain the projected economic decline in China. First, similar to Japan, the number of bank savers have decreased because the current generation belongs to the school of thought that money should be spent in whatever way one wants, instead of remaining frugal in life. It is projected that from the number of people “aged 30-50, typically the highest savers, will drop from 50% in 2010 to around 46% in 2020 to 40% in 2030” (Wang, 2012). Second, cheap labor will not be as cheap or be readily available as before or during the last 20 years. This can be partially attributed to the shrinkage in the supply of young workers, thus, while production may still be high, the trade off is higher labor costs. As a result, product price also increases (Wang, 2012).
Both Japan and China “must raise productivity, growth, and overall financial returns” (Farrel & Greenberg, 2005, p. 6) in order to continually compete in the economic global market. If they continue with the trend of having higher ageing population as compared with the younger generation, the labor force will continue to shrink, leading to lower GDP growth. Both nations must ensure to increase productivity and continually innovate to attain economic reforms in their respective countries. If it has to come to having to eliminate product market regulations or rehabilitating their tax policies, then both countries must be open to it in order to save their economies. The governments must also consider reviewing land reform rules to help bigger companies expand and create more jobs to help inject money into their economies.
References
Farrel, D., & Greenberg, E. (2005). The economic impact of an aging Japan. The McKinsey Quarterly. Retrieved from http://www.mickeybutts.com/agingjapan.pdf
Fishman, T.C. (n.d.). Shock of gray. PDF.
Howe, N., & Jackson, R. (2009). The world won’t be aging gracefully. Just the opposite. PDF.
Smith, K. (2014). Aging America heading for disaster. PDF.
Wang, F. (2012). Racing towards the precipice. Brookings. Retrieved from http://www.brookings.edu/research/articles/2012/06/china-demographics-wang
