Demographic Politics And Population Growth - 2

[ramana]

From Deccan Chronicle, 8 Sept., 2007
<!--QuoteBegin-->QUOTE<!--QuoteEBegin-->A new old-age crisis
By Mark L. Haas

<b>The world’s great powers are growing old. Steep declines in birthrates and major increases in life expectancy have caused the populations of Britain, China, France, Germany, Japan, Russia, and the United States to age at a substantial rate.</b> This phenomenon <b>will hinder the other major powers challenging US’ economic and military dominance, largely because these countries are growing old faster than the US.</b> Yet population ageing may still threaten US’ international security interests.

The scope of the ageing process is remarkable. <b>By 2050 at least 20% of the citizens in these countries will be over 65; in Japan more than 33% will be. China alone will have more than 329 million people over 65. The populations of Germany, Japan and Russia are expected to shrink significantly.</b> The ageing problem in the other great powers is so severe that, in coming decades, they will lack the resources to overtake US’ huge power advantages.

Greying populations will hinder countries’ economic growth as working-age populations (ages 15 to 64) shrink, and will strain governmental resources as public spending for retirees’ healthcare balloons.

This is true even for China.

<b>China’s economic expansion is already threatened by labour shortages due to population ageing. China is also unprepared to pay for the costs of an ageing population</b>.

The country’s elderly have very little savings, the government has set aside little money for their welfare, and the family structure is weakening.

Exploding public elderly care costs are likely to force cuts in discretionary spending, including for economic development and defence.

<b>Although its population is also ageing, the US is in much better shape.

The country is the "youngest" of all the G8 nations. Because it has the highest fertility and immigration rates of all the great powers, it will maintain this position.</b>

The US’ working-age population as a result is expected to expand in this period. <b>The US also has a relatively well-funded pension system; its public welfare commitments to the elderly are modest; its citizens work many more hours and later in life; and its tax burden is low.</b>

Although the ageing crisis is less severe in the US than in the other great powers, the challenges arising from this crisis are far from trivial.

The Congressional Budget Office projects that by 2015, spending on the elderly in the US will total almost $1.8 trillion — nearly half of the anticipated federal budget.

For the United States, healthcare costs are the biggest problem presented by an ageing population. The United States spends more than twice as much per capita in this area than any other industrialised state. By conservative estimates, absent reforms, the costs of Medicare alone will be $2.6 trillion in 2050 in today’s dollars, roughly the size of the current US federal budget.

To pay for the massive fiscal costs associated with its ageing population, the US is likely to have to scale back its international policies. The US will be less able to dedicate significant resources to preventing the proliferation of WMDs, financing nation-building, and engaging in humanitarian interventions. So at the same time that global ageing will help prevent the rise of great power competitors, this phenomenon may jeopardise other vital US international interests.

<b>To protect its international security, the US needs to maintain its enviable demographic position. </b>

Specifically, it should reduce Social Security and Medicare payments to wealthier citizens, raise the retirement age to reflect increases in life expectancies, maintain largely open immigration policies, and, above all, restrain the rising costs of its healthcare system.

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