DifferenTakes #42: Too Many Grannies? The Politics of Population Aging Print E-mail


 

DifferenTakes is an investigative series of issue papers, published by the Population and Development Program at Hampshire College, providing alternative information and analysis on a wide range of reproductive rights, population, environment and social justice issues.

We are pleased to send you our latest issue, "Too Many Grannies? The Politics of Population Aging" by Sarah Sexton.  This issue looks at how in countries with low fertility old people are now being cast as burdens with alarmist images and arguments similar to those used to generate fear of "too many babies" in the Third World.

- Betsy Hartmann and Amy Oliver
Co-editors, DifferenTakes

* Available soon at http://popdev.hampshire.edu/projects/dt

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Too Many Grannies? The Politics of Population Aging

A Publication of the Population and Development Program at Hampshire College • No. 42Fall 2006

Until recently, pensions were primarily of interest to just two minorities: older people and actuaries. But no longer. As The Economist puts it, “for the first time, pensions are as hot as an issue can get.”1 Pensions are now prompting workers to put up the barricades and go on strike across Europe. They are triggering bankruptcies among top-ranking companies. They are filling newspaper pages and television screens.

Surely, headlines of people living longer and healthier lives should be a cause for celebration? Instead, media reports dwell on doom-and-gloom scenarios of masses of desperately poor, gray-haired folk who will be a burden on their families and society alike.

It has been an axiom of international politics for decades that our world is overcrowded with billions of humans ­ or rather poor and brown-skinned youth, largely from the South. Have the poor old of the North now joined these surplus billions? Or is the focus on aging simply a continuation in another guise of age-old Malthusian politics? After all, the apocalyptic language used in media reports is echoingly familiar. This time, however, “demographic time-bombs” refer to aging women, conflict is predicted between generations instead of countries, and the greatest risks are believed to stem from people living longer than they used to.

Too many old people?
Demographic studies indicate that the absolute numbers of older people and their proportion in any given population are rising in many countries around the world. In Japan, the proportion of the population over 65 is the highest in the world at 19 percent, even though half a century ago, it was just five percent, well below that in the US, UK, France or Germany. In the UK, the proportion of the population over the age of 60 has been about the same for the past 20 years (21 percent), but this figure is predicted to rise to almost 30 percent by the year 2031. Of OECD (Organization for Economic Co-operation and
Development) countries, Italy, Japan and South Korea are likely to be the “worst affected” by population aging. By the year 2050, more than one third of the populations in these countries will be over 65 compared to one fifth in the US, Mexico and Turkey. Although warnings usually focus on a “crisis” in Northern countries, some 60 percent of older people
already live in the South, with the figure expected to rise to 80 percent by mid-century.

What actions should be taken based on these projections, however, is open to question. Historical demographic statistics do not show that the proportion of older people in a population has risen constantly: just like birth rates, it rises and falls over time as circumstances change.

Indeed, the increase in the number of older people is, to a certain extent, a temporary phenomenon, reflecting the advancing years of those born during the “baby boom” ­ the sudden leap in births that occurred in many industrialized countries after the Second World War between 1946 and 1964. This “old age bulge” will simply work its way to the top of the age pyramid and deflate by about the middle of the 21st century as the baby boomers die. Rarely mentioned is that societies managed to find the money to feed, clothe, house and educate all these baby boomers for their first dependent 16 to 20 years before they started working; or that the US economy will be three to four times larger when the baby boomers retire than it was when they were young dependents.2

Predictions of what will happen in the future based on current statistics and trends are notoriously problematic, not least because they do not allow for changes occurring between now and then. Population studies certainly do provide indications for future economic development and growth, labor markets, national savings, age structures, health, fertility and mortality, functioning of markets, welfare programs and inequality. But the results are simply projections rather than predictions, and in many cases they are inconclusive.

…living for too long?
Besides a higher proportion of older people, another cause of the supposed pensions (and healthcare) crisis is significant increases in longevity. One financial journalist asserted that: “Once upon a time our biggest fear was dying too young. Now it is living too long.”3

Life expectancy in many countries has been lengthening for the past 200 years. In the first half of the 20th century, lower death rates in early life accounted for much of this rise in longevity. But people now tend to be living longer because of
changes that affect the rest of their lives: less smoking, less exhausting and dangerous jobs, better education, and medical advances in anesthesia and surgery.

Yet it is hardly a surprise that people are living longer. Governments and actuaries have had at least half a century’s warning of any “crisis,” given that pensioners were born 60 or more years ago.4

Many projections of life expectancy assume that people’s lives will simply carry on lengthening, just as predictions of future population growth are often based on extrapolating birth rates way into the future. But just as population growth and birth rates do not continue ever upwards, so, too, life expectancy will not increase ad infinitum.

Indeed, average life spans in several countries are falling rather than rising. According to US Census projections, life expectancy in more than 40 countries is anticipated to be lower in 2010 than in 1990. In Russia, for instance, life expectancy has dropped significantly since 1985, especially for men, a fall attributed to alcohol-related diseases, accidents and violence. In sub-Saharan Africa, life expectancy has dropped precipitously by 10-20 years in the past two decades largely because of AIDS. If there are proportionally more older people in many African countries than there used to be, it is more because the young are dying than because the old are living longer.

.. . . or too few babies?
Rather than “too many old people,” the issue could be presented equally well as one of “too few babies,” implying that a country will have “too few workers” in the future. In the past 50 years, the world’s average birth rate has tumbled from five children per woman to 2.65 children. Most of the 44 countries classified by the UN as “developed” have birth rates below the replacement level of 2.1 children per woman.

In recent years, Italy has had the lowest birth rate in Europe with Spain not far behind. But the most recent figures suggest that Germany now has the lowest: 8.5 births for every 1,000 inhabitants compared with 12.7 and 12 in France and Britain respectively. “Baby Shock: We Germans are Dying Out” headlined one newspaper article in March 2006. In response, some
politicians have suggested that people (especially educated women) who do not have children should have their pensions reduced by half.

And it is not just in the developed world that fertility has fallen. In East Asia, Thailand, Burma, Sri Lanka, many Caribbean countries and most South American countries, fertility rates are now below replacement level. Brazil, Iran and Turkey may all be below replacement level within 15 years. In some countries where more boys than girls are being born and raised because of sex selection and son preference, the decline may be compounded.

Yet reducing the birth rate has been a key international policy goal for more than 50 years. Rather than reassessing this goal, however, it has proved easier to target and to blame vulnerable older people.

An October 2005 OECD study projects that, by the year 2050, 10 active workers will be supporting, on average, more than seven older inactive people compared with just four in the year 2000. What is rarely highlighted in such studies is how the previous generation of retirees laid the foundations for economic growth through their own work and taxes.

Statistics, moreover, leave out the reasons why many people of all ages struggle to earn a reasonable living, such as a lack of skills, experience or aptitude, lack of educational opportunities, low wages, the outsourcing of manufacturing and, increasingly, service jobs to even lower-waged countries. Raising the age at which people can retire and draw a pension as a way of reducing the cost of pensions assumes that there are jobs and training available and that older people do not suffer age discrimination. In the UK, some 40 percent of the one million people between the ages of 50 and 65 who want to work are unable to find employment.

“Old” is, moreover, a relative term. Attitudes toward “old age” are anything but unilinear and unambiguous. Nor are boundaries between “working age” and “old age” completely rigid. Many retired people are part of the “active” economy rather than a dependent expense or a passive burden. This is the case whether they are seen only in the narrow calculus
of economics and accountancy or whether they are considered as part of a broader politics of welfare. In financial terms, they spend, save and invest, all of which helps an economy. They may not be net consumers of public money or national wealth, if the broader effects of their activities are taken into account. For instance, many perform social, voluntary, group and family activities, such as (grand)childcare and community and charity work, all of which are not captured by quantitative measures
such as GDP and thus are not off-set against public expenditure.

.. . . or too few migrants?
Dull, number-crunching arguments about life expectancies, birth and death rates, and the affordability or otherwise of pensions and health care become emotionally charged when they overlap with debates on immigration. Indeed, fears of “too many immigrants” provide much of the subtext for the current debates on population aging. In the process, both
migrants and pensioners are being scapegoated.

Supporters of increased immigration, either on a permanent or temporary basis, argue that migrant workers provide much-needed skills and labor, given the declining ratio of younger people to older ones. They thereby boost economic growth and enable pensions and health care to be paid. UN Secretary General Kofi Annan points to Japan, Russia and South Korea as examples of countries facing shrinking economies and “stagnating” societies. “Immigration alone will not solve these problems,” he says, “but it is an essential part of any solution.”5 Opponents contend that immigrants take the jobs of “native
workers,” lower the wages of others, and thereby depress the economy for everyone.

While these arguments are ostensibly about economic costs and benefits, racism and nationalism are never far from the surface and other economic and historical realities are selectively left out of the picture. The UK and the United States, for instance, have been countries of migrants for centuries, and their preeminence still relies on the legacy of slavery and
colonialism. Columnist Gary Younge of the UK’s Guardian newspaper points out that “economically, without the huge pool of cheap labor emanating from the developing world, documented or not, we simply could not function as we do.”6 Many migrants are filling jobs that British people are unwilling or unable to do.

More and more migrants are going to OECD countries as highly-skilled workers to fill jobs in areas of shortage, such as nursing, teaching and information technology. Without nurses and doctors from overseas, for instance, the UK’s public health service would collapse.

Far from depending on welfare, many migrants are supporting families and communities in the countries from where they came. In 2004, migrant workers formally transferred US $150 billion in total, and informally twice that amount ­ in all, triple the value of official aid to Southern countries and not far behind foreign direct investment.7

An estimated 200 million people now live and work outside their own country, double the number of 25 years ago, but representing just three percent of world population. Europeans migrated in vastly higher numbers in the 19th century to the Americas and Australasia. Nonetheless, migrants are often held responsible for unemployment among old and young alike. Three academic economists point out how easy it is to create a “popular wisdom [that is] simply false”:

“Start by substantially overestimating the number of migrants, as the natives invariably do. They assume the number of jobs is fixed. Evidently any immigrant must be taking the job of a native, so unemployment can be cut only by stopping immigration.”8

Often left out of discussions is an international trade policy that allows capital to roam freely across borders in search of low wages, destroying jobs and livelihoods, but that does not allow people to move in search of better ones. To date, such free market policies have been instrumental in causing the forced movement of people who are simply trying to survive or are fleeing from torture and oppression ­ and in causing the increased racism and hostility they encounter if they manage to migrate. In a similar and related process, pensioners are denigrated as burdens on the young even as footloose capital depends on their savings.

In Whose Interest?
A major goal of many of those who emphasize the aging crisis (too many old people will soon cause countries to go bankrupt) is to reduce direct state provision of pensions so as to increase private, for-profit provision, albeit with significant public subsidies. Pension savings are not intended to be stuffed under a mattress or hoarded in a bank vault, but put into private pension funds that buy and sell stocks and shares around the world or gamble on other financial instruments such as derivatives and hedge funds.

The privatization of pension systems over the past decade and more has not led to better pensions for more people, nor to greater economic growth. But the theory persists because formidable commercial, political and social interests support it for their own opportunistic reasons: to expand stock markets, liberalize financial markets and change the role of the state. The “crisis” thus lies not in pensions nor in the numbers and proportions of old people, but in neoliberal aspirations.

Population aging may well be “unprecedented” and “without parallel in the history of humanity,”9 but it does not follow that the challenges it creates are major, nor that proposed solutions are as obvious as they might appear.

If there is a crisis of too many old people, it is one of too many people in poverty in their old age, both now and in the future. Problems of pension financing derive less from demographic changes than from unemployment, low wages, and a shift in income distribution away from wages towards profits. Even if demography were the main problem, a private system based on financial markets would not be the solution, as it is more costly, less equitable and inherently less secure than public alternatives. Worsening financial problems won’t be the result of the existence of more old people, but exaggerating the demographic challenge only makes that grim future more likely. As economist Paul Krugman points out, “The view of demography as destiny is only a half-truth, and in some ways it’s as damaging as a lie.”10
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Sarah Sexton is at The Corner House, a research and solidarity group based in the United Kingdom that aims to support democratic and community movements for environmental and social justice. This piece is drawn from a recent Corner House Briefing by Richard Minns with Sarah Sexton entitled, “Too Many Grannies: Private Pensions, Corporate Welfare and Growing Insecurity.” http://www.thecornerhouse.org.uk.

The Population and Development Program
CLPP • Hampshire College • Amherst • MA 01002
413.559.5506 • http://popdev.hampshire.edu
Opinions expressed in this publication are those of
the individual authors unless otherwise specified.

References
1. “Britain’s Pensions Pickle,” The Economist (leader), (December 3, 2005), 11.
2. Dean Baker and Mark Weisbrot, Social Security: The Phony Crisis (University of Chicago Press, Chicago, 1999), 31.
3. Trevor Matthews, “Fewer pension pots, more efficiency,” Financial Times (November 23, 2005), 19.
4. Gordon L. Clark and Noel Whiteside, Pension Security in the 21st Century: Redrawing the Public-Private Debate (Oxford University Press, Oxford, 2003).
5. Kofi Annan, “Migrants can help rejuvenate an ageing Europe,” Financial Times (January 29, 2004).
6. Gary Younge, “Detox this racist culture,” The Guardian (May 16, 2005).
7. “The global workforce: How to realise the benefits of migration, and reduce its risks,” Financial Times (editorial) (October 6, 2005), 18.
8. Tito Boeri, Herbert Brucker and Richard Portes, “It’s economic sense to open borders,” Financial Times (June 10, 2005), 19.
9. United Nations, World Population Ageing: 1950-2050, Department of Economic and Social Affairs: Population Division (New York, 2002), http://www.un.org/esa/population/publications/worldageing19502050/.
10. Paul Krugman, “America’s Senior Moment,” The New York Review of Books (March 10, 2005), 6-11.