"Graying" Developed Countries Face Economic and Security Risks

Richard Jackson

As the population in most developed countries stagnates or even declines over the next few decades, you might—at least at a first pass—welcome the thought. It could mean fewer clogged interstates, less competition for childcare services and, perhaps best of all, more alone time in parks, beaches and lakes. You can almost imagine the sounds of honking horns replaced with lapping waves.

But in a talk at the AAAS Forum on Science & Technology Policy, demographic expert Richard Jackson offered a less tranquil scenario. When a population fails to replace itself, "economic and social challenges are created," said Jackson, director and senior fellow in the Global Aging Initiative at the Center for Strategic and International Studies.

A generation ago, women in every developed country on average had more than 2.1 babies, the so-called replacement fertility rate needed to maintain the population. But now, women are having fewer babies, and the U.S. fertility rate has dipped to replacement. The U.S. birth rate was 2.0 babies per woman in 2000-2005, down from 3.3 children in 1960-1965. Although the birth rate has fallen, the U.S. population is still expected to grow by 100 million by 2050—in stark contrast to the rest of the developed world, where populations will stagnate or decline.

Jackson described the consequences of falling birth rates in the developed world during the 9 May lunch session of the AAAS Forum. Considered the premier event of its kind in the United States, the AAAS Forum focuses on federal budget and R&D issues; public- and private-sector research; education; innovation; and other high-profile domestic and international S&T issues. The 33rd annual Forum, held just a few blocks from the White House on 8-9 May, attracted more than 500 policymakers from government, education, industry, and other fields, plus more than two dozen journalists.

In their new report "The Graying of the Great Powers," Jackson and coauthor Neil Howe describe geopolitical implications of the changing populations in the U.S. and elsewhere. The looming changes, described by the authors as a "massive demographic riptide," will likely include a slackening global influence of the developed world as a whole—but a growing role of the United States within the developed world.

Jackson told the AAAS audience that a more drastic fertility decline is evident in other developed nations. Italy's fertility rate has fallen from 2.5 to 1.3, and Canada's has plummeted from 3.7 to 1.5. France, the United Kingdom, Germany and Japan also report their citizens having fewer babies.

Decreasing numbers of people in the next generation will mean slower growth in employment and GDP, Jackson said. Early retirement ages and the increased age at which young adults enter the workforce also contribute to the slowdown. In modern societies, individuals "take at least 20 years to become new workers," the report notes.

A shrinking younger generation also means a shrinking recruitment pool of 17- to 24-year-olds for the military. The pinch will be less severe in the United States, Jackson and Howe explain in the report. They add, however, that 70% of the U.S. recruitment pool does not qualify for the military due to obesity, asthma, diabetes, drug use, or other reasons.

Meanwhile, longevity is soaring. It now ranges from 77 in the United States to 82 in Japan, and many demographers say life expectancy will continue to climb. The aging population will strain the economy.

"Graying means paying," Jackson said, referring to pensions, health care and long-term care for elderly. Many, perhaps most, countries will face a fiscal crisis. As the younger generation shrinks, gaps are also created in who performs essential care for elderly family members. "There will be a virtual extinction of the extended family in some of the fastest-aging developed countries like Italy and Japan," Jackson said. "The family tree is becoming all root and stem and no branch."

Along with the increasing elderly population, there will also be a graying of the workforce, Jackson said. ("And here," he quipped to the AAAS audience, "we're entering uncomfortably personal terrain.")

In "The Graying of the Great Powers," Jackson and Howe cite evidence that most of today's middle-age workers in the U.S. plan to retire later than their parents did. An aging workforce has all sorts of implications for workplace dynamics. Productivity, for instance, peaks in all sectors of the economy when people are in their 40s and 50s, Jackson said.

Entrepreneurship and innovation are also likely to decline as a population ages. "Creativity may peak even earlier than entrepreneurship," he said. This means that an older workforce may be less likely to sustain innovation and adjust to changing markets and technologies. Decreased fluid intelligence and increased rigidity are other cognitive features associated with aging. Together this suggests an "at least mildly negative" effect of an aging workforce on productivity in developed nations, Jackson and Howe write.

In contrast to the shrinking young adult workforce and expanding older population of developed nations, a different scenario is taking place in the developing world. Although the average fertility rate in the developed world has declined from 5.9 to 2.9 since the 1970s, averages can be deceptive. Fertility rates still tower in the 4-to-7 range in Sub-Saharan Africa and parts of the Muslim world, where, according to Jackson, continued rapid population growth and large "youth bulges" of young adults aged 15 to 24 will continue to threaten stability for the foreseeable future. The youth-and-violence correlation is so well established that intelligence officials track these youth bulges as a way to predict emerging regions of conflict.

Meanwhile, in other parts of the developing world, fertility rates have plunged so far beneath replacement that populations will age "prematurely," Jackson said. China faces a massive age wave that will arrive while it is still in the midst of development, while Russia faces an unprecedented population implosion.

In "The Graying of the Great Powers," Jackson and Howe argue that the world is entering an era of heightened geopolitical risks. The aging of the developed world will weaken its ability to maintain security, even as dramatic demographic changes in the developing world give rise to new threats. "What we worry most about are large and rapidly developing countries that could slip into chaos—or else become affluent, technologically advanced, and civically cohesive, yet hostile to liberal democracy," Jackson and Howe wrote in the report.

Molly McElroy

9 June 2008