America's Secret Growth Weapon: Why Immigration Really, Really MattersTue, 04/24/2012 - 17:27 — admin
April 23, 2012
When countries get rich, they can get predictable. They live longer. They get older. They use their wealth to pay for the insurance and security of the elderly. As the workforce moves away from farms into factories and cubicles, working parents tend to have fewer kids. Fewer children grow up to become fewer workers. And fewer workers paying into expensive programs ironically puts strains on the very wealth that made this all possible, in the first place.
An aging country faces three deficits. First it faces this entitlement deficit. Second, it creates an creativity deficit, as a declining share of working-age people are finding and tweaking smart ideas. Third, it creates a savings deficit. Broadly, young people save for retirement and retired people spend down those savings.
We see this hydra of deficits inflicting pain in Japan, whose the working-age population has already peaked and debt-to-GDP is the highest in the advanced world. We see it in Europe, where the ratio of working-age adults to seniors is poised to fall by 38 percent in the next two decades. We see it in Taiwan, and South Korea, and Hong Kong, where birth rates are below 2.1, which is commonly considered replacement level. We see it in China, where rapid aging and a bizarre one-child policy has created a "4-2-1 phenomenon," where one child's income supports two parents and four grandparents. We see it across the developed world, where the 60+ population will be growing more than three times as fast as the general population by 2030.