AGING, ECONOMY & NATIONAL DEFENSE

*the Pax Geriatrica

Range: 0 - 21Population Age 65+ (%) Afghanistan 2Saudi Arabia 2Yemen 2Jordan 3Iraq 3Iran 5Egypt 5China 8United States 12Russia 14Japan 21Source: PRB 2007 World Population Data Sheet

• Except for Japan, the world’s 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.”

Number of Years for Percent of Population Age 65 or Older to Rise from 7% to 14%

26

45

45

47

53

65

69

73

85

115

Japan 1970-1996

Spain 1947-1995

United Kingdom 1930-1975

Poland 1966-2013

Hungary 1941-1994

Canada 1944-2009

United States 1944-2013

Australia 1938-2011

Sweden 1890-1975

France 1865-1980

More developed countries Less developed countries

41

27

26

25

24

23

22

21

20

19

Azerbaijan 2000-2041

Chile 1998-2025

China 2000-2026

Jamaica 2008-2033

Tunisia 2008-2032

Sri Lanka 2004-2027

Thailand 2003-2025

Brazil 2011-2032

Colombia 2017-2037

Singapore 2000-2019

Speed of Population Aging in Selected Countries

Why is the Developed World Growing Older?

• Decreased birthrates• Increased life expectancy

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

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

Percent of Elderly (65+) in China’s Population, 1950-2050

Aging in China

0

5

10

15

20

25

1950 1960 1970 1980 1990 2000 2010 2020 2030 2040 2050

Source: World Population Prospects: The 2004 Revision (2005).

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

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

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

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.

China

• 2050 the median age will be 45• Dependency rate rises from 10:1 to 2.5:1 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

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

R&D 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

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

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?

DEMOGRAPHIC ISSUES WILL BE THE KEY DRIVERS

OF THE ECONOMY AND NATIONAL DEFENSE

Questions?