Sunday 6 May 2012

Is there a "demographic timebomb"?

In the debates about pensions, much has been made of rising life-expectancy, with scary graphs which show the rapid rise in the percentage of the population over 65.  A lot less attention has been paid to far less scary graphs which show the percentage of the population aged 15-65.  What this shows is that the proportion of the population who are not of "working age" has not changed anywhere near as fast (even if you allow for the fact that people are older when they start working later now than 100 years ago).

Because the debate on pensions has been dominated by "pensions experts" who look at the issue in isolation, they miss the fact that today's working population is supporting a broadly similar proportion of the population who are not of working age as in the past.  More pensioners is offset by fewer children.

Production per worker has risen massively with developments in technology.  If society could afford a decent welfare state and pensions in the aftermath of World War 2, we can afford it today - if we're willing to stop the trend of more and more wealth being concentrated in the hands of a tiny minority.

The domination of the pensions debate by institutions that gamble on the markets has been poisonous, obscuring the fact that decisions about what proportion of society's wealth go to look after children, older people and those unable to work are political decisions.

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