Peter Bickley: Lots to worry about, but older people aren’t one of them
There’s nothing like a good worry to keep us interested and it seems there’s no shortage of stress-fodder around these days.
Lifting our gaze from the immediacy of the euro-crisis, the American fiscal cliff, coalition travails and whether or not China is going to lay an egg, the big black cloud on almost everyone’s horizon is demographics.
Across most of the developed world not only do we have to swallow our pride and admit that we are going to be overtaken by tomorrow’s superpowers, we also have to face the fact that we are getting older – that’s society as a whole, not just each individual one of us.
This is a statistics-free zone, so I’ll not bombard you with numbers but the apparent inevitability is that the dependency ratio – that is the ratio between those actively involved in creating wealth and those who consume it – is heading rapidly in the wrong direction. Actually this is true in many emerging economies too; China’s disastrous “one child” policy might have been designed to starve the future economy of workers while stuffing it full of oldies.
Economists get very excited about all this, all good cage-rattling stuff. It’s good copy for the media too – great for big headlines and mercifully insusceptible to detailed or immediate solutions. So we’re doomed, condemned to a life of broken pension promises, overwork in youth, poverty in old age and, doubtless, plague and pestilence; not an encouraging prospect. And it is hard to argue to the contrary: we know that as we age we become more of an economic burden whether we’re trotting off to the doctor or sitting quietly outside the pub investing our pension in a nice pint.
Yet I sometimes wonder whether it really has to be as bad as all that. Humans have amazing adaptability. Generally we don’t just sit there and let disaster happen – if you take a long enough view, that is. The prophets of doom seem to assume that demographic change will be met by meek submission, by an inability or unwillingness to alter our assumptions and behaviour in response. This seems to me to be not just defeatist but improbable, too.
We oldies are a fit bunch, capable of working long beyond the traditional pensioning-off ages of 60 or 65, ages that were set when retirement was for most a short period of comparative decline. One well-known DIY retailer saw the light years ago – older employees actually know something about what they are selling, they work better, are appreciative of the employment opportunity and are generally thoroughly good eggs.
It is nonsensical to assume that as labour markets tighten people will not remain actively productive for longer. Most will be willing participants too; many forced retirees resent their banishment from work as much as they rue the loss of income.
And it is wrong to characterise the retired as useless burdens on society. Aside from their immense – albeit difficult to quantify – contributions by way of voluntary work and as the movers and shakers of processes from local government to basket-weaving, retired people spend money. During the earlier phases of our lives we save; as we age we enter “drawdown” and our savings reduce. As we spend we create demand and, as we are all too aware right now, final demand is critical to economic progress.
There is a mutual dependency here: by creating demand oldies create the very employment that younger people need to support their elders. Money does not just disappear into Zimmer frames, it whizzes round in circles, doing us all good.
Productivity in the UK happens to be weakening just now but the structural trend is for productivity to increase. A thinner workforce will for sure be able to generate more output per capita. This has been true since all time, though agrarian and industrial revolutions alike. Technological revolution has transformed our lives; it will do so over and over, in ways we cannot predict. It’s a big, complex topic but that’s the point: those simplistic prophets of doom are just that – simplistic.
• Peter Bickley is a consultant economist
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Monday 20 May 2013
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