Rich countries' populations are shrinking ... not to worry though?

demography.jpg Two interesting articles in this week's issue of the Economist take a glance at the world's demographic trends and what this means for our future. 

See the corresponding leader as well as this case study on Japan; both from The Economist.

So, what is the story then?

"Rich countries' populations are beginning to shrink. That's not necessarily bad news"

Conventional wisdom would rate this as a bad tendency because it means that the potential output of the economy consequently shrinks with the population. However, The Economist is not so pessimistic.

"People love to worry—maybe it's a symptom of ageing populations—but the gloom surrounding population declines misses the main point. The new demographics that are causing populations to age and to shrink are something to celebrate. Humanity was once caught in the trap of high fertility and high mortality. Now it has escaped into the freedom of low fertility and low mortality."

With their focus on Japan The Economist argues that we have to stay longer in employment to offset the growing "old to young" ratio an as such the governments and companies must adapt.

"The government and some companies are starting to respond to the new circumstances. Already, eligibility for the fixed part of the state's two-tier pension benefit has been raised to 62; it will be 65 by 2013."

Is it all good then?
 
I agree with the zest of the arguments, namely that the new realities mean that there will be fewer people in the workforce to support more old people in the future. In a global perpspective I also believe that the world would benefit of fewer people on a whole. However, the point that escapes The Economist in the midst of their optimist is that some countries will have a h'll of a lot more difficulties adapting than others and as such these demographic trends might have a real negative effect, at least some places in the world.

Demographicsclaus vistesen