Heard the one about the 'ageing crisis'? It's the old story, says Phil Mullan
As the years tick by, the assumption that we are on the brink of a global ageing crisis grows. But is there really any reason to worry?
Demographic ageing represents the process by which most industrialised countries are experiencing an increase in the average age of their populations. Statistically, ageing is usually expressed as an increase in the proportion of older people, conventionally defined as those 65 years old and over. In many countries, the proportion of the population over 64 years of age is projected to grow by about 50 percent over the next 30 to 40 years. For example, in Britain this percentage would rise from 16 percent today to about 24 percent in 2040, or from 10 million to 15 million people.
Everybody presumes that the ageing trend will create an enormous potential crisis, since the growing mass of dependent elderly people will be producing little wealth while consuming a lot of our limited resources. The biggest fear is that the pension and welfare systems will collapse under the impossible burden, as too few people of working age try to support too many old people and resources run out.
The alarmist predictions do not end there. Some experts anticipate intergenerational conflict, as resentful younger people turn against the scrounging ways of the old. Racial tensions are also expected to revive, as inflows of foreign workers will apparently be needed to offset labour shortages in the West. Peter Peterson, chair of the American Council on Foreign Relations, goes so far as to warn that global ageing could be a greater threat to the world than more familiar concerns, like the proliferation of nuclear, biological and chemical weapons, extreme climatic change, the financial and economic aftershocks of globalisation, and violent ethnic conflict. 'Global ageing', he concludes, 'could trigger a crisis that engulfs the world economy. This crisis may even threaten democracy itself' ('Gray dawn: the global ageing crisis', Foreign Affairs, January/February 1999).
Scary stuff. But why has 'the ageing crisis' become an issue now? Population ageing is hardly new: it has been a constant feature of the twentieth century. In Britain the proportion of older people rose steadily from about five percent at the beginning of the century. In fact, the 1990s is the one decade this century when the proportion of older people has fallen. It is difficult to substantiate the panic about ageing from demographic trends alone, except with the help of some rather dubious statistics and arithmetic.
Most projections of financial, economic and social crises extrapolate one rising trend - the proportion of over-64s - and assume that everything else is fixed. But when ageing is put in the context of a dynamic society it disappears as a problem. Industrialised countries have become far more wealthy this century, at the same time as their proportions of elderly people have often tripled. Surely it is reasonable to assume a similar continuation of economic advance over the next half-century, while this proportion rises by another half?
The notion of a demographic 'time bomb' rests on the misleading assumption that a great mass of elderly dependent people will appear overnight and overwhelm society. Given that resources available for welfare already appear a little squeezed, it seems obvious that another five million people to cope with would be insupportable. But many other circumstances will change, too, as this net extra five million gradually emerges.
There is no need to suppose that there will be any absolute shortage of resources. The size of the cake of economic wealth is not fixed. Even if we anticipate no better than a continuation of the (historically low) levels of economic growth of the past 30 years, economic wealth will triple over the next 50 years. This creates the potential for people of all ages to enjoy significant rises in prosperity.
The rise in the proportion of elderly people in the population tends to be offset by a fall in the proportion of another age group that is generally regarded as economically dependent: the young. Why? Because the main force driving population ageing is falling fertility. The primary cause of ageing populations is that fewer babies are being born - not that more people are living longer. This reduces the size of successive generations and brings about the increase in the average age of the population. So the 'burden' to society from a rising proportion of older people is almost always compensated for by a falling proportion of dependent younger people.
This is likely to be the case at the time when the demographic 'time bomb' is scheduled to explode in the next century. The primary cause for the ageing of industrialised societies over the next 40 years will be the specific fertility shift from the baby boom years of the 1950s and 60s, to the baby bust years of the 1970s and 80s and beyond. This fairly abrupt fall in fertility gives a boost to demographic ageing from about 2015, as the baby boomers reach their mature years, alongside smaller-sized younger population cohorts. It is striking, though rarely noted, that when this effect dissipates as the large baby boom generation starts to die off in big numbers from about 2030, today's population projections show a stabilisation and in some cases a reduction in the population age structure.
And what if there are more elderly people? The stereotype that all people over 64 years old are ill and disabled and therefore dependent on the 'productive part' of society has never been true, and will be less and less true in the future. Life expectancy is increasing, but active life expectancy is growing even faster. People are not only living longer but are enjoying healthier elderly years. It is no coincidence that the average age of death is rising alongside falling morbidity of elderly people. The same factors that have contributed to people living longer since the Second World War, thereby giving an impetus to demographic fears, have also had a beneficial impact on the quality of life enjoyed by the elderly.
The notion that a greater proportion of older people will represent an inevitable burden on the rest of society misrepresents the current position, and will become even more erroneous in the future. Future generations of healthier over-64s will make relatively fewer demands on health and care services, and contain relatively more potential producers. Many demographers and scientists recognise that today's elderly population is healthier than ever before, reflecting the improved levels of nutrition, and other aspects of living standards, and better medical support that they have enjoyed through their lives compared with earlier generations. This improvement in health will be even more pronounced for the ageing baby boom generation - the ultimate cause of the 'crisis' - since it has grown up and lived through the unprecedented period of relative economic good times following the Second World War.
Realistically, the economic cost of the ageing population can be calculated fairly precisely. Even on the basis of making several worst case assumptions about welfare and pension expenditure, the net increase required from national output over the next 40 years adds up to about five percent. This is no more than the additional cost to public finances arising from the public spending implications of the last economic recession over the three years 1989 to 1992. Neither society nor the economy were brought anywhere close to ruin by that particular experience.
So over the next 40 years, what is the 'ageing crisis' so many are so worried about?
Population ageing is ultimately an expression of human progress, where society gains increasing control over natural forces. Populations age primarily from below (falling fertility) and to a lesser extent from above (increased longevity). Life expectancy rises because of falling mortality levels, which is itself a product of a healthier public environment - notably the fruits of sanitation and clean water - higher living standards and improved medical and health care. Meanwhile, various social developments have contributed to falling fertility. The enormous reductions in infant and child mortality, pursuant upon medical advances, mean that people have fewer children. And the way in which industrialisation has contributed to the development of collective welfare provision, and to a changing role for women in society, has had a significant impact.
The fertility pattern we see today is the product of all these positive developments. Yet all that we seem to hear of are fears about the burden caused by too many old people. Ignoring the facts, the purveyors of this prejudice conjure up fantastic images of millions of elderly people being kept alive artificially, just so they can run up healthcare bills and collect their state pensions at the expense of everybody else.
Ageing is commonly viewed as a natural, biologically driven and inevitable process. This reinforces the sense that there is little we can do about the 'time bomb' except to reduce our expectations about the standard of life in the years to come. The assumption that we are dealing with a fixed, natural process is partly based on a confusion between population ageing and the process of individual ageing.
Demographic ageing is assumed in some way to be the aggregation of many instances of individual ageing. And just as the personal experience of growing old has a naturalistic component, so it is assumed to translate to the population level. But even at the individual level this is a crude simplification. What it means for a person to be old, or 65, or over 65, means different things in different historical periods and different economic and social circumstances. Imagine a person reaching retirement 50 years ago, after a lifetime of relatively poor living and working conditions, limited healthcare, and war. Now imagine one of today's teenagers at 65, reaching this point after a life of healthier, higher living standards. Why assume that, at 65, one of these teenagers would suddenly become frail and sick, simply because their birthday had arrived?
At the aggregate level of the population there is almost nothing left of a natural component to ageing. The ageing of populations is driven by a multitude of social, economic and cultural factors and changes. And instead of population ageing determining the financial circumstances of society, these are driven by the same dynamics. In particular, the numbers of real dependent people at any time are more a function of what is happening in the labour market than in the age structure. Over the past 20 years labour market changes, including greater female employment rates, the later age of ending full-time education and the shift to part-time employment, have been about three times more significant on the ratio of dependent non-working people to productive people, than have the changing numbers of elderly people.
There is, in fact, no demographically created crisis. The panic over the 'ageing crisis' does not express a problem brought about by population numbers, so much as a more general state of anxiety about the future of society.
The issue of ageing has been politicised for a number of reasons. Since the 1980s, for example, the anticipation of too many old dependent people has provided a useful pretext both for making cost-cutting changes in welfare and public pension provision, and for promoting in parallel the mantra of individual responsibility. Today's demographic alarmism, however, is driven by a wider agenda than welfare reform. It is an offshoot of the contemporary climate of anxiety and insecurity in society, where insecurity about the labour market coexists with uncertainties about personal and family life.
Crisis is one of the most overused words of our times. But it is not used because the world really has become more uncertain and dangerous; it is used because of the perception that that is the case. The crisis mentality expresses a sentiment that only expects the worst for humanity. And what better symbol for this negative vision than that of an ageing society: dependent,
unproductive, capable of little and having reached the end
of the road?
Phil Mullan's The Imaginary Time Bomb: why an ageing population is not a social problem is published by IB Tauris in September
Reproduced from LM issue 121, June 1999